Passively investing in passive income generation

[Kevin McGuire]

Hello fellow BP'ers,

I have a friend who is starting his retirement but is anxious about no longer "getting a paycheck". The issue is psychological, not financial. He's been financially fortunate working in high tech, is frugal, and logically knows he'll be fine financially. However, as I understand, it's normal for one who has worked hard and saved, seeing that savings number go up all the time, to freak out at the idea of seeing it go down, forever. For my part, that's why I got into real estate investing, for the financial and psychological comfort of passive income generation without depleting your capital, but he doesn't have the inclination to be a landlord. He would qualify as an accredited investor.

I'm encouraging him to look at passive income generation outside of stocks and bonds. I mentioned to him two alternatives:
A) Hard money lending

B)  Investing in a real estate syndication

Questions to you helpful folks:

1) Do you have other avenues you'd suggest?

2) Regarding syndication, are there posts, sites, or books you could point me to that I could pass on to him? I only have passing knowledge and have wanted to learn more anyway.

Thanks in advance,
Kevin

PS. Honestly, it really is a friend of mine, it's not me asking like, "I have a friend who has this embarrassing rash..."

[Brian Burke]

Originally posted by @Joe Splitrock:

As the market continues to tighten, it will keep getting harder for syndications to perform at the level they have in the past. I am sure syndicators will argue that,  

Joe, I'm a syndicator and I won't argue that at all. I completely agree with you. Any real estate, syndicated or otherwise, is unlikely to perform in the future to the levels of the past. My last three full-cycle deals all performed above 20% IRR, even significantly higher, but I don't expect any that are acquired today to see those kind of results. Any sponsor that promises the performance of yesteryear is doing themselves and their investors a disservice.

Because we are heading into uncertainty, I have been preaching for a while now that the syndication sponsor's industry experience matters, and cycle experience also matters.  A growing percentage of syndication sponsors have been in the business for less than ten years, which means they have only seen what an up market looks like.  The danger is the failure to respect the power of adverse markets and the disadvantage newer sponsors possess in navigating them when they occur.

When and if markets move, some will survive and some will fail.  I know that if I'm boarding a plane about to take off in stormy weather, I want an experienced pilot at the controls.