Weird situation - what would your strategy be?

[Barry Je]

Let’s say you’re able to invest 30k a month for 4 years and after that your funds available drops down to basically nothing - forced early retirement.

What would your strategy be to live the rest of your life with an almost certain 10k passive?

Would you do nicer houses nationally pay them off completely hold no mortgages and sit on the cash flow?

Would you do an apartment?

Index funds?

For those 4 years though there’s no time to manage C class houses or property managers. To make that money you’re working so insane it would be literally impossible to find more hours.

One thought I had was higher value A/B class properties. Fewer units with higher cash flow that’s in a more reliable tenant population with newer houses. I’m less concerned with ROR I’m more concerned with the end of the 4 years to have a very solid less headachey 10k+ a month. Over 48 months can get 8 180k houses all cash that rent for hopefully 1600+ and cash flow 1300 which is about 10k passive.

Thoughts? I understand no investment is truly passive. I went the C class route the returns were good but not worth the hours. I care less about the hours and more about hitting the 10k mark and not have to manage many managers with evictions and weird tenants.

[Haydn Zeis]

@Barry Je, that is an interesting situation.

Here's what I'm reading:

1. There's high cash-flow over the next four years.  
2. No time, not even to manage a property manager.
3. End Goal, have $10,000 of cash-flow at the end of four years.
4. Have easily manageable assets at the end of the four years.

Ultimately, you've got to decide exactly how passive you want your investments to be.  You said you're not as concerned with returns, as you are having something easy to manage.  If that's the case, syndication investing, where you have equity in each of the deals is a good option.  I'm biased, because I'm a sponsor on syndicated deals.

Forgive me if you're familiar, but for those who don't know, real estate syndication is simply pooling people's money together to purchase real estate assets.  The assets are managed by a sponsor, the general partner (GP). The majority of the capital for the investments is brought by the investors, or limited partners (LP).  The GPs manage all aspects of the deal from the initial due diligence before the purchase, through the sale of the asset (typically 5-7 years down the road).  Beyond the initial time spent researching the sponsors and deal, the LPs have very little responsibility, mainly just receiving their distribution check.  This is a very passive type of real estate investing.

If I had $30,000 to invest per month, with very little time, I'd invest in syndicated deals that have an 8% preferred return where the LPs get paid before the GPs.  I'd also make sure I had a stake in the equity and the depreciation gets passed through. Rather than using $180,000 to invest in houses, I'd invest $180,000 every 6 months into a syndicated deal.  Additionally, I'd roll all the cash-flow earnings from those deals, back into another syndication.  If you did this, you'd earn more than $200,000 of cumulative cash-flow by month 48.  So this means at month 48, you'd be able to invest the regular $180,000 plus an additional $200,000 from the cumulative earnings from the previous 8 syndication deals.  You'd have $1.65 million of assets, rather than $1.4.  You'd also cash-flow around $11,000 per month, passively (more passive than owning 8 or 9 residential houses).  You'll likely be able to increase your monthly amount when deals mature and are sold or refinanced.