Don’t want to be a Landlord? Ask yourself this 1 question…Jul 17, 2022
Are you on the fence about whether or not you want to be a landlord?
Investing in real estate can be a lucrative venture.
But this question of “to be a landlord or not to be” is a big one, and it’s absolutely normal to be a bit hesitant.
It's important to consider your goals and options before jumping in.
So, let's talk about the questions you should be asking yourself if you're not sure about becoming a landlord.
We'll also explore some alternative ways to invest in real estate without the responsibilities of being a hands-on landlord.
Okay, let’s get into it!
The power of asking the RIGHT questions:
Have you ever thought about how the quality of our lives is often determined by the quality of the questions we ask ourselves?
Well, when it comes to deciding whether or not to become a landlord, asking the right questions is crucial.
So, here's a key question to consider:
"How long before I want to achieve financial independence?"
Maybe you're even thinking about retirement, so your question would be:
“How long until I want to retire?”
By framing the decision in terms of your financial goals, you can evaluate the best path to reach them.
Let me share my personal experience with you.
Back in 2019, I found myself at a tricky crossroads.
I was overwhelmed with work, lacked autonomy, and was nowhere close to being financially free.
Despite working in medicine for 10 years, my portfolio showed that I was only halfway to the financial freedom number I needed.
That's when I realized that my investment approach would greatly impact the time it took to achieve financial freedom.
Doing What’s Right for YOU:
You might be thinking, “Yeah, obviously different approaches to investing have different returns. Not a huge discovery.”
But reflecting on my own experiences, I found a HUGE disparity between my real estate and stock market investments.
Even with a passive real estate portfolio managed by professionals, my returns were twice as high compared to my stock portfolio.
It wasn't just about cash flows either; factors like debt paydown and market appreciation played a role too.
To put it into perspective, I used a retirement calculator and found that it would take me 17 years to achieve financial freedom with primarily stock market investments.
But with real estate investments, I could get there in just three years!
That's quite a difference, right?
I thought so too, and from this point on I was sold on the power of real estate investing!
Take advantage of the Tools Available:
I never would’ve had this realization without financial planning tools, though.
So, I highly recommend using a retirement calculator or financial independence worksheet to get a clearer perspective on how your financial goals align with your current situation.
Beyond that, if you need some guidance through the planning process, Generational WealthMD offers a free workshop on planning for financial independence that you should check out.
No matter what resources you use, take the time to assess your current situation and goals.
It will give you a clearer picture of your path to financial freedom and help you determine the level of returns you'll need to get there.
Understanding ROI: Real Estate vs. Stock Investing:
Now, let's talk about understanding the return on investment (ROI) when it comes to real estate versus stock investing.
When comparing the two, it's important to consider the key differences in returns.
While stock market returns during growth may average around 10%, factors like asset allocation and inflation-adjustment impact returns during retirement.
As a rule of thumb, to withdraw safely in retirement, you typically can only access 4% of your stock portfolio, which means you need a substantial nest-egg of 2.5 - 5 million dollars.
On the other hand, real estate investments offer higher yields due to inflation-adjusted returns.
There are two primary approaches to investing in real estate: syndications and direct ownership.
Syndications involve pooling funds with others to invest in a shared property and provide an average annualized return of around 20%.
With direct ownership, you have greater control and potential returns ranging from 25% to 70% through leveraging, advanced tax strategies, and active management.
Investing in Real Estate without Being a Landlord:
Now, let's say you don't want to be a hands-on landlord.
No worries, there are still plenty of options for you.
Investing in real estate syndication opportunities as a passive investor allows you to tap into the higher returns offered by real estate and the tax efficiencies without the time commitment.
You can find more information about it at http://www.generationalwealthmd.com/syndication.
If you're not into managing properties yourself, hiring a property manager can significantly reduce the time and effort required.
With as little as two hours per month, you can manage a long-term rental portfolio.
Alternatively, if you're considering short-term rentals, a property manager or co-host can handle the day-to-day operations while minimizing your involvement.
By exploring these alternative investment approaches, you can enjoy the benefits of real estate investing without dealing with the 4 T's: toilets, tenants, trash, and termites.
Instead, you can focus more on your career, family, personal well-being, or anything else that you value!
Putting it all Together:
So, before you decide to become a landlord, ask yourself this one question:
"How long before I want to achieve financial independence?"
By evaluating your financial goals and comparing investment strategies, you can gain clarity on whether being a landlord aligns with your goals.
And hey, whether you're a seasoned investor or not, don't hesitate to consult a retirement calculator or any other retirement planning tool.
Generational WealthMD offers some great resources like the financial independence worksheet and a free workshop that can provide a clear picture of your current situation and future trajectory, empowering you to determine the most effective path towards financial independence.
Remember, the quality of your life can be shaped by the quality of the questions you ask.
So, take the time to ask yourself the right questions, explore the options available, and leverage the resources at your disposal.
By doing so, you can navigate the world of real estate investing with confidence and take positive steps towards long-term financial success.
Interested in learning more about taking back control of your time and income by building your real estate portfolio the right way? Get on the wait list for the next cohort of Creating Generational Freedom here:
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