Are you like me and never socked much money away for retirement? We are not alone. The Employee Benefit Research Institute’s Annual Retirement Confidence Survey found that pre-retirees (Americans between the ages of 55 and 65) greatly underestimate how long they are likely to live and how much money they will need in retirement.

Experts say that we need to change our mindset from “assets” to “income” in retirement planning. It’s not enough to know how much money we have in savings; we need to know how much income our savings can generate over time.

There is no better way to change our mindset and our portfolio from “assets” to “income” than by investing in real estate. If we invest wisely before we retire, and can have a stable of reliable rental properties that generate steady monthly income. We can look forward to a retirement that provides security instead of uncertainty.

Don’t rely on politicians to provide you with retirement security. If you want it done right, you must do it yourself.

Yep, that's me painting a fixer-upper house

If your circumstances are such that it is impossible for you to start investing in real estate today, you can start by just meandering in that direction. You can program your mind to pay attention to anything related to real estate. Cut articles out of the newspaper, buy books at book sales, ask friends and co-workers how they purchased their house, watch for free classes or seminars.

Start to Prepare Yourself

You can be constantly learning and preparing for the day you will purchase your first fix-up property. Virtually anything you need to know is available to you through books, audio recordings, workshops, seminars, public education programs, consultants and training programs.

I meandered for approximately 11 years before pur-chasing my first investment property. Now I wish I had started sooner, but you can’t begin until you have the desire and the knowledge. Sometimes, desire and knowledge can be acquired simply by observing someone else operating a suc-cessful business.

Reason to Not Invest and Reasons to Invest

There are always reasons not to invest in real estate. The most common reason used to be that people thought house prices were too high. Now, the situation has reversed itself and housing prices are at historic lows.

The time is ripe to start meandering in the direction of Fixer Upper Houses.

See What’s Happening in Your Neighborhood

You might want to check out how low houses are selling for in your neighborhood. You might be surprised.

You can find housing prices at Zillow.com or on the multiple listing service (MLS).

Go confidently in the direction of your dreams. Live the life you have imagined.
– Henry David Thoreau

While you pay a price for following your dream, you also pay a price for staying where you are. You lose the opportunity to develop new life-coping skills that help you deal with unexpected crises or joblessness. You may suffer from depression by staying in a debilitating job.

Marsha Sinetar, in To Build the Life You Want, Create the Work You Love, says that excelling at a job that you love could be the best mental health insurance for people who feel depressed or anxious about their work. Americans spend $12.4 billion each year to treat clinical depression.

Do You Have Zest and Gusto?

Science fiction writer Ray Bradbury, in Zen and the Art of Writing, wrote that, “life is short, misery sure, and mortality certain.” Yet, he advocated that as we move along life’s way, and in our work, our lives should be filled with “zest” and “gusto.” With zest and gusto, traveling to the grave, Bradbury vowed to fight injustice, appreciate beauty and encourage children.

Is there enough zest and gusto in your life to fight in-justice, appreciate beauty and encourage children?

What do You Trade Your “Life Energy” For?

We should wisely use the time that we must devote to work. Our working hours constitute at least one-third of our lives during the work week. As Joe Dominguez and Vicki Robin point out in Your Money or Your Life, money is what we chose to trade our time, or “life-energy,” for. The authors distinguish between “wants” vs. “needs,” and promote not wasting money on unnecessary consumer goods. Instead, they advocate conscientiously saving money until you reach the point where you can free yourself from the working treadmill.

Fixer Upper Houses was Right for Me

The independence of working with fix-up houses was this type of “right” job for me, and can be for you too. It can be the road to operate a business that develops one’s inde-pendence, creativity and imagination. With real estate, you can invest a small amount and gradually accumulate money as both your rental income and equity increase over time.

Video of TV Interview for “Carve Out Your Niche”

Although I used my handyman friend to inspect the first fixer upper house that I bought, in later houses I hired a professional property inspector to go through the house and to provide me with a complete inspection report.

The Value of the Inspector’s Report

The inspector’s report can be used to help you negotiate a lower price on the house if they uncover anything in the house that is in need of repair. Hiring a qualified property inspector is a good way to make sure that you are really getting what you pay for in a house.

Due Diligence Allows You to Correct Deficiencies

Once you have made an offer on a house and it had been accepted by the seller, the “due diligence” period begins and you have until the close of escrow (or completion of the sale) to check out the physical and financial condition of the property. If you discover that the property has problems, but you think the deal is still worth pursuing, the seller may be willing to correct any deficiencies, or give you money to complete the necessary work yourself.

Two Key Components of Due Diligence

There are two key components of due diligence process:

1. Review of books and records
In my case, there are usually no records to review. Most of the houses that I buy have been repossessed by a bank, the Veterans Administration or HUD, and the owner is long gone.

2. The physical inspection
When there is no owner present this makes the physical inspection all the more important.

The due diligence period is your last opportunity to either:

1.) complete the transaction, or

2.) cancel the escrow, have your money returned, and look for another property.

“Carve Out Your Niche” TV Interview Monday

Most people only re-examine the path that their life is taking when they suffer a traumatic experience. Some people take a deep breath when they reach a point where they realize that their days are numbered. They sense the need to focus the remainder of their lives on doing something that provides a deeper satisfaction and allows them to spend more time with their family. For others, they realize that they don’t want to continue to work at a mind-numbing job or for an ungrateful boss.

There is more to life than just making money. Henry David Thoreau said, “Most men live lives of quiet desperation.” We long for something more fulfilling.

I advocate investing your time and psychic energy in fix-up houses (and in writing books, as I elaborate on in my other blog). You will find more meaning in life, grow as a person, and make money independently of your regular job.

Taking a new path toward earning money requires us “to give up what is familiar and secure,” as Marsha Sinetar says in her book Do What You Love and the Money Will Fol-low. Sinetar feels that working at the “right” job involves “doing our best at what we do best.” Sinetar suggests that we periodically take stock of our true life’s purpose by asking the following questions:

1. What do I want to have accomplished when I look back upon my life in old age?

2. What habits would I need to cultivate and what would I have to delete from my present life to live out my true purpose?

3. What activities would I do if I lived as if my purpose meant something to me?

See also:

Do the Opposite of Everyone Else
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This is a guest post by: Erik Braunitzer of Douglas Elliman Real Estate Company, agents for NYC Apartments.

The bathroom is an essential part of most every home. However, the bathroom is also an area that is often neglected when it comes to creating an environmentally friendly and green space. Luckily, when designing or remodeling your home, the nation-wide renewed focus on green living has opened up an entire marketplace full of green items.

And what most homeowners and contractors don’t realize is that going green really boosts the value of your home. Things like geothermal heat, 95% efficient furnaces and walls made with reclaimed materials are just a few examples of expensive but worthwhile home investments. One of my favorite areas of focus is the bathroom.

Recycled Glass Tile: Tile is a commonly used throughout the bathroom, from floors and shower walls to backsplashes and accent work. Consider using recycled glass tiles, which come in a wide range of colors, shapes and sizes. Recycled glass tile is installed in the same manner as regular tile, and can come in pre-spaced squares allowing for easy installation and grouting.

Sustainable Harvested Woods: Wood is often used for vanities and even flooring for bathroom spaces. However, many wood products require the use of environmentally unfriendly or even illegal logging practices to supply the material. Choose products with a Forest Stewardship Council approved sticker on them, or choose more environmentally friendly products like bamboo, cork or wheat straw. Storm-feld tree products are also an option for a greener bathroom. Avoid wood products made from particle board, which often contains formaldehyde.

Recycled Metals: Recycled metals can be used in your bathroom from cabinet pulls to fixtures. Look for products such as recycled metal counter tops, vessel sinks made from recycled metal, recycled aluminum tiles, salvaged brass faucets, and recycled bronze metal hardware.

Composite Terrazzo: Another way to use recycled materials for vanity countertops is through composite terrazzo products. These counter tops are made from a wide range of different materials, such as recycled glass, which is then combined with an epoxy binder or cement to create the hard and formed surface of the countertop. Because there are different types and colors of materials used in each piece, you get a unique finished look to the product you install.

Salvaged Products: Whenever possible, try to use recycled salvaged products in your bathroom remodel. Often times home owners will get rid of light fixtures, cabinets or sinks that are still in style, but that do not fit their own current personal style. Purchasing these products from salvage stores reduces the chances that the product will find its way into a landfill, as well as can provide a unique or vintage look to your bathroom space.

Windows: Install windows in your bathroom to bring in natural light. The more natural light you have flowing into your bathroom, the more open it will feel and the less electricity you will need to use, which reduces your energy waste and brings down your electric bills. Install Energy Star rated windows to help reduce the loss of heat or cold air during the winter or summer months.

Toilet: Toilets make up a significant portion of water usage in most households. Each flush can waste gallons of water, even though newer toilet designs can provide the same performance with less water. Look for toilets made to the HET Standard (or High Efficiency Toilet) which guarantees you’ll be using less water with each flush.

While these steps may seem small, every choice helps create a better world for you, your family and generations to come. By making these simple choices, you can make a positive impact on the environment, all without sacrificing style or function in your bathroom.

When you own a rental property, two silent forces at work to increase your wealth, principal reduction and equity increase.

With each mortgage payment, you decrease the amount that you owe on a home loan as you reduce your principal. When your property is rented out, your tenant pays your loan for you. At the same time, equity goes up as property values appreciate over time.

Let’s assume that the original mortgage (loan) for a property is $150,000, which is also the original value of the house. As time goes by, the value of the house may increase to $300,000, due to appreciation. At the same time, the amount owed on the mortgage is reduced to $20,000, due to the mortgage being gradually paid down. At this point, the amount of equity (or value) that you have in the house would be $280,000.

If we don’t allow periodic dramatic rises and falls in home values to shake our confidence, we can count on steady, long-term, profits from our investment properties.

Carve Out Your Niche” Radio Interview Tomorrow

In my case, I travel to my rental properties frequently, usually just to do a drive by and make sure everything looks like it should.

I used to drive by one of my properties on a daily basis, because I was having trouble with the tenants. They were pretty good tenants for the first two years that they were there, then things started to slowly unravel the next two years. They started paying their rental checks later and later. They weren’t keeping up the front yard. They were having large parties.

Finally, the cops had to come to the house and break up a party, and that was the last straw. I evicted them (by simply canceling their month-to-month contract). Now, I don’t drive by the property so frequently, because we have more reliable tenants.

To claim these travel tax deductions, you must keep a travel log, and just write down the milage each time you travel for landlord related business.The travel claim is made on Schedule E of your tax forms.

You allowed around 50 cents per mile by the IRS. The amount changes over time on the tax instructions, so you must verify how much it is each year. You just mulitply the number of miles that you have driven by the amount allowed per mile, and that is the amount you enter as your deduction.

The Best of Carve Out Your Niche 2011

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Always try to verify the references by telephone. You wouldn’t be the first landlord to be given a fake reference, and people will often give more candid opinions when you speak to them.

I don’t run credit checks, but I do like to see copies of their paychecks. I do a criminal background check by searching county court house records, and I check the sex offender’s registry list.

A high priority for me is that they make enough money to pay the rent. Don’t go by what they say; go by what their paycheck says.

They may say, “So anyway, my wife/girlfriend is going to get a job in a couple of weeks, and we operate a successful E-bay business, so the rental payments won’t be a problem.” Weeks turn into years and all the while they will have trouble making their monthly payments. Someone who has a stable, good paying job is an ideal tenant.

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The Value of a Month to Month Lease

My policy is to use a month-to-month lease whenever possible. This way, if you have a tenant that you want to get rid of, it’s easier to do. These are tenants who are disturbing the neighbors, they don’t take care of the place, or they consistently pay late. Just cancel the contract and the bad tenants must be out in 30 days. No court fights, no mess.

Modify Your Lease

Feel free to modify a lease contract to make the tenants behave the way that you want them to. Nothing is set in stone. It’s your contract. Mold it into something that works.

For example, I found my tenants making oil changes and auto repairs in the driveway of one of my properties. I didn’t want to encourage that type of activity, so before the next tenants move in, I just added a sentence to the lease contract saying that those things are not permitted.

Some of the key components of my lease include:

• tenants are responsible for paying utilities (electricity, gas and water). If the landlord pays any utilities you are encouraging the tenants to be wasteful;
• tenants cannot paint or make any significant changes to the landscaping without permission;
• no smoking is allowed inside the house;
• and, tenants must maintain outdoor plants.

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