Passive Real Estate Investing: How to Have a True \u201cFour Hour\u201d Real Estate Workweek<\/a><\/em><\/p>\nOnce a property is listed, it can be on auto-pilot, and you can collect your commission from Tahiti, but what about the next listing, or the listing ten years from now?<\/p>\n
Property development can be great.\u00a0 Take a piece of property, subdivide it, and sell the lots.\u00a0 Maybe even coordinate with a builder and get some homes built on the lots, and get even a larger piece of the pie.<\/p>\n
There are some hoops that need to be jumped through, and some initial investment, but selling a no-maintenance lot once a year can generate some solid income \u2013 that is until the land runs out.\u00a0 Unless you saved a large chunk of the earnings in an investment account, you still need to get the next deal.<\/p>\n
The Importance of Saving Money<\/h2>\n
In all the above cases, unless you have been diligent in saving your money, you still need to complete more deals to generate lifetime income.\u00a0 If you want to slow down, you need a sizeable amount of money in a retirement account that you can draw from.<\/p>\n
Assuming the 4% rule, if you want to have $4,000 per month or $48,000 per year, you need about $1,200,000 in your accounts to generate that much income.\u00a0 That is a large chunk of change, and some people would say an impossible amount.\u00a0 In reality it is very realistic amount, and can be done, but there are easier ways.\u00a0 And $48,000 a year is not a lot of money.<\/p>\n
Long term real estate investors purchase rental property, and rental income is generally forever, or at least as long as you want it.\u00a0 If you want your rental properties to generate $48,000 in income, you need to invest considerably less than $1.2M.<\/p>\n
If have purchased correctly, you may be getting a 15% cash-on-cash return.\u00a0 That is, you only need $320,000 invested to get the same amount of annual income.<\/p>\n
In addition to the cash flow of a rental, some people manage their own property, and save every last dime.\u00a0 Some do their own maintenance on their rentals, either out of a sense of satisfaction, or a way to save additional money.<\/p>\n
They do this to build up their equity, and establish a separate passive income stream faster.\u00a0 They can use this extra money to get their next rental.<\/p>\n
Managing and maintenance jobs can be done by anyone, but it\u2019s your property, and you can hire yourself to do many of the tasks if you want.\u00a0 You do not need to work at Target for $8 an hour; you can hire yourself for $50 an hour.<\/p>\n
What Saving Can Do for You<\/h2>\n
This should be extra income, on top of your 15% cash-on-cash return, and not the way you make money on your rental.<\/p>\n
You need to be able to leave those jobs too, if you want to.\u00a0 With enough passive income, you can hire an employee, or hire a company.\u00a0 It\u2019s your choice.<\/p>\n
If you are using rental income for retirement, be sure to allocate at least 45% to 50% of your rents for expenses, not including your mortgage payment.\u00a0 In this 50% amount, assume at least 10% of your rents will be allocated for maintenance.\u00a0 If you do not spend it on the rental, put it in a reserve account.<\/p>\n
Many investors mistake deferred maintenance for profit.\u00a0 At some point, this comes back to haunt them; and it opens up a new opportunity to a different investor.\u00a0 If you have an older building, it is not unusual to spend 20% of your rents refurbishing your property until it is back in solid condition.<\/p>\n
Once you have a solid passive income going, you can then relax.\u00a0 There is no need to continually chase deals, but if deals come your way, you can grab them.\u00a0 You can retire early, or keep going.\u00a0 You can spend it all, or leave a legacy.\u00a0 You can do whatever work you want, or not do any work.\u00a0 But if you never set your end goals, you will never achieve them.<\/p>\n
What is your end goal in the Real Estate game?<\/em><\/p>\nBe sure to leave your comments below!<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"At some point, we all look forward to that time we can spend on the beach, in a hammock, or even working until you drop over dead. Most people want […]<\/p>\n","protected":false},"author":1634,"featured_media":59353,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5524],"tags":[],"class_list":["post-59091","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-investing-for-beginners"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/59091","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\/1634"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=59091"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/59091\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/59353"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=59091"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=59091"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=59091"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}