These 9 Reasons Will Give You More Time, Money and Peace Of Mind
You have a 9 to 5 job. It’s demanding and you have a lot of responsibilities. Sometimes you have to travel. Most days you work overtime. You’re a project manager, an engineer, a doctor, or a software developer. You’re a mother or father. You come home tired every night, but you love your job or you could hate it. The moment you’re home, you just want to spend time with your kids or your partner or turn on Netflix. You’re done for the day. But you have a lingering side interest in real estate investing. You want to invest in apartment buildings, but you don’t have the time or energy to do so. You just want to make money while you sleep but how and where do you start?
Consistent and predictable distributions every quarter
One of the advantages of investing in apartment buildings is the cash flow. Every month, apartment buildings produce cash flow through monthly rent. This in return allows investors to enjoy receiving a quarterly distribution that goes straight to their bank account as passive income. Best of all, investors do not have to pay taxes on this consistent passive income.
Like many of you, I worked a 9 to 5 job, didn’t have the time and energy to go out and find the apartments myself. In 2018, I started passively investing in apartment buildings. This way, I was able to work my 9 to 5 job while receiving passive income on the side. After every 4 months, I just wanted to receive my distribution.
Great Tax Benefits
In addition to the quarterly distribution, real estate investors like myself have benefitted from tax reduction when we receive a Schedule K-1 during tax season. As a passive investor in apartment buildings, I’ve been able to reduce my taxes because of the loss in Net Rental Real Estate Income in Part III Box 2 of the Schedule K-1. Remember to always consult with your tax advisors for tax advice.
Investing in the stock market does not help you reduce taxes. If you sell your stocks, you incur a capital gains tax. It doesn’t matter if you’ve held it for a long time or for a short period of time. Either way, you’re taxed by the short-term or long-term capital gains tax. There’s no way around it.
You Don’t Have to Deal with Stock Market Volatility or Uncertainty
The stock market, on the other hand, doesn’t produce cash flow. It is volatile and uncertain. In an economic downturn and with the current pandemic, everyone who has invested in the stock market lost their money overnight. They didn’t have a chance to exit before they lost all their capital. If you’re tired of this, passively investing in apartment buildings is a better investment option.
Renters Realize the Importance of Homes
Speaking of the current pandemic, everyone is working from home. COVID-19 helped people realize how important their homes are. You don’t have to go into the office every day. You don’t have to go to the grocery stores every day. You can order food from Amazon. But you have to live at home every day. So even with a major pandemic that affected the economy, apartment investing is the safer option. Post COVID-19, remote work and working from home will become more prevalent.
You Won’t Have to Deal with Tenants, Toilets or Trash
As a passive real estate investor, you do not deal directly with the hassles of day-to-day management. Clogged toilet? You’ll be sleeping soundly all night because you’re not getting a call at 3am. Leaking ceiling? It’s not your job to call the repairman. During this pandemic, with people staying home 24/7, there’s going to be a lot more wear and tear on the house. Most people during this time are happy being renters since they don’t have to deal with mortgages, clogged pipes and broken fixtures.
You Can Make Money While You Sleep
You won’t just be sleeping soundly all night; you’re also making money while you sleep. Becoming a passive investor is a quick easy process. After you’ve done your due diligence, sign legal paperwork online, and transfer your funds to the operator or general partner, your investment will be processed. You will then become an equity stakeholder in that real estate deal and will start receiving quarterly distribution also known as passive income. Because you’ll be investing in properties with existing tenants, there is existing cash flow and your money is working for you 24/7 from day one.
It’s time to pave your way towards financial freedom. It’s time to put your hard-earned money to work because money sitting in your savings account only earns you pennies. You’ve worked hard all these years so make sure your money is now working hard for you.
Focus on What You’re Good At
On the topic of working, being a passive investor allows you to focus on your day job and do what you’re best at. If you’re a project manager, a doctor, a dentist, an engineer, a software developer, or a single mother who is interested in real estate investing, but works a demanding 9 to 5 job right now, then passively investing in apartment buildings is the solution. You’re interested in apartment investing and have some money to invest, but don’t have the time to find and manage the properties or you fear missing out aka FOMO, then the best way is to find an operator or general partner whom you could trust to invest with. For more detail on what an operator does, check out my other blogs. In general, an operator or general partner controls and manages the property.
Hedge Against Inflation
According to the Federal Reserve, the target inflation rate is 2%. This means every single year, your hard-earned dollar is worth 2% less which means inflation is eating away your savings.
Passively investing in real estate hedges against inflation due to the positive relationship between GDP growth and the demand for real estate. The demand for real estate drives rent to go up and this translates into higher capital values. Thus, real estate tends to maintain the buying power of capital bypassing some of the inflationary pressure on tenants as well as integrating some of the inflationary pressure in the form of capital appreciation.
Recession Proof
Investing in apartment buildings is recession-proof. During an economic downturn, such as the last recession that lasted from December 2007 to June 2009, apartment investing is much safer. If it’s a 20-unit apartment and 3 tenants decided to leave, you still have incoming cash flow from 17 other tenants. If you invest in a single-family and that one tenant leaves, you’re doomed. Also, it takes the same amount of work and time to invest in apartment buildings as it does invest in a single-family.
5 years from today, would you wish you had started passively investing right this moment?
When Should You Consider Investing in a Rental Property?
The great news is you’re one step away from becoming a passive investor in your first deal. Andrew Carnegie, the billionaire industrialist said it best
“More money has been made in real estate than in all industrial investments combined. The wise young wage earner of today invests his [or her] money in real estate.”
-Andrew Carnegie
Take your first step and be one step closer to investing in your first apartment building. The best way to learn is to start passively investing in apartment buildings. Schedule a call with me and let’s begin your journey to financial freedom!