July News in December 2023, Issue #244

CELEBRATING 22 YEARS

Steve and I met on July 7, 2001 and our first vacation was to Honolulu. 

The same water feature is still there at Kuhio Beach Park. 

It is amazing to reflect on 2 decades of accomplishments, from managing 528 rental properties in 4 joint venture partnerships and 5 limited partnerships, to our first construction project of a 191-unit purpose-built rental building in Langley Township. 

My 80-year long term vision is broken down into decade intervals.

17 years later, we exceeded the 20-year milestone goal with over $100-million assets under management. 

Currently working on the next decade's $1-billion milestone.

EXPONENTIAL FUNCTIONS

We tend to overestimate what we can do in the short term and underestimate what we can accomplish in the long term. 

You can see this in action when you stay committed to your goals because in doing so, you align yourself with the exponential function of growth.

What does that mean?

If you left your money in a savings account over a very long time, the amount of money grows exponentially due to compounding interest versus simple interest. 

But, if you're not getting double-digit interest rates, the compounding takes much longer. 

This is how investing in real estate can accelerate your wealth when you play the long game.

REVERSE ENGINEER YOUR RETIREMENT

As with all of my short and long term plans, I reverse engineer the end result and work backwards to determine the intermediate steps. 

It's like planning a road trip: you know your destination and reverse engineer the streets back to your starting point. 

The same principle applies to money, finance, and real estate investing.

Take a look at this Compound Interest Calculator and plug in Age 40 at 5% interest with an initial investment of $100,000 (leave the monthly savings amount blank).

In 25 years, that $100,000 will compound exponentially to $348,129, but that is not going to be enough to fund your retirement.

Now change the interest rate from 5% to 15% and see what happens: compounding double-digits produces a twelvefold increase to $4,154,412. 

My plan is to eventually move into an assisted living facility and these vary between $3,000 to $7,000 or more per month.

Let's go high end and extrapolate $10,000 per month over 20 years = $2,400,000, and that's the amount to reverse engineer today.