Should Real Estate Investment Be Part of Your Retirement Plan?

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Are you familiar with “passive income”?

According to Wikipedia, passive income is defined as income resulting from cash flow received on a regular basis, requiring minimal to no effort by the recipient to maintain it.

It wasn’t until the last four years or so that the phrase “passive income” entered my awareness. Sure, I had an IRA, but the income generated from that is called portfolio income. Secondly, the traditional income we know well is called active income—we put in time and energy to earn wages. The whole passive side of earning didn’t really make a dent in my financial goals until recently. (This didn’t come as a surprise to me since I am always one or two seasons off in my wardrobe styles.)

For a business owner, passive income comes in the form of revenue from book sales, selling online courses, affiliate marketing and other income-generating ideas related to a business. The other side of passive income typically results from rental property income in which the earner does not materially participate. Instead, the earner offers an investment of money which in turn helps the property managers purchase, operate, and maintain a property.

The purpose of passive income is to make your money work harder for you rather than you working harder for the money.

Many Baby Boomers and Generation Xers have started to build a “nest egg” however, few have enough money to live comfortably and to the fullest while caring for parents, children, grandchildren, and also themselves. There is great concern on whether there will be enough money available for retirement and those within the “sandwich generation” are looking for additional streams of income.  Therefore, passive income from rental property investments is an option to consider for your retirement plan.

Yet, the process can be confusing. On one side of the rental property coin, the practice is to buy a property, fix it up, “flip” it, then find tenants who would pay rent or to sell it. Plus, the belief is one would need a massive amount of time and money to get the process started. Unfortunately, this common vision is not within the area of expertise, financial possibilities, nor time availability for many people.

The good news: there is an easier, less time-consuming alternative. As I dug deeper into passive income through real estate, I located Goodegg Investments. This business, established in May 2018, provides answers, education, and opportunities for passive income opportunities through a process called real estate syndication. What this means is the team at Goodegg Investments partners with investors in the purchase of large apartment buildings and provides investors with passive income.

This video explains it well:

And if you want to learn more, the Goodegg Investment team created an excellent course, called the Passive Real Estate Investor Academy (PREIA), to help you learn what you need to know.

The result: your contribution is an investment into apartment buildings. Goodegg’s role is to identify the partners and the market, and then partner with investors to purchase the buildings. Goodegg searches for investments in markets that offer:

• Job and industry growth
• Population growth
• Diversity
• Landlord/property manager friendly
• Companies with positive track records.

Their ongoing research then presents future investors with options for rental property opportunities.

Here’s what you need to know to invest:

• You must be an accredited investor. This means you must have $1 million in net worth, not counting your primary home.

OR

• You make $200,000/year as an individual or $300,000/year joint with a spouse, and have done so for the last 2 years and intend to do so for the foreseeable future.

Your minimum investment is $50,000.

What to expect:

• Distributions start at 30 to 60 days after closing on a select property
• Income streams are generated in a short amount of time

Additional considerations:

• Can be used as an alternative to a savings account
• May be utilized as a way to save for a child or grandchild’s education
• Not a good choice for someone who is afraid of real estate investing
• This is a long-term “savings” plan, meaning your initial investment will not be returned until they either refinances or sells the property, which usually happens 2 to 5 years later
• This form of real estate investment results in passive income as well as passive involvement in the process; you are a silent partner
• Not meant to offer control over the investment or to be active in the real estate operations.
• ROI is not guaranteed but an 8% preferred return is offered
• Your investment is used to make a down payment on a property, take care of needed repairs, and build up reserves for emergencies
• For older investors, this could contribute to an additional income stream to social security and pension checks

The best part of this form of investment is it offers diversification to your income streams with minimal involvement. And for busy parents and grandparents, you’ll appreciate having your money do all the hard work!

Are you ready for passive income streams?

Kristen Edens

feature image photo by Mikes Photos from Pexels