As the baby boomers are starting to flood the retirement era, they are taking control over their retirements and 401K’s. The stock market has proven to many what seemed like a steady portfolio can turn upside down on you. Most everyone went thru several cycles over the last ten years where their portfolio values lost over 50%. Although, many portfolios recovered or stabilized over time, the fear at that moment was so real that many Boomers are looking for control and stability over their retirement.
Many Baby Boomers are now converting their 401K into property investments with no penalties and fees. Middle class investment properties are yielding 8-10% returns annually.
The typical scenario is a Baby Boomer with about $200,000 in a 401K. The goal is to buy 5 investment properties. $30K down on each home and keeping $40-50K in 401K for reserves. They are financed on 15-20 year notes. After taxes, management and maintenance are paid they net about $300/month on each property. Some elect to use that profit to make additional equity payments. On that plan at about 7-10 years, their $200K is has yielded about $400-500K in equity. So their net worth is about $750K.
The strength of this investment strategy is the the value of the homes themselves that keep the investment solid. They have to invest in areas that are stable and have at least a 30 year average. One of those areas would be North Texas. Their economy and job market for the middle class continues to grow.
If you would like to learn more about how your 401K can work for you, call today.