[Editor] Our featured partner for this post is Trion Properties, a private equity investment company focused on maximizing investor returns by increasing net operating income throughout the holding period. Enjoy!
With so many different investment opportunities available, a lot of people wonder if real estate is really worth the effort. I hear it all the time, “If I can get 7-10% a year investing in index funds, why even bother with real estate investing?”
It’s a legitimate question and it typically evolves into a stocks vs. real estate discussion. But that’s not where this post will go. Personally I think there’s a place for both, however I have 75-80% of my net worth invested in real estate.
I know it can feel like there’s a lot to learn when it comes to real estate investing. However, in order to create monthly passive cash flow (that can buy your time back), it will always take an upfront investment of time, energy, or money. Perhaps all three.
But once it gets going, the investment is well worth whatever it took to make it happen.
Passive Income is Worth It
What’s your ultimate goal? Is it to sacrifice 20-30 years to hopefully be able to enjoy the next 20-30 years? When I talk to a good number of physicians this tends to be the mindset.
Or do you want to create your ideal life now and enjoy the most life has to offer at any given moment?
If your goal is the latter, I believe the only way to make that possible is by creating passive streams of income other than by hitting the lottery.
Real estate investing is one of the best ways to create those passive income streams. Sure, I’ve put in some time to make that happen but that time is far outweighed by the return on my investments.
Passive income has absolutely allowed me to take back control of my time.
It’s also given me and my family a level of security that my career in medicine can’t. Things happen and nothing in life is ever guaranteed.
Any one of our circumstances could change in a heartbeat, and having extra income streams in the face of that realization gives me peace of mind. I know I can still care for my family if things in my life were to drastically change for whatever reason.
Real Estate Investment Doesn’t Always Mean Being a Landlord
So I know what you’re thinking, I don’t want to deal with the double T’s of real estate that seem to suck time and energy – Toilets and Tenants.
Well, if you’re like me and feel your time is too valuable to spend it answering the calls of tenants at all hours, there are plenty of real estate investments out there that don’t require you to be a landlord.
These options are:
- Real Estate
- To name a few…
Here’s Why Real Estate is Definitely Worth It
There are multiple ways to make money
When real estate naysayers quote returns, they typically only consider a portion of the possible returns – price appreciation. In reality there are multiple ways that real estate investors make money and why you can multiply your returns significantly.
Appreciation – There aren’t very many things that we’ll buy in our lifetimes that will likely increase in value for as long as we own them as long as we make a sound investment to start with. Think about it. You buy a car, and its value has taken a huge hit the second you drive off the lot. That’s not the case with real estate. As long as you take the time to vet a deal, a property, and the market well, the odds of coming out ahead are in your favor.
Cash Flow – In addition to the value of the property increasing over time, because of the nature of owning real estate, whether it’s through direct ownership or through a passive investment in a syndication or fund, the end product is typically monthly or quarterly cash flow. It’s this cash flow that allows you to decide how you want to live your life. That’s what having another income stream can do for you.
Tax Benefits – Quick, would you rather pay a dollar less in taxes or make an extra dollar in returns. Well, depending on how you’re taxed for those returns, saving on those taxes might end up being a better deal. Real Estate investing can be one of the best ways to invest in a tax efficient manner. Just ask all those real estate investors that have been able to defer paying taxes while still getting monthly cash flow.
It Can Be What You Need it to Be
Versatility is one of the best parts of investing in real estate. You don’t have to be the landlord on TV that shows up with her toolbox to fix the pipes in the middle of the night. Your time and energy investment is entirely up to you, and you can adjust that by managing your properties and/or investing in real estate in different ways.
Say you want to invest in real property, but you don’t have any desire to be a landlord in any capacity. Maybe you don’t want to be responsible for a property or any of the decisions that go along with owning one at all. Syndication or a REIT might be the right choice for you.
Maybe you’re okay with being a landlord, but it’s not worth the time you’d spend taking care of all the “landlord things”. You can hire a property manager.
The many ways to invest in real estate investment means you can be as hands-on or as hands-off as you want to be. You can go big and make a large investment in a whole property or you can dip your little toe into the pool through crowdfunding or syndication and see how it feels for you first. There are so many ways to tailor your investment strategy to your needs.
You Can Learn it at Your Pace
One of the best parts about real estate investment is that you don’t need a college degree to get the job done, and there is a TON of information available out there for you to take in at your own pace.
There are so many amazing resources out there including books, conferences, and courses (like our very own Passive Real Estate Academy). There are books and websites dedicated to helping people learn all about real estate investment so they can create passive income streams that allow them to live life the way they always dreamed of.
I will say that educating yourself and how to invest well will be the best investment you ever made. You want to make sure you know how to do the proper due diligence before you invest your hard earned money.
Successful real estate investment also requires continuous education since the market is always changing and each new property or deal should be carefully considered. Luckily, there are so many networking opportunities like conferences and online groups where you can find support and ask questions to build your real estate knowledge base.
So is it worth it?
Is it worth the time and the money and the effort and the risk? If you’re looking to create passive income that can impact the way you live today…absolutely.