TSP & ROTH vs. Real Estate Retirement

**pyriel** · 11-07-2006, 07:22 AM

I've always been a fan of Robert Kiyosaki and now he has a new book that came out with Donald Trump as the co-author. The name of the book is "We want you to be rich." Both are into real estate but their book focus more into teaching others on their reasoning on why they want ordinary people like us to be rich. Both of them don’t believe in investing in mutual funds, 401K, and IRA. According to both of them, these retirement vehicles (to include TSP) are not the best way to get rich.

After being here for over a year and reading countless posts, I am beginning to see where they are coming from. It seems like our focus is to grow our retirement account in hope that we will have a better retirement future. And that is actually the bottom line here. It is totally different from their point of view. To them, we are average people who are average investors who chose to be average. This is funny because I see so many smart people here on this MB but yet, I do feel that they (just like me) are average investors.

My wife and I max our TSP and ROTH every year. That is about an average of 38k this year with the possibility of increasing it to 39k next year. Then on 2008, we have the opportunity to increase that to 41K when ROTH goes up to 5K per year. I also save at least 25K of my own money every year just in case there are real estate opportunities that might come by. Now, I’ve been thinking, where can I invest 66K per year that will beat out the rate of return from TSP and ROTH.

I can buy a pretty decent house for 150K with 45K downpayment (30%) and use the other 21K for closing and renovation, It is possible for me to have $500.00 a month passive income and after having it renovated, an increase of equity of 70K. If I do this for 9 years, I could have a possible passive income coming in to my pocket yearly of $4500.00 a month or $54,000.00 per year and a possible equity of $630,000.00 in equity. The caveat to this is that when I retire at the age of 48, I would have received $648,000.00 in passive income (before age 60) and a possible increase of equity of more than a million dollars. This projection does not include my current real estate holdings now nor does it count the 50% base pay that I will receive when I retire.

This sure looks good in paper. But why do I hesitate? I have this same knot in my stomach when I purchased my first property several years ago.

I wonder what others think about this scenario vs. growth in TSP and ROTH.

**colonialmike** · 11-07-2006, 11:09 AM

P- Once again, I enjoy your views on Real Estate and Investing. I have been going to the various book stores the last few weeks looking for a new investment book, and have found none that really grabbed me. I will try your recommendation. I just finshed Investing in Real Estate by Andrew McLean and Gary Eldred.

I am currently moving some equity around for a Costa Rican land purchase and to improve cash flow. I have been looking into the Roth IRA option with the extra cash. I would love to try the option you described of using savings (TSP et al.) for a real estate purchase, but with a wife, 2 kids, 2 mortgages and one on the way, and a land note, I just can't take anymore risk.

The thought of it gives me the "stomach knot" you describe, but also the realization of serious equity and profit. If I were younger, with less dependents, I may try it for a bit...but not now. I will probably look into the Roth a little more.

**Want2retire** · 11-11-2006, 06:14 PM

First, a disclaimer - - I don't know anything about real estate investing, and don't plan to invest in any real estate I won't be living in, at least in the near future.

I find the writings of Kiyosaki and others to be intriguing, as you probably do too. The one who is most persuasive to me, is John T. Reed. If you haven't looked at it, you'll find his website to be interesting:

http://www.johntreed.com/realestate.html

Take a look at what he says about various "real estate gurus". He likes some, doesn't like others. It might give you some alternate opinions. He also has some free suggestions for those who want to invest in real estate successfully.

Good luck with your real estate plans!

**pyriel** · 11-11-2006, 11:30 PM

Originally Posted by Want2retire

First, a disclaimer - - I don't know anything about real estate investing, and don't plan to invest in any real estate I won't be living in, at least in the near future.

I find the writings of Kiyosaki and others to be intriguing, as you probably do too. The one who is most persuasive to me, is John T. Reed. If you haven't looked at it, you'll find his website to be interesting:

http://www.johntreed.com/realestate.html

Take a look at what he says about various "real estate gurus". He likes some, doesn't like others. It might give you some alternate opinions. He also has some free suggestions for those who want to invest in real estate successfully.

Good luck with your real estate plans!

I've come across John's books awhile back and I am also impressed with them. I visited the site you mentioned and went there for a visit. He recommends some authors while discourage readers from buying books written by some authors. The only thing I have to say about this is that you as a reader must make that decision. For when the day is over and you signed your "John Hancock" on that dotted line, you are responsible for your action.

As for me, I get a piece of everything from all the books I read and modify them for my needs. I had to, since many of their recommendations do not apply to Guam laws. I recommend for those people reading this to do the same. You can never get all the great ideas from one author. Pick and choose what works for you, compile them, and execute your real estate plan.

Good luck to all of you... P