by Mike Johnson
The biggest downside of building a nest egg for retirement is TIME. It takes time to save and invest and accumulate money. Usually DECADES of time.
There is a way to get around this. Instead of accumulating money, accumulate mostly-passive income streams.
Once your monthly passive income exceeds your monthly bills, you’re done with jobs and work schedules forever.
Few people ever realize they are just one good property away from early retirement.
Learning how to do this is self-education, so you can learn around your existing job.
The right property can be purchased with borrowed money, so you can start right now.
The right property will support a manager to run it, so it’s mostly passive.
The right property will generate enough income to pay a large mortgage, all operating expenses, a manager, and enough to pay all your monthly personal bills plus more.
The right property gives you immediate financial and time freedom.
For me, the “right property” was mobile home parks.
With mobile home parks, I only rent the land so there are no dwelling repairs. Mobile homes are expensive to move so tenant turnover is extremely low. By buying an entire park, I buy dozens of rent streams at once, at the lowest possible cost-per-rent-stream. With income properties, the more rents coming in, the less risk from non-payers, vacancies and unexpected expenses.
Mobile home parks easily trump single family homes and apartments. Homes and apartments feature dwelling repairs, constant tenant turnover and extremely high cost-per-unit. It’s difficult to buy enough homes and apartments to gain the financial and time benefits you get from mobile home parks.
I “retired” in 2009 after selling an active business and using the proceeds to buy a second mobile home park. Now I own three parks. Each park has a manager who deals with 90% of all tenant and operational issues. I choose to write the checks and deposit the rents. I do 95% of my “managing the manager” by phone and email.
I earn 90% passive income five different ways.
Income After depositing rents and paying the parks’ operational bills, mortgage, and manager, I keep the rest as my monthly income.
Equity Each month, when my tenants pay their rent, I use some of this money to make the mortgage payments, which lowers my balance, building equity.
Appreciation Due to the magic math of mobile home park values in the marketplace, each one dollar I increase profit adds 10 to 14 dollars to the value of my parks.
Depreciation Thanks to real estate owners writing the tax laws, I can legally depreciate a large portion of the property value each year. This amount is usually so large that my ample spendable income is reduced on paper so much that my taxable income is so low there is no tax due.
Inflation hedge I borrow mortgages at 5%. REAL inflation is nearly 10% (ShadowStats.com). This pushes half my inflation exposure to my lender. I easily overcome the other 5% through annual rent increases, property appreciation and equity gains.
Best of all, I control the assets. I can touch them. I can see them. I can increase rents and decrease expenses. I can change the managers. I can change the tenants. I can sell a property or buy a new one.
As long as I own golden geese, my retirement funding will never run out. This is the difference between living off a nest egg or living off a perpetual income stream.
I went bankrupt at age 39. I didn’t learn about income properties until age 40. I had zero savings. I bought my first mobile home park at age 44 with just $1,000 down. I was financially free by age 48. I bought my second park at age 52 and early-retired. The past ten years have been wonderful. Every day is Saturday.
So yes, parks are lucrative monetarily. But to me, their biggest benefit is TIME. I’m free of jobs and work schedules forever. I only wish I’d learned about mobile home parks earlier. I could’ve saved years of employment and retired at age 25 instead of 52.
Time is far more valuable than money. Income properties are the only thing I’ve discovered that lets us buy an early retirement right NOW.
Mike Johnson made the journey from jobs to freelance writer to entrepreneur to passive income and early retirement. Today he teaches people how to skip right to passive income and early retirement at PerpetualSaturday.com