3 Really Simple Qualities of Attractive Passive Investments
Suppose you start out investing as a spring-chicken. In that case, you may be excited to dive into scrubbing moldy cabinets, exterminating bug-infested corners, painting, repainting, and installing sheetrock until your arms are weak with exhaustion.
The truth is, the hustle and bustle of real estate are fascinating, and it's thrilling to be a part of it all. Investing in real estate provides experience in both the finance side and the construction side of things. But after a while, you may begin to feel like you need a simpler option.
As we get older, we want life to be less complicated and more thrilling. We want to ride in a hot air balloon, see the Northern Lights or go on Safari. So, to continue to provide good quality housing for people, I've had to adjust my approach.
Simply put, I want low effort, low-risk projects that provide cash flow so I can spend my energy knocking off the bucket list. Hey, if you can dream it, you can do it.
#1 - Low Effort
The investment trait that's the most important to me these days is that the effort required from my end is low.
Traveling to far off places means being away for extended periods. It also means being unavailable to deal with tenant applications and maintenance requests.
I've heard horror stories of tenants on the verge of eviction purposely clogging sinks and leaving the water running. You better believe that translates to piles of insurance and repair paperwork to sort through. When it's time to catch the next tour, I never want to have to say, "Sorry, I can't go, I have all this insurance paperwork to do."
Therefore, an investment opportunity must rank low on the required effort scale.
#2 - Low Risk
Investments are like a playing piece in a giant game of Jenga. The whole thing topples over in a certain amount of time (the market cycle), and then you can re-stack the pieces and play again.
When will the Jenga blocks begin to teeter so much that they crash?
The tower is still standing, and many people like to speculate, but no one knows how much time we have until the next market cycle will come around.
I want to position my portfolio such that I'm accounting for the possibility of that tumble. Thus, low risk is another main priority.
#3- Cash Flow
Gamblers spend hours, sometimes days, at the casino, hoping to hit it big. More often than not, they come home empty-handed.
In an extremely opposite manner, investing for cash flow is my game. I want my investments to cashflow as-is, before improvements.
That way, if the Jenga blocks do tumble, I know that the investment will stay afloat until the tower gets built again.
Appreciation is great, but I want to be able to sleep soundly, knowing that I can count on the cash flow.
Investing passively in real estate syndications has met my low effort, low risk, and positive cash flow requirements.
I like the idea of having an experienced team in place working the renovations and following the business plan on my behalf. They do the tough stuff while I receive regular cash flow checks, tax benefits, and progress updates. Meanwhile, I have all the time in the world to knock off my bucket list.
Passive investing wouldn't have made sense for me as a spring chicken. I was way too excited to roll up my sleeves and get my hands dirty on a fixer-upper. But now? The girl's trips are much more valuable.
At this stage of life, investing passively in real estate syndications that are low risk, low effort, and provide cash flow, allows me to have time freedom while simultaneously building wealth. It's not a get-rich-quick strategy, but I'll be so happy to know that I can make the best of my time while also focusing on my financial future.
That's what it's all about, right?