Today’s REI Classroom Lesson

Rental Properties have the ability to offer passive income long-term that can be a big part of you reaching financial freedom. Kevin Ortner goes over all the ways rentals make financial sense.

REI Classroom Summary

The amount of rent charged is many times a good bit over your monthly mortgage and other expenses, allowing you to have positive cash flow each month. By having multiple rental properties, the opportunity for a good amount of passive income increases.

Listen to this REI Classroom Lesson

Real Estate Investing Classroom Show Transcripts:

Mike: Welcome back to the flipnerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.

Kevin: Hello, I’m Kevin Ortner, CEO of Renters Warehouse and I’ll be your host today for REI Classroom. We’re going to talk about creating financial freedom through rentals.

Mike: This REI Classroom real estate lesson is sponsored by uglyopportunities.com.

Kevin: And financial freedom through rentals can mean one of two things. It can mean having added income and extra money in your pocket through your working years or I like to focus on having financial freedom in retirement. But let’s start with the first, financial freedom before retirement. In your working years, many people like to say, “How can I make more passive income when I’m working? How can I create and enhance my lifestyle for me and my family?”

And a rental property is a great way to do that. It really comes from the monthly cash flow of your property. Again, that cash flow is going to be your rental income minus your monthly expenses like your mortgage, your insurance, your taxes and maintenance expenses. Let’s say you have $200 left at the end of the month from your rental property, what could you do to leverage that $200 to enhance your lifestyle or take your family maybe a bit further?

But let’s think bigger than that. What if you had five properties? What if you had 10 properties, all cash flowing $200 a month? You could be making extra $1,000, $1,500 or $2,000 a month in passive income through the use of real estate. What could that do? That’s $12,000, $18,000 a year. What kind of family vacation could you take? How much more could you put in your retirement account? How much faster could you retire and be able to stop working? So those are the benefits and ways to create and add financial freedom through your working years.

But let’s focus on retirement because let’s face it, the old way of retirement is dead. There are no more pensions and Social Security is just not going to cut it. So it’s up to each and every one of us to create our own legacy of financial stability in retirement and rental properties can create that annuity for you.

So let’s remember, it’s not a get-rich-quick scheme. This takes work, it takes discipline and it takes time. But this is where that effect of compounding results can really enhance your lifestyle. So let’s imagine for a minute that you have 10 rental properties and 20 years from now, you have them all paid off. Let’s think that these 10 rental properties average $1,500 a month in income. That’s $15,000 a month before expenses.

Now remember, these properties are paid off for you so you don’t have that mortgage or that interest in payment, but you will have some expenses. So let’s say for today’s exercise that the expenses are maybe 30% of what that rent is for you, which leaves you with just over $1,000 a month per property in income. $1,000 per month per property in income with 10 properties is over $125,000 a year in cash flow in retirement. That’s a pretty nice retirement income and remember, now you also have a nice portfolio of assets that continues to appreciate over time that you can sell off if you have large expenses in retirement or medical costs and also, as an inflation hedge, rent rates will generally increase over time as well.

So and the nice thing is you can do this all with a hands-off approach by hiring a great third-party property management to take care of that day-to-day work for you. So don’t think short-term, think long-term, use the benefits of compounding successes over time to use real estate and leverage it to create a fantastic financial freedom and legacy for you and your family in retirement by starting today. That’s it for today’s session of REI Classroom. We’ll see you next time.

Mike: HomeVestors, the “We Buy Ugly Houses” folks, is a franchised system of hundreds of real estate investors that have purchased over 65,000 houses. If you’d like to learn more about the most powerful real estate investing system in existence, whether you’re a pro looking to take your business to the next level or whether you have no experience at all, but a burning passion to be successful in real estate investing, please visit flipnerd.com/ugly to learn more.

Please note, the views and opinions as expressed by the individuals in this program do not necessarily reflect those of flipnerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.

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Kevin Ortner
President and CEO of Renters Warehouse, Kevin Ortner first joined the company in 2009 as a franchisee for the Phoenix region. After the retirement of founder Brenton Hayden, Ortner went on to take the reins of the company, helped see it through monumental growth and helped double their total number of franchisees in the country since 2013. In 2015, Kevin was honored with both an American and International Stevie Business Award for his achievements as Executive of the Year. With Kevin at the helm, Renters Warehouse secured elite honor roll status on the prestigious Inc. 500|5000 list of fastest growing privately held companies in America for its sixth consecutive year.
Kevin Ortner

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