My New 2.5 Million Dollar Retirement Strategy

I don't think most people understand the power of compounding interest. Anyone that has a mortgage or has actually looked at their Truth in Lending Statement should know. Banks make a ton of oney from mortgages. I've decided to become my own bank. I want to use the same strategy the banks use to make all that money. How can I do this? I need to own a home free and clear without a mortgage. I have an IRA. Can I use my IRA funds to buy an investment property? Yes, if you make your IRA self-directed.
There is the key. Most people do not know they can self-direct their own IRA's. Here's what I've decided to do. I am a Real Estate investor, I'm going to find deals that I can invest my IRA into and have my IRA act as the bank. I have 3 children and the fourth due any day. I want to retire in 17 years. How do I get there.
I'm going to take $180,000 of IRA funds ($90,000 from mine, $90,000 from my wife's) and invest in six rental properties. Affordable housing is always in demand, I can find brick 3 bedroom homes in Atlanta for under $20,000, add in the rehab and I can be in ready to rent for right at $30,000. I find deals like this every day. Most people do not believe me, but they are there. These homes will rent Section 8 for around $850 per month. After taxes, insurance, property management and vacancy I will cash flow approximately $600 per month per home. That money goes directly from my property manager back into my IRA. Once in the IRA, I reinvest the money into a growth mutual fund.
How to we get to $2,500,000? We're investing in the homes for $30,000. These homes sold for between $80,000-$120,000 5 years ago. I look 5 years back, because that is before there was any talk of a "bubble." I think it is a fair assumption, that in 17 years from now they will be worth at least that, we'll use $100,000. Six homes 100k each, we'll sell the homes for $600,000. What about the monthly rent we've been investing in the growth mutual fund? Historically these funds average 12% growth per year. I've decided to be a little conservative and go with 10%. We've invested on average $3600 per month ( 6 homes with an average cash flow of $600 per month). Over 17 years, assuming the 10% growth rate, that would be $1,926,684.28. Add the two together and presto, $2,526,684.28. Properly invested with a conservative return of 5%, that would produce around $126,000 of income annually. I would be able to live with that.
Keep in mind, I've assumed rent will stay the same and also assumed the homes will only be worth what they were 5 years ago. Rent typically goes up, and historically home values will rise over time.
For comparison, if I left the $180,000 in the IRA's, assumed a 10% return over the next 17 years, it would grow to be $909,804.65. That is a good amount as well, but I would rather have the 2.5 mil.
Why wouldn't you make this kind of investment? In this scenario, we are taking advantage of the depressed Real Estate market and using the cash flow from it to invest in the stock market. Your retirement will be growing in Real Estate and stocks. Traditionally both have performed very well. There is a great opportunity to to really grow your wealth in today's market. Those who take advantage of these investment opportunities and properly leverage their cash flow will be sittng pretty in years to come.