As you may have heard, the San Francisco Giants won the 2014 World Series in a thrilling Game 7 defeating the Kansas City Royals. What is interesting about the win is that it was built upon skillful pitching and base hits. The Giants did not hit any home runs in Game 7 and had only one double in the deciding game.
What does this have to do with real estate?
Base Hits Matter
The Giants won because they were able to get base hits. They were able to get men on base and put them into scoring position. Base hits allowed the runners to slowly advance around the bases and eventually get to home plate to score runs.
In real estate everyone likes to go for the big score. The home run deal that serves up 10%, 15%, or more in return.
However, sometimes it is the smaller deals, the singles and doubles that end up winning the game.
It is the small portfolio of single family homes acquired over 20-30 years that provide the income and wealth that transfer on to the next generation. It is the small acquisitions made with discipline and prudence that provide for the life and retirement you have only imagined.
A Lifetime of Singles
I met an investor who was purchasing his 8th house. I asked him about it. He said, “It took me a lifetime to accomplish it.” And yet, his 8th property acquired in a good area is worth in excess of $400,000. If all of his properties are worth about the same, he has a portfolio of close to $3,200,000. That isn’t too shabby for a lifetime of work.
To have saved $3,200,000 via the stock market he would have needed to deposit $13,260 per year earning an average of 12% per year over a 30 year time period. If that represents 10% of his savings, he would have needed to average an income of $132,600 over that 30 years.
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