Can Buy & Hold Real Estate Fund a Comfortable Retirement?

Over the weekend, Bigger Pockets published an article by Nathan Brooks that discusses whether you can use buy and hold real estate as a tool for retirement. I’ll include a link to the article at the bottom of this post so you can read it yourself.

The article starts out referencing a discussion between Nathan and a real estate broker about how long he intends to hold the properties. When I talk about Nomad, the plain vanilla version has you holding the properties until you’ve paid them off completely.

I have not talked a lot about it yet, but there are quite a few variations of the Nomad model where you would sell off part of your real estate portfolio, exchange the properties into other properties and/or refinance the portfolio. I do plan to cover these variations in future articles and classes for Nomads.

Getting back to the article, he basically talks about how the broker was commenting that the folks who owned the buildings for a long period of time are the ones making the biggest money. We totally know this from our modeling of Nomad.

Here is a chart showing cash flow over time.

As you can see in the chart above I have modeled a pretty conservative version of Nomad where you are financing your down payment over time. But even though we have modeled negative cash flow for the houses in the first years after converting each one to a rental, cash flow grows strongly over time. Eventually you’re seeing significant cash flow every year.

That’s what the article mentions: holding properties for the long haul means long term wealth building and long term cash flow.

He gives some examples of what his modeling of cash flow on a single property looks like. Our model for Nomad assumes you buy 10 properties over 10 years as an owner occupant and then convert them to rentals after living there for a year.

In the article he also talks about some of your options with the property and a what-if scenario of owning 100 properties. This is possible, but much more ambitious, than what we typically talk about with Nomad.

Read the original article.

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