Retire Early with Real Estate, By Chad Carson
About the Author
Chad “Coach” Carson graduated from college in 2003 and decided to jump full-time into real estate investing. He began real estate investing with a business partner, and they still actively invest together, fifteen years later. Throughout his journey to financial independence, Chad has faced many challenges, from growing too fast, to surviving the 2008-2010 real estate “crash.”
In spite of these challenges, Chad has managed to retire early, and become a successful blogger, investor, and mentor. His blog is very informative, and always geared toward helping others reach the summit.
Coach Carsons’ mission at CoachCarson.com is to help you do more of what matters!
Retire Early with Real Estate is set up to guide you up the mountain of financial independence even if this is the first real estate book you’ve ever picked up. I think the author does an excellent job explaining this isn’t a “get rich quick” plan, but a simple, actionable journey to embark on.
I’m going to keep this review somewhat in the order it was written, but just cover the wave-tops of each section.
—> If you would like to learn more about any individual section click HERE!
Your savings gap is the amount of money you’re able to save from your income. He uses a story to simplify this concept, but essentially you want to live on the same amount of money no matter how much you can increase your income. That way every time your income increases you can save more, invest more, and prepare more!
“If you want to reach financial independence in a much shorter time than average, focus on becoming much better than average with your savings rate. Pg. 79”
The size of your income doesn’t matter, large (or small), it is the amount of money you save that will pave your path to riches.
Personal Capital is my favorite way to track your net worth assets.
The Five Wealth Stages
Focus on paying the bills and staying out of crisis mode.
Out of crisis mode. Now pay off personal debts and create an emergency fund.
Increase your savings rate and start stashing away cash savings.
Begin investing your savings and growing them by purchasing assets.
Have large enough net worth, now need income, safety, and low-hassle investments.
Stability, Saver, and Growth Wealth-building plans:
These four plans are simple ways to start building your wealth in order to retire early. Some of these can be done with a small amount (or no) of money for a down payment. Some of these still require a little capital (cash), but you can pull your cash back out of the asset within the year!
The House Hacking Plan
My first deal was a house-hack! I love this plan because it allows you to utilize low, or no, money down loans such as the FHA (3.5% down) or VA (0% down) loans!
The traditional house-hack consists of buying a duplex, triplex, or four-plex and living in one unit while renting the other units out. Coach Carson talks about a few other ways to house-hack as well.
He mentions buying a home with enough room to park/rent an RV or mobile home out, the use of Airbnb in order to rent spare bedrooms, and several other creative strategies!
Check out my description of the VA house-hack here!
The Live-In-Then-Rent Plan
This plan is exactly what it appears to be. Buy a primary residence (again, FHA/VA loan possibilities) live in it for at least a year and then move into another house while continuing to rent that house. Could be any 1-4 unit residence and still qualify for the low down payment loans.
That means you could theoretically combine this strategy and the house-hack strategy!
The Live-In Flip Plan
With this strategy, your goal is to buy a house that you can add value to. That could mean it needs a lot of repairs, or maybe you could add a bedroom or bathroom to increase the value.
Either way, the goal here is to raise the value of the property then after 2 years, you could sell it for profit and not even be required to pay capital gains tax (if under $250k for single, and $500k profit for married sellers)!
The BRRRR Plan
BRRRR stands for Buy, Rehab, Rent, Refinance, and Repeat. It is exactly what it sounds for, and is a solid strategy that allows you to potentially recoup your capital 6-18 months down the road while maintaining ownership of the asset!
(Keep your eye’s open for more content about the BRRRR strategy in the future!)
Don’t forget to research property management!
Wealth-Building plans if you’re in the Growth Stage and already have a good financial base:
These next three plans are great ways to build on the earlier strategies in order to retire early!
The Rental Debt Snowball Plan
This is similar to the way Dave Ramsey suggests we pay down debt. The basic philosophy is to make minimum mortgage payments on all of your properties in order to make much larger payments on one of your properties.
This allows you to pay the first house off quickly, and then you take all of the money you were paying towards this mortgage and “snowball” it onto the next property you own.
By doing this you pay each house off faster than the previous house. Once your portfolio is paid off you will receive a much larger amount of passive income from each property!
If you are more risk averse you can also utilize a similar method but purchase each property in cash.
The Buy and Hold Plan
Enjoy the perks of cash-flow and growing equity with this plan. This is the essence of the real estate rental game. Chad talks about both the long-term, and short-term buy and holds plan and I believe these are both simple, and effective methods of building your wealth.
For more information on the differences; buy the book!
The Trade-Up Plan
The idea with this plan is to grow your portfolio by upgrading your properties every couple of years. In order to maximize effectiveness, you must be able to avoid paying taxes upon the sale on each property.
There are three different plans discussed in this book, the most commonly known of these is the 1031 tax-deferred exchange. The author does a good job of explaining the basics of complicated tax strategies in this book.
I won’t elaborate too much on this, but the author does an excellent job of explaining several methods to diversify your investments. From retirement funds to self-directed IRA’s. There are a lot of solid strategies discussed, and the author is quite knowledgeable in all areas of finance!
Remember, the goal of this book is to help you retire early in order to enjoy life. No matter where you are in your financial journey, at some point in life you must retire/withdrawal your money (unless you plan on working yourself into the grave).
The two goals of your withdrawal plan should be that your portfolio pays for all your living expenses (now and in the future) and that your portfolio never runs out of money.
There is a simple equation shared that your net worth multiplied by the cash return (ROI) on your wealth needs to equal (or exceed) your expenses. In other words, once you have decided what your cost of living will be in retirement, you can use this formula to discover how much wealth you must accumulate to make it happen!
There are a ton of strategies listed to help you plan your retirement. He lists several ways to mix and match all of the above real estate strategies to ensure your future is stable. There is also a very comprehensible overview of retirement accounts and other investments that could be used to improve your retirement.
I really like the way Chad discusses frugality, security, and personal development. The below quote is awesome and accurately captures why “net-worth” and happiness don’t always go hand in hand. Ensure your pursuit of financial independence includes personal development!
“You can have all the money in the world, but if you are constantly anxious and concerned, you don’t have security. And if you have little money, but you have confidence, skills, and hope, you do have security.” Pg. 259
If you want to retire early, read this book!
This book is not just another real estate book, but rather an over-arching financial success book! The author walks you through the journey of discovering your “why” (motivation) and on to retirement and beyond!
Throughout this book, there are a lot of awesome graphs and charts. These are extremely beneficial for visual learners, and really helped confirm my understanding of his writings. The nickname coach may have its roots in Chad’s athletic background (stud football player), but it is evident that he is truly a coach at heart.
He does an excellent job of explaining how to retire early with real estate. He also describes how to live a fulfilling life along the way! I have followed his blog/journey for a couple of years now, and it was an honor to have the opportunity to read/review this book!
I give this book two solid thumbs up! Now, go read it for yourself!
“KULIA I KA NU’U!” (translated from Hawaiian to): “Strive to Reach the Summit!”