Here’s Why You Need to Set Up Passive Income Now

Here’s Why You Need to Set Up Passive Income Now

2 min read
Sterling White

Sterling White is a multifamily investor, specializing in value-add apartments in Indianapolis and other Midwestern markets. With just under a decade of experience in the real estate industry, Sterling was involved with the management of over $10MM in capital, which is deployed across a $18.9MM real estate portfolio made up of multifamily apartments. Through the company he founded, Sonder Investment Group, he owns just under 400 units.

Experience
Sterling is a seasoned real estate investor, philanthropist, speaker, host, mentor, and former world record attemptee, who was born and raised in Indianapolis. He is the author of the renowned book From Zero to 400 Units and the host of a phenomenal podcast, which hit the No. 1 spot on The Real Estate Experience Podcast‘s list of best shows in the investing category.

Living and breathing real estate since 2009, Sterling currently owns multiple businesses related to real estate, including Sterling White Enterprises, Sonder Investment Group, and other investment partnerships. Throughout the span of a decade, he has contributed to helping others become successful in the real estate industry. In addition, he has been directly involved with both buying and selling over 100 single family homes.

Sterling’s primary specialities include sales, marketing, crowdfunding, buy and hold investing, investment properties, and many more.

He was featured on the BiggerPockets Podcast episode #308 and has been contributing content to BiggerPockets since 2014, with over 200 posts on topics ranging from single family investing and apartment investing to mindset and scaling a business online. He has been featured on multiple other podcasts, too.

When he isn’t immersed in the real world, Sterling likes reading motivational books, including Maverick Mindset by Doug Hall, As a Man Thinketh by James Allen, and Sell or Be Sold by Grant Cardone.

As a thrill-seeker with an evident fear of heights, he somehow managed to jump off of a 65-foot cliff into deep water without flinching. (Okay, maybe a little bit…) Sterling is also an avid kale-eating traveller, but nothing is more important to him than family. His unusual habit is bird-watching, which he discovered he truly enjoyed during an Ornithology class from his college days.

Education
Sterling attended the University of Indianapolis.

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Why is passive income such a big deal?

In general, there is a lot more of awareness (and talk) of passive income — and passive-income producing investments — than there used to be. Yet, many people still don’t fully appreciate the critical benefits it provides — and the urgent need for it. Why is it so important? Why is it so vital to lock in as early as possible? Here’s why:

Changing Income Dynamics

Passive income changes the dynamics of your income and expenses. Passive-income investments aren’t just for later on, for retirement, or the extreme long term. Generating additional income now elevates earning potential, and that can turn the tide in your favor when you go to balance your bank account each month. It can help you find the finances to both pay the bills and live a little.

Related: How to Make $5,000/Month in Passive Income Using Real Estate: A Case Study

Income When You Can’t Work

Most accept that there will come a day when they will need to retire. At that point, passive income is a must for covering living expenses. Yet, we never really know how soon that day will come. Almost 70 percent of the U.S. population stops working by the time they are 65 years old. Many retire much earlier, which may become more popular as tech replaces more and more jobs. At some point, all of us will probably need time off work due to health issues, injuries, or family emergencies. How will you keep the money coming in during these down periods? Passive income can close that gap and deliver money while you are sleeping.

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Tax Benefits

Real estate comes with many organic tax benefits, breaks, and write-offs. However, once you get started, you’ll realize that active income from real estate (i.e. flipping houses) can be taxed at very high rates. Tax rates on passive income and long-term capital gains can be much lower, which makes a big difference in net gains. Buy-and-hold investors can also use vehicles like 1031 exchanges and self-directed retirement accounts to pay even less taxes.

Freedom

Life is short. Studying and working for 65 years in the hopes of surviving in retirement doesn’t make for much of a life. Unfortunately, most people have less than $100,000 in their savings as retirement rolls around. It is very difficult to retire and live comfortably with such a small amount of cash. Passive income means you’ll be able to live, travel, and spend your time wherever you like — without being tied to an expensive location or commute for one of those old-school jobs.

Related: The Part-Time Investor’s Guide to Truly Passive Rental Income

Succession Planning

Passive income is a great succession planning tool. Many wealthy individuals are more interested in passing their income on to support their heirs, rather than stockpiling a big nest egg that they may wind up blowing.

Summary

Securing and generating passive income is important and necessary. However, not all opportunities and investments that claim to create passive income really do (like being a DIY landlord). Make sure you look for truly passive investments. 

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How do you achieve passive income? Let me know in the comments below!