How I Plan to Use Real Estate to Fund My New Year's Resolutions

Every year, as the Christmas cookies turn stale and the persistent food coma from constant holiday eating wears off, I find myself adding “exercise more” to my list of New Year’s resolutions as I lounge on the couch in my stretchy pants and, okay, a stale Christmas cookie.

In my twenties, all I had to do was ride the high of this New Year’s momentum to find a yoga studio, buy a pass, dig out my workout clothes, and block off the time on my reasonably flexible weekend schedule.

These days, weekends are not nearly as open-ended. Gone are the days of sleeping in till noon, meeting up with friends for spontaneous brunches, sipping bottomless mimosas, and sleepy late afternoon Netflix marathons (well, actually it was DVD marathons back then, but you get the point).

These days, aspiring to exercise outside of the house once a week means that first, I have to actually find the time to research yoga studios in town.

Assuming I get that far, next is figuring out the childcare situation, finding a class at a time when my husband doesn’t need the car, and forcing myself, for that one hour or so, to not think about the dishes that need to be done / laundry that needs to be folded / bills that need to be paid / toys that need to be picked up so that I can actually get myself out of the house, focus on the class, and (gasp!) perhaps even enjoy myself.

These days, there are a mountain of things between my saying I want to exercise more and actually being able to do so on a regular basis.

BUT! These days, I do have one advantage over my twenty-year-old self. One major advantage.

Spending Money vs. Creating Passive Income

In my twenties, I would pay with my yoga passes with my savings. I would go to work, earn a paycheck, and use part of that paycheck to pay for the yoga classes. That meant that, if I wanted to take yoga classes, I would have to forgo something else, like eating out, or else be okay saving less money.

These days, I have the financial savvy to be able to fund my yoga classes, plus childcare, plus a mini brunch break afterward, all for free. That’s right, I can now do all that without withdrawing a dime from my savings account.

Don’t believe me? I don’t blame you. It sounds pretty gimmicky to me too. But humor me and set aside your skepticism for a moment.

Let’s start by tallying all those items up real quick. A ClassPass that will give me about 4 classes a month costs $49 here in San Francisco. Add to that the cost of 2 hours of babysitting at $20 per hour (i.e., $40 total) and a brunch for one (roughly $30).

Per month, that comes out to $49 ClassPass + ($40 babysitting x 4 weeks) + ($30 brunch x 4 weeks), or $329 per month. That’s $329 for 1 yoga class per week, with a solo brunch afterward, and 2 hours of childcare so I don’t have to deal with the guilt of leaving my kids with my husband for 2 hours per week while I enjoy myself. #momguilt

My twenty-year-old self would have charged that to a debit card, spending a total of $3,948 over the course of the year and not thinking twice about it. And yes, I could still do that now, but that means that I’d have $3,948 less at the end of the year, which is a lot of money.

My current self knows better. My current self knows about this thing called passive income. And better yet, my current self knows how to actually generate passive income. So in other words, my current self knows how to fund those yoga classes with no money out of pocket.

Now, let me pause here on the term “passive income” for a second. Over the years, I’ve come across this concept of passive income and it’s elusive allure many times. I tried opening my own Etsy shop (too much work and not nearly as fun as I thought it would be), I tried part-time gigs (which, as it turns out, were not actually passive), and I tried investing in rental homes (way more work than I thought).

Through lots of trial and error, going out on limbs, and taking leaps of faith, I’ve discovered a path to passive income that works for me: investing in real estate syndications (i.e., group investments).

Investing in Real Estate Syndications

By investing $50,000 into, say, a multifamily real estate syndication with a projected annual cash-on-cash return of 8%, I would be getting cash flow distribution checks of $333.33 per month, totaling $4,000 per year.

And that $333.33 is exactly what I need to cover my yoga + childcare + brunch dates. Fancy that.

At the end of the year, my $50,000 investment is still there, and I would continue getting those $333.33 checks monthly until the end of the syndication hold time (typically 5 years), at which time I’d get my $50,000 back, plus a chunk of the profit from the sale (say, an additional $25,000 or so).

In other words, not only would I be funding my yoga outings for free, I would also end up with a chunk of cash when the investment is sold, that I could then roll into another investment / put toward my kids’ college savings / remodel the kitchen.

Conclusion

In my twenties, when I wanted to buy something, I would save up and pay for it with cash, because I thought that was the only way to do things. That’s what my parents did, and that’s what they taught me to do, so I figured it was the only way.

But now, I’ve discovered a new path. When I want to buy something, whether it be yoga classes, a new car, or a family vacation, I find a way to pay for it using passive income. That way, we continue to grow our family’s wealth while also living the life we want.

All the while, we are building a legacy for our children. And that. That beats any New Year’s resolutions I could ever make.