Buying homes and renting them out is a good way to provide retirement income, Kathy Fettke, CEO of the Real Wealth Network, a California real-estate services and consulting company, told Newsmax TV.
Without real estate investments, it will be difficult to fund your retirement, she said on Newsmax TV's "America's Forum.
"People will never be able to retire, because they're being told to put away 10 percent toward retirement and maybe 10 percent in emergency funds," Fettke said.
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"Well that is not going to get you there," said Fettke, also author of the new book, "Retire Rich with Rentals."
You can't rely on stocks, Fettke said. "If your money is in the stock market, you better retire when the stock market's up."
For those who were in the stock market, "you could have retired in late 2007 and done fine, but if you waited 18 months you would have lost half your nest egg," Fettke said. "Nobody wants to take that risk anymore."
Real estate is much easier, she said. "It's a high leverage situation where you can use 20 percent of your money and borrow 80 percent from the bank if you have good credit and a good job history," Fettke noted.
"And then you rent that property out and your tenant pays off that loan for you. If you accelerate that payment by making one extra payment a year, you can have that property paid off in 12 to 15 years."
Demand for housing will be strong, giving you plenty of opportunity for tenants, Fettke said. "For the past six years we really stopped building in this country, but we have a population growth of about 4 million per year," she said.
"Plus we've got the next biggest generation coming, it's the baby boomers' kids who eventually are going to want to have their own homes."
But now they're renting, so demand for rentals is currently strong at the same time there's a shortage of housing, thanks to the lack of building, Fettke said. "So right now it's just an incredible time to be a landlord, to be able to buy an investment property, rent it out to someone who needs it and wants to live indoors," she said.
"People are moving out from mom and dad. We're recovering in the U.S., and people want to live on their own. They're willing to pay a landlord for that, and that landlord could be you."
So your borrowing will pay off, Fettke said. "It's the ultimate leverage where maybe you got a $100,000 house, you put $20,000 into it, and then you get the $100,000 house paid off through the help of the tenant."
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