Can passive real estate investments really help you retire? The answer is most definitely, but it’s not likely to become a “get rich quick” plan, unless you’ve got a substantial amount of money to invest right off the bat. To understand how passive real estate investments can help though, it’s important to take a look at what has happened in the past, and how that has informed the present in terms of investing.
A generation or two ago, it was pretty much a given that around the age of 60 - give or take a few years - people would retire from their jobs and live out the rest of their lives in leisure. Heck, there are large parts of Florida populated with seasonal residents who have followed that exact life path. Unfortunately, as the “Baby Boomer” generation is rapidly approaching retirement age, many - especially those on the younger end of that generational segment - worry about whether or not their retirement savings will truly be enough to see them through their golden years or they are putting off their plans to retire by an few extra years.
Getting a stable job, owning real estate, and retiring have always been three of the major hallmarks of the “American Dream,” but owning enough real estate to make it your sole retirement plan means that your liquid assets are tied up in property that needs to be sold to have any usable value, or that you’ve got to act as a landlord or developer to see any cash flow on the property. However, passive real estate investments allow savvy investors to sit back, relax, and collect return checks each month as their funds do all of the heavy lifting for them.
What Does Passive Real Estate Investing Mean?
Essentially, passively investing in real estate means that you take your funds and work with an investment company that in turn works with borrowers and developers on various real estate projects. These borrowers and developers are typically either developing land from scratch for residential or commercial purposes, or renovating existing properties to then sell (fix-and-flip) at a profit.
How Would It Help Me Retire?
Once you’ve made the decision to invest your funds in real estate, you’ll be able to enjoy the luxury of sitting back and collecting a return check every month while the heavy lifting - rent collection, construction management, marketing and sales, etc. - are all handled by either the borrowers/developers or, in some cases, by the lending firms themselves. These returns are generated by either the profits from the sale of the property, or from the income derived by rent collections. It may seem like there would be no way to sustain the return checks, however private lenders like Walnut Street Finance are savvy and they’ve got funds invested in multiple projects at any given time. Your initial funds are therefore constantly being reinvested into new projects. Additionally, your funds aren’t all invested into one project, but split across multiple projects to ensure that should one project face a setback, your overall investment isn’t negatively impacted.
Interested in learning more about passive real estate investments with Walnut Street Finance? Take a look at our Executive Summary and then get in touch.