Struggling To Find The Path To Passive Income

[Steven Rosenfeld]

I did W2 for 30 years as in corporate IT. Dabbled in real estate but never went for it big time - bought and sold a few primary residences and a couple of condos over the years. Now I'm 56 and hoping to never work for anyone again. I've got $2 million in an IRA (invested in mutual funds), $300K in investable cash, and $200K in reserves. I'd love to take that $300K and build up some passive income of $50-100K annually. I also got my real estate license during the pandemic but I am not into being a real estate sales agent. My wife has a great income and covers half our costs but we live in the NYC metro area, so expensive. Considering all of these variables, WHAT WOULD YOU DO IF YOU WERE IN MY SITUATION? Would you invest in some cash flowing (if they still exist) properties and start up the road of passive income from real estate? Is it too late for someone like me to make this happen?

[Jim Pfeifer]

You stated pretty clearly that you are looking for passive income - you got some great advice and most of it was to invest in real estate syndications.  There really isn't another way to be a passive investor in real estate - owning property and being the asset manager is never passive, I agree you should look into syndications.  How do you start?  That is the one thing I did not see addressed.  When I started investing in passive real estate syndications I listened to podcasts and read books in order to find quality sponsors.  I would call them up and talk for 30  minutes and then they would send me a deal.  I would review the pitch deck - not really understanding what I was looking at - and call the sponsor and ask a few questions.  Next, I was expected to wire them $50,000.  I had talked to them less than an hour and knew very little about them.  Naturally, sending that wire was terrifying!  I found some great sponsors that way, but I also found some lousy ones.  It turns out that being a great podcaster and marketer does not always make you a great asset manager!

Now I do things differently - I use a Community to help me find sponsors and analyze deals. This is exactly what BP is to BRRR investors, flippers and others who are more active in real estate. There are also plenty of people who are syndication investors in BP and there are quite a few other Communities that are geared directly to syndication investors. Now, I don't invest in a new sponsor unless they are introduced to me by someone in my Community, who I know like and trust and that person has invested with the sponsor. I still do all of the same due diligence, but trust transfers - now I am a hundred steps ahead because I know this is a real syndicator and someone I trust has had some success with them. This doesn't mean that all of the sponsors and deals I invest in our homeruns - but I definitely rarely strike out anymore. The power of Community is real. I think from the feedback on this post that syndications is probably your best option, but if you really want to get the most out of it, I recommend joining a Community or several - it's the best way to leverage the knowledge and expertise of others!