What Is Passive Income Through Real Estate?...
Passive income is an incredible tool that everyone should include in their retirement plans. With traditional investing you have to rely on the stock market to increase your investments over time. Normally, the longer you have your money invested, the more your money will grow. The stock market does not produce passive income, except in the form of dividends.
Typically, most dividends are extremely small and produce small returns on investment. The bulk of stock market returns come from an increase in stock market prices. The only way to realize those increase in values is to sell stock. Retirement calculators that use the stock market as an investment plan on you running out of money when you die because you have to sell all your investments to keep bringing money in.
The great part about creating truly passive income is the money comes in every month without you having to sell your investment or worry about running out of money when you retire. The returns are also typically better with rental properties, because the cash flow produces a much higher percentage as cash on cash return. That does not include equity pay down on the loan, anticipated appreciation, and depreciation on the asset. Appreciation on rental properties is a usually a bonus, but stock market investors depend on it.
Creating passive income is one of the most important steps towards retirement. However, the sooner you begin, usually the better the pay off. Passive income is money that comes in without any work from you. Stock dividends, rental property income, interest on notes are all forms of passive income. Truly passive income is almost impossible to achieve, because every investment involves some sort of work.
However, there are different levels of work, and can be minimized. Stocks are fairly easy to buy, but still require research, while real estate is more difficult to buy, but usually produces much higher returns. For the busy professional, who wants to put their money to work but simply doesn’t have the time, we have the solution for that as well. Much will depend also on your exit stategy. That is, do you wish to Buy & Hold, or Flip for a faster return of capital. The old saying comes to mind, “you get out of it, what you put into it.” Our distinct preference is to work with “Accredited Investors”. However, we will review others with interest on a case-by-case basis.
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