Passive Retirement Investments

[Sherman Lau]

I wanted to get everyone's advice on passive real estate investment strategies. We have low 7 figures to invest and would like to retire. We no longer want to be landlords or manage developments anymore. What would be the best way to invest our savings for income and growth. We still have grade school age children. I am very interested in Note Funds, like PPR, with it’s 12% returns. It seems so attractive, that I want to be a large percentage of our savings into the fund, since I have a hard time finding similar returns. We are also looking at starting a EIUL retirement plan. Any thoughts on how I could diversify my strategy to get a solid return without too much risk. Any other funds you could recommend. Thanks for the input.

[Edward B.]

@Sherman Lau,

I like your thinking. I too am exploring an EIUL strategy as one income stream for retirement. Insurance is pretty complex and there are about a bazillion ways to structure the contract. I won't go into it any further for fear of bringing out the haters but I will give a shout out to @Thomas Rutkowski who knows a thing or two about them and definitely has some opinions. Mainly because he sells them, but what I like about his strategy is that he structures his policies so that you can take a loan out against your cash value almost immediately, which would allow you to invest that money into other things such as Note Funds at a higher rate than you borrowed. It is an aggressive strategy but the risk cn be mitigated.

I like PPR's fund, but like most you have to be an accredited investor. NNG and RCM (@Bob Malecki) also have funds with different return structures and risk profiles that I would look into to diversify some. You may want to look into some of the crowd funding sites as well to diversify even further. And I would also recommend looking into performing or reperforming notes outright once you are comfortable with the space. You should be able to earn a 12%+ return fairly easily, but also get that kicker if the borrower pays off early, and statistically most will, since you buy them at a discount. A fund does not provide that. Of course, the higher potential return does come with greater risk, as always but definitely something worth looking into.

PPR, NNG, RCM, many of the crowd funding sites etc are all stand up companies and I have invested with some of them. I just can't bring myself to put all of my eggs in one basket, though. You just never know when someone or some company will fall on hard times so I would urge you to diversify among them. That is a personal preference, though. And even though this may be heresy on BiggerPockets, I would also look at other asset classes as well. Especially if this is going to be your retirement. The EIUL will cover the stock market but I am a huge proponent of asset allocation even though I focus on real estate and notes.