this approach<\/a>, an investor would invest in syndications, real estate investment trust, or apartment buildings that are totally passive. People can do this, especially people who are higher income earners. It\u2019s a perfect option for those who don\u2019t want to solve the problems of an individual asset.<\/p>\nSay, for example, you had an upfront investment of $100,000 by using your IRA. If you invested $50,000, you\u2019d make about $1,250 in passive income per quarter. Once that property is totally stabilized and refinanced, you can typically expect to make an additional percentage return on your investment until that property is sold.<\/p>\n
Although it\u2019s not hitting your $5,000 per month in cash flow immediately, as you do those syndications, they do snowball over time. So, I can take my initial $50,000 investment and the $5,000 I made that year in passive income and keep rolling the interest into the deal. Though the initial return was only one-tenth of the goal for passive income, using this strategy over 10 years could literally mean $10,000 per month in passive income.<\/p>\n
If you’re a super saver or you have a high net worth, this could absolutely be a great option. The only downside is if the general partner who manages the syndication decides to sell, you’re not really in control of that decision.<\/p>\n
You would have whatever gain is built into the deal (make sure to underwrite every deal specifically), but you wouldn’t have control. You also don’t have the same tax benefits as owning individual real estate investments, of course. So, there are definitely elements to consider here.<\/p>\n
<\/p>\n
Strategy #3: Investment Property Scaling with Turnkey or BRRRR<\/h2>\n
Ideal for:<\/strong>\u00a0Real estate investors who are more active in their investing or who have their own team and understands the risks associated with this strategy.<\/span><\/p>\nIn this example, you can acquire three, four, or five properties in a year, so you really start building up and seeing more significant cash flow in a shorter term. You\u2019re also spending less time in paydown mode and more in growth mode from a position of number of doors. BRRRR is one popular way to achieve passive rental income.<\/p>\n
In this case, an investor can scale more on the cash flow side because there are more doors. If you have 30 to 40 doors making $150 to $200 per month, then you can have cash flow that gets you to that $5,000 per month\u2014an excellent passive income stream. You are at a higher leverage, but you can apply the same idea of taking the one or two lowest performers and selling them, and then paying off the others or using those to purchase more doors for additional income.<\/p>\n
To minimize the time you spend managing and searching for rental real estate, considering hiring a property manager or a property management company. They can handle things like listing your properties and turning them over between tenants. Your real estate agent can also help you scope out potential investment opportunities. After all, growing your taxable income with this strategy will require regularly purchasing new income properties.<\/p>\n
Conclusion<\/h2>\n
What does this look like for you? I\u2019d highly recommend you assess the following three things:<\/p>\n
\n- How much capital you bring in each year<\/li>\n
- Your risk tolerance<\/li>\n
- Your capacity (how much time, energy, and effort you can commit)<\/li>\n<\/ol>\n
You should also pay close attention to your real estate market and discuss your strategy with your real estate agent. They’ll have a good idea what strategies lead to long-term wealth in your metropolitan area.<\/p>\n
Next, make sure you have a clearly defined goal and be honest with yourself about how badly you want to get to that goal.<\/p>\n
We all know people who over a few years have acquired incredible portfolios, and we also know people who are still underwriting one or two opportunities months after being presented the deal. Everyone has different ideas of what they want their portfolio to look like, but no matter what that is, this fact is true: The clearer the vision, the clearer the outcome, the clearer the path to get there.<\/p>\n
I tell my team this all the time. There are two things you can\u2019t get back: time and experience. Don\u2019t let those two things go to waste in your life. Make a plan. Outline the steps. And get after it. It\u2019s time for action.<\/p>\n
<\/p>\n
What approaches have you found the most effective on your investing journey?<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"Real estate investing is a marathon, not a sprint. Increase your passive income by utilizing smart real estate strategies.<\/p>\n","protected":false},"author":1678,"featured_media":113672,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7363],"tags":[],"class_list":["post-127890","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-reits-passive-investing"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/127890","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/1678"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=127890"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/127890\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/113672"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=127890"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=127890"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=127890"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}