A Real Estate Investing Guide to Creating Time Freedom and Financial Abundance:
People who say, “I don’t want to fix toilets,” frequently deny themselves the use of this powerful investment vehicle. Toilets are more important to them than their liberty. That is the mentality that keeps most people poor. ” Kiyosaki, Robert
Today, we’ll talk about how to build real wealth by investing in real estate without having to worry about tenants or toilets. Because, as the quote above shows, these types of things deprive most people of the opportunity to build the long-term wealth that real estate can provide.
The poor purchase liabilities, while the wealthy purchase assets.
If you’ve read the book Rich Dad, Poor Dad, you may recall the lesson about the differences between what the rich and poor buy. It all boils down to the difference between an asset and a liability.
An asset is something that brings money in (has a positive cash flow), whereas a liability is something that takes money out (negative cash flow). You don’t always know whether something is an asset or a liability; you have to look at the numbers to see how income and expenses differ.
For example, a great stock that appears to be an asset at first glance may turn out to be a liability when you consider the plethora of broker fees and market spreads. In the case of real estate, a seemingly excellent property can become a liability if excessive repairs are required or if the rent is not high enough to cover all of the costs.
When the poor decide to invest in real estate, their thought process is, “This house is nice, and it is in a great neighborhood.” My friend told me that property prices always rise because “the wealthy actually examine the data and make informed decisions about their investments.” What we mean is that you should not buy real estate based on a “hot tip” from a family member or an untested assumption. You need to see what happens to your net worth after you put your money down.
Investing Styles: Passive vs. Active
It is critical to understand that the only way to build a massive real estate portfolio is through leverage. You must use other people’s money, time, and expertise to build an empire that will provide for you and your family for years to come.
This is where passive investing comes into play. In contrast to active investing, passive investing does not require you to actively manage the investment. You look at the numbers, put your money in, and then keep an eye on it. If you choose your partners wisely, you will soon see your money grow.
Real estate can be used as a passive investment. This eliminates the need for you to constantly fix toilets and collect rent from your tenants. Remember that passive investing does not always imply completely automated investing, but rather “an investment strategy to maximize returns by minimizing buying and selling” (source: Investopedia).
How do you go about doing this? How can you make real estate a passive investment that grows your wealth while you sleep?
Make Real Estate Investing Stress-Free by Using a Good Partner
Here’s another Robert Kiyosaki quote:
Because I, too, do not want to fix toilets, I am looking for a property manager who does. And by finding a great property manager who knows how to run houses or apartments efficiently, my cash flow improves. But, more importantly, because I don’t have to fix toilets, a great property manager allows me to buy a lot more real estate.
A great property manager is essential for real estate success. A great property manager frequently hears about great deals before real estate agents do, making them even more valuable.
Finding a good manager is more important to me than finding a good property. “
Can you tell the difference between a successful investor’s thought patterns? To be a passive investor, you must leverage the time and expertise of others, in this case, a partner, in order to invest in more properties and truly build a stable portfolio.
However, there is a distinction between being a passive investor and an active investor. There are both active and passive investors when a group of investors join forces to pool their resources and buy higher-yielding properties, a practice known as syndication. Active investors, also known as General Partners (GPs), handle all of the day-to-day operations of acquiring and managing the property. Passive investors are limited partners (LPs) in the syndication who contribute financial resources to assist in the acquisition of the asset and thus receive a majority share of the returns.
When you consider leverage and not doing everything yourself, you will see that a real estate syndication will allow you to:
a) access deals that would otherwise be difficult to enter on your own;
b) increase your returns by receiving an equity share from your investment; and
c) be a passive investor. General partners are liable for the entire investment, whereas limited partners are only liable for the amount they contribute.
As a result, you could be a limited partner and delegate responsibility for the investment to an experienced individual. That way, you can build a passive portfolio while leaving the hassle of toilets and tenants to someone else. The key here is to work with an experienced GP team so that you can enjoy the freedom of time while your money works for you.
Real Estate Independence Without the Hassle
Real estate is a tried-and-true investment vehicle for amassing massive wealth while enjoying the time freedom that passive investing provides. Are you going to let the worry about toilets and tenants take that away from you?
There is an easier way. SAS Texas Capital has a team of dedicated professionals who can assist you with real estate investing to help you achieve your goals. And we make the process as simple and stress-free as possible.
Schedule a call with us here so that we can assist you in defining your investment objectives and matching them with one of our projects. SAS Texas Capital believes that smart passive income investments can provide you with the life you’ve always desired. Start making yours right away.