Episode 45: A Faster Way To Retire

Welcome to the “InFLOW” podcast. I’m your host, Michelle Bosch. In today’s episode, we are going to be talking about a faster way to retire. Hi, I’m Michelle Bosch, real estate investor, mom, wife, and host of the “InFLOW” podcast. And I’m passionate about helping women invest in land and apartments. Join me each and every week for real estate investing strategies and interviews with thought leaders that will leave you inspired and ready to step into flow, for inflows of cash, inflows of ease, and inflows of grace in your life. Now, here on YouTube are the video versions of my podcast, and in order for you to get my latest information, please go ahead and subscribe. And now, let’s go.

Hi, welcome back. I’m Michelle. And in today’s episode, we are talking about a faster way to retire. So there’s traditionally been a school of thought that talks about, you know, coming up with a big pile of cash so that you can go ahead and retire sometime in the future. And everyone is talking about, you know, what is that number for you? And that number might be depending on your lifestyle, is it 5 million? Is it 10 million? Is it 15 million? But in any case, it’s about a number and it’s about a mountain of money or a pile of cash type of number that you need to come up with so that every paycheck you go ahead and put away 10% of what you earn and put it into either mutual funds or 401K or whatever, yes, stock. And so that’s the school of thought about, you know, this pile of cash mentality, which hopefully, you know, you come up with a number that you don’t outlive.

But, you know, the reality is that we are living longer, that we, especially women, you know, for the most part are outliving husbands and in, generally speaking, both men and women are living longer. So this pile of cash theory, in my opinion, is not so good, it’s not a good way. It’s not the faster way to think about retirement. However, when you think about retirement from the point of view of what is your monthly cash flow number that you need in order to, you know, live a reasonable lifestyle? Say that number is $5,000, you know, you are now thinking about, okay, how can I invest in assets that can produce monthly cash flow of $5,000 to pay for, you know, any reasonable lifestyle. And usually, normally $5,000 is enough to really retire from a job that you hate or retire a spouse from a job that you hate, you know, on a monthly basis.

And so going along the lines of that, you know, we love investing in, my husband and I love investing in real estate assets because they’re much more long-term assets that really don’t fluctuate a lot. There’s not lot of volatility, you know, like you have in the stock market, you don’t have that with real estate assets. And so that’s one of the reasons why we love it. Another of the reasons why we love real estate, specifically multifamily, is in terms of it being able to produce monthly cash flow for us. We love multifamily because multifamily different two houses is valued such that it’s not based on the comparable of the houses, you know, around the proximity of your neighborhood that defines the value of your property. You know, that’s how you typically go about finding comparables when it comes to two houses.

But when it comes to multifamily, you are in total control of the value, you know, of that asset because value is really a factor of net operating income. If you can, you know, run that property really, really efficiently and increase market rents and increase net operating income, you can actually, you know, force appreciation on a property and actually increase the value of a multifamily asset. So that’s one of the reasons why we love, you know, thinking of our retirement number, or our monthly cash flow number, coming from assets such as multifamily. So, you know, so for us, I think we’re at a moment where it’s important to start transitioning. You know, if you’re right now on a job that you don’t like, or even if you’re in a job that you like, you know, and you love what you do, it’s a good idea to start transitioning from being an earner or even a business owner to transitioning into being an asset owner.

So for example, if you’re a lady listening to this, traditionally women have been dependent on their spouses when it comes to money. And we’ve grown leaps and bounds and we’ve kind of like moved into a stage where we’ve become earners and we’re not new to money. And now many women are finding out there that corporate America is not the path for them and they decide that they don’t want to continue just being earners in a job that they hate and they start their own businesses. But even when you start your own business and you become a business owner, so you’ve moved from earner to business owner, you’re still basically having to hustle every day and wake up every day, you know, in order to produce revenue and to produce income and to produce cash flow.

And so I think the next big step for us in general, women or men if you’re listening to this, is to really transition from being an earner or business owner to being an asset owner. Thinking of assets, how can you invest or buy assets that can produce the monthly cash flow that you’re looking to retire with. And I’m not saying that $5,000 is a good retirement but I’m taking $5,000 as a number that it’s tangible, that it’s actionable, and that you can easily accomplish and replace basically your active income from either being an earner or a business owner with an asset such as, you know, real estate.

You know, when we started making that transition, we started making that transition using land as that’s the asset class that we used to transition from being an earner and a business owner into an asset type of owner. And what we do there is, you know, we are able to sell property either for a quick cash flip, you know, like wholesaling, just like you would wholesale houses only much simpler because you don’t have the complexities that come with the houses, like repairs, tenants, toilets, etc.

You can flip a piece of land for quick cash. And normally we are able to buy land for anything under a thousand dollars, a typical piece of land or a typical flip, you know, a property that we basically purchased for $1,000. And then we turn around and we do a quick flip for say, $6,000 and we’re able to net $5,000. So that’s one way that we have basically transitioned from being an earner in our jobs to being a business owner and creating cash profits for ourselves rather quickly and simply just because the asset class is so much simpler than anything else out there.

And so the next step for us was like to, okay, “How can we transition into creating monthly cash flow? Because that’s the goal anyway,” you know, or was the goal for us to retire faster with that monthly cash flow school of thought versus the pile of cash methodology? And so the next step for us was like, okay, look, we are at a point where we can start selling our land using seller financing. That means that if you buy a property for $1,000 and you sell it for $10,000, maybe instead of doing a quick flip for $6,000, you sell it for top dollar, $10,000. But you accept the down payment of say $1,000 down which recoups your investment and you don’t have any money out of pocket and you finance the remaining $9,000. And all of a sudden you can finance that remaining $9,000 balance from your buyer for say 5 years at $200 a month.

If you think about that example of turning $1,000 into $10,000 and really creating $9,000 worth of equity and then getting that equity paid off over a period of 5 years at $200 every month, if you take that same example and you just think about doing that, just $200 doesn’t sound like much. But if you do that 25 times, that means 25 deals, which is totally, totally doable in the land space, you all of a sudden have $200 times 25 of those exact same deals. You have a $5,000 monthly cash flow that is being completely taken care of by an asset that is now your land and the note or mortgage that you have created against that land.

And then eventually what you want to do is you want to start moving, even transitioning doing one more step and transitioning those huge cash flips. If you’ve been just flipping for cash and using the cash flow that we just created of those $5,000 to take care of reasonable expenses in your lifestyle, you can now start transitioning some of those cash flip profits and revenue and start investing or buying assets such as multifamily or investing passively into assets such as multifamily.

Because when you start looking at retiring in this way, all of a sudden if we’re looking for say, again, that $5,000 retirement forever as in like until you die or even after you die because if those assets continue being part of your family, your children will continue to collect on those $5,000 a month. And so if we start looking at assets in that more of a long term horizon, all of a sudden you realize that in order to create that retirement of $5,000 a month or that income of $5,000 a month, you don’t need $5 million or $10 million or $15 million. You only need about $800,000 to produce $5,000 a month in cash flow forever, for the duration of your hold of that specific piece of property, or multifamily, or apartment, or so on.

And so, this is what I wanted to share with you guys today, how easy it is to retire and really make that happen within a period of 1 to 3, 5 years maximum versus putting in 10% of your paycheck for the remainder of your life which is 65 and then retire at 65 and maybe possibly even outlive that pile of cash that you have been putting aside which is what traditional financial advising, you know, that industry, that’s traditionally what they want to get you to do. So this is just a different way and it is incredibly powerful.

I wanted to make sure that I shared this with you today because in my own personal experience, my father was an accomplished lawyer back home. And it wasn’t his profession what got him to retire rich and fast. It was an investment in a multifamily asset. He went ahead and flipped land in rural areas of Honduras and he used those cash profits from those land flips to go ahead and invest and purchase assets in the city, in this case, commercial assets in the city that would spit cash flow every month to pretty much take care of his lifestyle. And when he passed away, when I was only nine months old, that is the single most important thing he could have done because that was what kept us living financially free lives for my mother and I. And she was able to take care of us, put me through private school, pay for in part from my university here in the U.S. And that asset will continue to spit out cash the duration of our hold.

We continue to hold that property, it’ll probably take care of my mother into her old age. And if she decides not to sell it, it’ll probably take care of Sophia someday, and that cash will continue coming into her. So I am a big firm believer that we need to start transitioning from this earning mentality or business owner mentality because those two activities require that you hustle everyday in order to produce cash flow. But when you start transitioning from that into much more of an asset owner, basically earner, business owner, asset owner, your assets are the ones that are starting to take care of your lifestyle and of your expenses. It’s basically your balance sheet. You know, you become balance sheet wealthy versus income statement wealthy. And that balance sheet or those assets inside of your balance sheet are the ones that are producing the cash flow for you to live and maintain a wonderful lifestyle and do the things that you came here to do, the things that you love to do and take care of your family.

And so I hope this episode served you and that you found some value in it. If you did, please leave me a five-star review. Share it with someone that you care and love. And I’m excited to spend some time with you in the next episode of the “InFLOW” podcast. Thank you so much. And until the next one, bye. I hope this episode left you feeling inspired and ready to get inflows of cash, inflows of light, and the inflows of faith in your life. I welcome your reviews on iTunes. Please leave me a review and help me create an amazing community of women in flow.

Thank you as always, for sharing your voice by going to michellebosch.com and joining the conversation about this show. And while you’re there, grab a copy of my 10 commandments to living a life in flow. You can also follow me on Facebook @michellebosch and on Instagram @michelleboschofficial. Thank you very much, and until the next one.