Throughout adulthood, I’ve committed plenty of the common financial mistakes—spending more than I make, charging items I cannot afford, saving minimal to nothing, etc. Almost any financial mistake you can think of, I made it says Wayne Connell |

It took me until I was almost 40 to figure it out. If it were not for forced retirement savings through my employer, I would have little to show for the bulk of my life’s earnings.

While all those decisions put me behind the “retirement eight ball,” they also led me to explore ways to supplement the amount I’d saved. This is how I landed on real estate as a means to fund my retirement. Utilizing my investigative skills as a law enforcement officer, I looked into several different ways that real estate could play a role in my future plans.

Sure, all the real estate flipping shows on TV make it look easy and foolproof. But in reality, I found that much of the focus on high-end finishes—those that command the highest return—do not bode well here in central Nebraska. Functionality is a premium over granite countertops, and luxury vinyl plank flooring is preferred over hardwood or travertine tile. As such, it immediately became evident that flipping houses was not the best way for me to get into real estate.

During the due diligence phase of my research, I found BiggerPockets’ podcasts and quickly became hooked. The information presented by Joshua Dorkin, Brandon Turner, and David Greene was concise, logical, and well articulated, as was the advice of numerous podcast guests who had years of practical experience.

Traditional Real Estate Investing Advice

I found that the general consensus was to purchase residential investment property (either single or multifamily homes) and then determine if the property would cash flow an amount that would pay for all expenses—both fixed and future—plus an additional $100 to $200 per door per month profit (minimum). Once these types of properties were located, investors were encouraged to obtain a preferred 30-year mortgage to fund the purchase.

Properties could be purchased locally or out of state, and using a property manager to oversee rentals that couldn’t be owner-operated was advised. For me, I concluded that buy and hold real estate was the appropriate avenue toward achieving my goals.

In spite of my past financial blunders, I had been able to pay off almost all of my debt, including vehicles and credit cards. The only debt I still owed was on my house and some lingering school loans.

I threw approximately $350 extra toward the principal on my house each month, which I paid $72,000 for in 2005 and put another $20,000 into. As a result, I had a large amount of equity in it.

Again, I live in central Nebraska. I have realized that small-town America is one of the most overlooked investment locations. So this all sounded exceptionally logical and like exactly what I was looking for—that is, until I began to more closely examine my goals.

How & Why My Investing Path Differs

My twin brother and I decided to team up in our real estate endeavor, as we both had the same end goal in mind: to be debt-free and able to fully retire by age 65. We wanted to be able to utilize cash flow from rental property or slowly sell off our portfolio to supplement our retirement and fund various other projects.

We live simply, and with our personal residences paid for and no debt by retirement age, we determined that 20 properties—or 10 each—would suffice to pay for projected expenses and to financially help our kids and other family members (something that is important to us).

Since we wanted to keep our investments free and clear by age 65, we determined 30-year notes would not fit into our business model. As of then we were 45, so we would’ve been 75 by the time the property debt was retired—something we did not want to have to deal with for that many years.

Yes, I know, many of you may be saying that a 30-year note is safer. And if we wanted them paid off sooner, it’s simple. All we’d have to do is put more toward the principal each month. This would also allow us to have the security of a lower payment while keeping the flexibility of increased payments to pay the note down faster.

However, I have discovered one of two things happens: either you do not put any extra toward the principal, or if you do, you are essentially paying the same as if you had acquired a 15-year note and your “cash flow” is still gone.

Before I go further, I want to point out an old saying attributed to Samuel Clemens, better known as Mark Twain. He said, “Figures don’t lie, but liars figure.”

Essentially, figures can be tweaked to say about anything one wants them to say. That being said, I realize that there are many who would argue about why our thought process is wrong and why a 30-year note, the 2 percent rule, cash on cash return, and a multitude of other proven techniques are the only legitimate and safe ways to proceed in real estate.

I agree that, for many, what is commonly pursued by investors is the logical way to go. However, the vast consensus is not the only way. In our situation, we look at our real estate investments as simply a savings account as opposed to looking at them from a cash flow or even an appreciation standpoint.

The Math Behind My Method

For example, for the sake of simple math, say I purchase a duplex for $144,000. I obtain a 15-year note, which means I am paying $800 in principal per month to pay it off in 15 years.

As I said, our goal is to have 10 properties each, or deposit $8,000 per month in “savings.” I make $60,000 a year working my main job, and I have four children. There is no way I can save $2,000 a month—let alone $8,000.

But by using the process I described, at the end of the 15 years, I will have saved (and my brother will also have saved) $1,440,000 using someone else’s money.

That is it. That is how we view real estate investing, as simply a forced savings account. If we can break even on a property on interest, taxes, insurance, vacancies, capital expenditures, and maintenance, we are happy. We do not use any of the cash flow except to put it back into the property or pay down the note (normally there is less than $50 a month).

There is one stipulation to all of this: the investor must have access to capital or a line of credit to pay for unexpected expenses. If not, this method would be tempting fate—and sooner or later, fate would probably win.

One of my core beliefs is that real estate investing is flexible. If I was in my 20s or even early- to mid-30s, I would instead look for properties where the numbers follow mainstream advice. But I squandered those years, financially-speaking.

I am now 48 years old, and the thought of purchasing property on a 30-year note does not appeal to me. This is also the reason I do not invest out of state or even out of my area. I want to see, manage, and maintain my properties myself. I do understand the concept that time is valuable, but I would defer again to the saying by Mark Twain concerning “figures” on this.

I purchased my last two properties from an out-of-state owner who had them “professionally managed.” Numerous basic maintenance issues were overlooked. What did I learn from that? Professionally managed does not necessarily mean well managed.

I have purchased four duplex properties and built a small micro-duplex. All four purchases have been private sales, with three of them owner financed. In all, I have not paid one single dollar out of pocket for the purchases.

I have a line of credit I utilize, as well as collateral when needed. What I want people to understand is that investing later in life is not only possible but logical. For people in their 40s, 50s, or even 60s, investing in real estate can provide a much-needed boost of income for retirement years.

One advantage to investing later in life is the ability to establish lines of credit, or have available collateral, or have available equity in a personal residence. Generally, those who are older have grown out of impulse purchases and the need for all the newest toys or gadgets. We have learned that a vehicle simply gets us from point A to point B and that it does not have to be the latest and greatest model. (My newest vehicle is a 2004.)

Age Is Just a Number—Even in Real Estate Investing

For most people, income from primary employment is sufficient to cover basic living expenses. In our case, having well-established careers allows us to focus on real estate debt service and not cash flow.

I hear time and time again, podcast after podcast, to focus on starting early in life, working hard, and building a portfolio that will allow one to travel the world and collect monthly checks with minimal effort.

This article is for everyone out there like me, who did not do the prudent financial things during their early years of adult life. This is for those who may not become multi-millionaire real estate investors but simply want to obtain property in order to supplement retirement—not completely fund it.

Real estate is flexible enough to be tailored to fit a multitude of individual situations. What is important is not necessarily how much one can cash flow each month. It is finding something that will work in a given situation.

If that means a 30-year note and a property that cash flows $200 per door per month, perfect! If that means a property to self-manage that won’t pay profits for years down the road, and one that may have out-of-pocket costs from time to time, that’s OK! Whatever works in a given situation should be pursued!

Do not sit on the sidelines waiting or playing the “what if” game because of what some real estate expert says is the best way to invest. Find an individual path and begin to walk it.

Now, please do not misunderstand me. I am not advocating for dismissing advice or for not listening to other experienced investors. I am advocating that real estate investing is flexible.

Perhaps buying properties out of state, financing with 30-year notes, and cash flowing enough to stop working is what one wants. A person could even decide to invest in three or four properties at age 50-plus and pay them off in 10 or 15 years by pouring all of the rents back into them. Choose your own adventure.

The end goal in real estate investing should be the focus—not the means of getting there. The real estate path may be the one less traveled; it may be rocky with lots of ups and downs. Just keep on the path, and eventually, you will find your way.

Louis L’Amour said it best: “There’s no stopping a man who knows he’s in the right and keeps a-coming.”