Money, experience, knowledge now what? New chapter and need mentors please :)

[Account Closed]

Good afternoon all!

A little about myself.  I bought my first house in 1999.  It didn't stop there.  Being military my spouse and I would purchase a house every 3-4 years and buy and hold.  We did sell a few along the way.  Fast forward 15 years (present day)  I own 7 single family/multi family in 4 different States.  2 units are duplexes, 1 is a future retirement home with income, 1 is our primary residence, 2 are single family long term rentals and one is a flip in my local market I just purchased 2 weeks ago with the intent to list and sell next week. 

As I see my portfolio grow and I have had the opportunity to experience many different markets and ways to grow in real estate I am looking ultimately for passive income.  With retirement from the military in 3 years I would like to have enough passive income to leave the working for other people life completely.  We plan to live very conservatively while traveling abroad with our children.  

After doing this flip I am currently working on I realized that it is second nature and very easy for me.  I have renovated at least 5 residences in the last 7 years and have Lowes/Home Depot memorized for expenses on a project.  I am looking for guidance from others that may have walked my path and have moved on to other things.

I realize as I get older that life is too short and spending my days from morning till dusk is not what I want especially with a family.  I am trying to think smarter and maybe even bigger?  Some of my thoughts of where I think I would like to go would be doing commercial properties.  I think a buy and hold dilapidated commercial deal would be a good future venture.  I have a business that does not fully have enough credit to purchase a commercial deal just yet.  I do have the down payment personally to purchase a larger deal.

Any insight out there?  I have never done commercial and it is a little scary but at the same time I am not afraid of adding another zero to the end of a purchase price of a future deal.

Thanks for any input.  I would love to hear from those that have been down this road and any experiences or advice you may have.

V/r,

Desiree'

[Dan Brewer]

Desiree - 

I am a firm believer in passive income - your time is more valuable that cash, because your time is finite.  Cash can grow over time, you can borrow etc.  Many investors talk of passive income and passive investing, but really do not do it.  Whether it's SF rentals, flips, commercial rennovation and leasing, its not passive.  

The definition of true passive investing is this : "regardless of any time you spend on that particular investment, whether it be 5 minutes, 5 hours, 5 days, it has absolutely no influence on the outcome of that investment".  So think about this in the context of your rentals.  If you spent virtually no time on them, whould it affect the performance of that investment?  I suspect the answer would be absolutely yes, even if you have a property manager because you have to manage your manager.  Conversely, if you spend a great deal of time on your rentals, would that affect the outcome of that investment? Again, I beleive the answer is yes.  

If you want to stay active, then you are not looking for passive income.  Perhaps you are looking for semi-active or semi-passive income, which is where I classify SF rentals, and there is nothing wrong with that.  You time will slowly get consumed as you add more active or semi-active investments to your portfolio.  And at some point, you will max out your available time, have to sell off to purchase more, or bring on other human capital to support your investment activity.   

So I encourage those who seek passive income to ensure it is true passive income.  In the stock market world, a proime example of passive income is mutual funds.  In the real estate world, it is real estate investment funds. There are other examples to, but that is a very big one.  You will find that will a very well reseached and well managed fund, you can achieve consistent and reliable double digit returns, which is going to be very competitive if not exceed your return on SF investments in most situations.  I have been in this business 22 years, and that is where I now focus virtually all my time for me and for my investor clients.  I no longer own a single rental or investment property.