Practical Investment Research
Conclusions suggest
Five-Year Plan for Financial Independence

Practical investment research is suggesting that a professionally managed rental portfolio is still the best wealth builder for most people. A five-year plan for financial independence was tested in the crucible of business transaction over a 20 year period by the Tactical Research Group of Arlington, Texas.

The effectiveness of the plan was replicated many times by students and associates of the Group. One of the main benefits of the investment research is a mechanism for overcoming the widespread failure to engage in personal financial planning.

It doesn’t take a lot of investment research to figure out that 95% of Americans die broke. It’s not for want of effort because most Americans are hard working and the average person earns over a million dollars in his or her lifetime.

But somehow the vast majority allow that fortune to slip through their fingers without conserving a dime. They die at or near the poverty level with no real wealth accumulated to serve their needs or pass on to their heirs. They’ve squandered the opportunity of a lifetime in the wealthiest country on the face of the globe in spite of the investment research available to them.

For one thing, too many have bought into the government’s promise of cradle to the grave security. They have traded true wealth and freedom for the government’s empty promise of Social Security in their old age. As a result the golden years turn out to be anything but golden.

Thus, the problem is not failure to work, the problem is lack of personal financial planning -- and misplaced trust. Our purpose is to show you how it’s almost never too late to reverse this sad trend and achieve debt freedom based on sound investment research.

In just five years you can put in place a strategy for creating a stream of passive income and lasting wealth in your retirement years. Based on our personal investment research we see a lot to recommend in this plan. It’s a wealth builder that can result in debt freedom.

What the Rich Have In Common

How is that possible? An investment research study was once conducted of the super-rich to try and determine if they held any characteristics in common. In one respect the study was disappointing. There seemed to be no common character traits that correlated with great wealth. Some were conservative, others were risk-takers. Some were generous, others were stingy. Some played the markets, others did not.

There was only one thing that wealthy people seemed to hold in common. What was it? Real estate. Yes, real estate! Almost all of the affluent have learned how to conserve and multiply their resources through real estate.

It is a skill that you too can master with a little knowledge and a lot of determination. That is the key. Determination to declare your financial independence. If you are willing to do what others are not for the next two years, you can do whatever you want for the next 20. The plan itself is relatively simple.

Other studies have identified these as two other characteristics the wealthy hold in common. Determination and a vision of the future. Most Americans live paycheck to paycheck. Their vision of the future extends no further than the end of the month and how they will pay the looming bills. The wealthy see the big picture.

There are basically six steps to financial independence. The first step is to adopt the mindset above. The remaining practical steps on how to build financial independence are described below.

A Five-Year Plan for Financial Independence

The five-year plan is contingent on purchase of one rental property every year for five straight years. Each year the cash flow from all properties is applied to the principle of the first property, which will thus be paid off early in just 7 years and 9 months.

The entire rental income from the first property ($523) is then added to the total cash flow ($831) to yield a total monthly payment of $1,354 applied to the second property. At this rate the second property is paid off in just 12 years and 9 months.

The process continues until the fifth property is paid off after just 19 years and 8 months. At that point the landlord would be pocketing $5,965 per month, even after allowing for a 35% expense factor, assuming he had raised the rent a nominal 2% a year. For most people that would complete their six steps to financial independence – the point at which total passive income equals or exceeds total expenses.

Property	Price	Mortgage	Rent	Cash Flow	Early Pay Down
SFH	$83K	$523	$850	$128	$831x12=$9,972
2-PLEX	$130K	$130K	$1,300	$135	$1,354x12=$16,248
SFH	$85K	$535	$850	$89	$2,172x12=$26,064
4-PLEX	$194K	$1,221	$2,040	$346	$2,707x12=$32,484
SFH	$90K	$567	$925	$133	$3,928x12=$47,136

Note: copyrighted information supplied by tactical real estate.com, Arlington, Texas.

The key to the plan is purchasing the right property, in the right market, for the right price, with the right management. The key to doing that is a little knowledge and a lot of discipline. This is like playing Monoply in real life. You start small, collect rent, buy more property, and pay off the bank.

Thus, personal financial planning, coupled with savvy investment research, can quickly lead to debt freedom. The five-year plan is based on sound investment research and is well within the grasp of the average investor. It is a true wealth builder, not a house of cards based on paper.

The amazing thing is that the plan can be accelerated the more properties that are added to the mix. For example, if two properties were purchased every year they could all be paid off in about ten years under this plan.

Priming the Pump

The Kingston Trio used to sing about an old pump house in the Nevada Desert. The shack contained an old hand-crank pump with a jug of water and a note of instruction for the wandering cowboy, dying of thirst.

The cowboy was given a choice. He could gulp down the water and prolong his life for perhaps a few more hours. Or he could pour the water down the well to prime the pump. If he did the latter, he was assured of having all the refreshing, cool water he could drink. What would you do? The words went like this:

You've got to prime the pump,
You must have faith and believe,
But leave a bottle full for others,
Thank you kindly, Desert Pete.

For each of us there comes a similar choice in life. It may come early or it may come late. We are asked to give up something we desperately want or need, believing that God will give back more than we gave up. It is a test of faith although it may be backed up by sound investment research.

Many times an old, ugly house that is paid off or almost paid off can be all it takes to prime the pump. It may take a step of faith to sell that old house, especially at a price below market to free up the capital it takes to prime the pump. That capital can then be applied to a substantial down payment on a property in a strategically selected area. An area in which property values are still going up at an accelerated rate of appreciation.

Does that mean I’ll have to purchase property outside my own home town? It very well could. Isn’t that dangerous? Not necessarily. It may even mean that selling low-yield property close to home will make sense as a strategy to gaining a strong foothold out of town. This is such an important topic that we’ve devoted an entire page just to the question of investing in real estate out-of-state. This is another area where investment research is often counter-intuitive. Here again the key is personal financial planning.

Return From Investment Research to Sell This Old House