Why Real Estate Investments AREN’T Passive Income

As I said before, real estate has a reputation as being a way to achieve passive income – but it’s not passive income. 

Let me explain why. 

What is passive income?

• Passive income is defined as being largely self-sustaining. 

To most people, this is ideal because it’s essentially a way to generate income without having to put in work. Now, you could look at real estate as passive income if you are 100% hands-off – but even then, it’s still not really passive income. 

In our client roster, we have owners who are 100% hands-off and trust us to manage their rental investment properties. Other people are a little more nervous, maybe due to having a tighter budget or other reasons, and are more involved because they want to see the day-to-day operations or, if not every day, have regular updates and generally be aware of what’s happening with that property. 

We also have people who own 20, 30, or even 40 properties because they do real estate investing for a living. Because it’s their whole job, there are usually a few things these types of owners like to do, such as property maintenance, rehab work, and other construction-based tasks. Again, this circles back to doing something you love and enjoying the work you do – for them, this is the enjoyable part of the business. 

Your level of involvement in your investment is your choice. 

If you’re working on a career or are established in your career and may have become an accidental investor (or even an accidental investor who picked up a second investment property on purpose) then you might not want a higher level of involvement. There is absolutely nothing wrong with that. If you’re making money somewhere that’s satisfying to you, you’re making money, and you just want another way to invest, real estate is a great option. 

Real estate can be a fantastic way to supplement or boost an existing income, it’s a fantastic investment – but I’m going to burst your bubble. Nothing about real estate is a “get rich quick” situation. 

That’s where we come back to the concept of passive income and why real estate is never going to hit that target for anyone. 

Yes, it’s possible to be 100% hands-off as an investor and owner. 

Yes, you can be as involved as you want in this investment. 

You can even change your mind and be less involved now but later, maybe after you retire from the career you loved, more involved with your property. Still, nothing about real estate is going to reliably put money into your pocket, which is what people want to achieve from a true passive income investment. 

Now Is The BEST Time to Invest in Real Estate

As a real estate investor myself, I understand your perspective. I love sharing some of the common challenges and pitfalls most owners and investors who are looking into real estate as an addition to their portfolio – by accident or on purpose – face based on my own experiences. 

One of the biggest challenges is a good thing, but it means you have to adopt strategic thinking to be successful. When I advise people to look for opportunities, I do so knowing that there are lots of shiny objects out there to consider. There is a wealth of opportunity in real estate investments. 

Where are you going to put your focus?

We want to help you develop your personal real estate investment strategy because landlord profitability is a major priority for us. We win when you win. Whether your goal is long-term wealth for your family, a little extra mailbox money to help you fund your retirement, or anything else, we can use our expertise in all areas of the market to help you devise a plan that will work and pay off. 

Our team at ROOST helps owners acquire properties intelligently, and that’s a huge advantage in this bustling, highly-competitive, ever-changing industry. 

If you’re a professional landlord, we can help connect you with people who will help you maximize the equity you have and invest confidently, whether that’s connections with sellers, buyers, lenders, brokers, managers, or anyone else you need. If you’re an accidental landlord who inherited a second home and never wants to buy another one, we can help you maximize the profits you receive and make sure your property is cared for so it will last for generations. 

We want to help people at every stage, too. If you want to make this a business but aren’t sure where to start, we can get you there. If you’re trying to expand your empire, we’ll connect you to new opportunities that maybe you hadn’t considered, or help you branch into markets we know very well. 

Final Thoughts

As you’re thinking about your real estate investment strategy, I invite you to keep these areas in mind:

• Watch your numbers. Be realistic about what’s possible, and what things cost. Stick to the budget you’ve made. 
• Don’t forget your time horizon. With time, all things are possible. If you stay the course, you could have a fantastic investment in 20 or 30 years.  
• Do small things right every month. Execution is critical. Start every month as if it’s day one, and don’t cut corners. 
• Focus on what you do best. For most of our clients, real estate investment is another notch in their portfolio – it’s a way to expand. Don’t jeopardize your career and future success in what you’ve built by distracting yourself with real estate investments. Let your property manager and other professionals do what they do best. If you’re not a builder, don’t be one. Hire one instead.

Ultimately, I believe now is the best time to invest in real estate. Whatever your goals are, there’s a way to be successful here as long as you have a plan and don’t overextend yourself beyond your means. 

I want our owners to have an annuity they can count on in good times and bad ones. I’ve personally gone through the highs and lows of this industry, and I’ve learned the tough lessons so, hopefully, you don’t have to – and it’s a benefit for you because we can help you learn your why. 

Why are you here? 

Why do you want to be in this business? 

From there, it’s just a matter of how we can help.