 If you start out investing as a spring-chicken, you may be excited to dive into scrubbing moldy cabinets, exterminating bug-infested corners, painting, repainting, and installing sheetrock until your arms are weak with exhaustion. The truth is, the hustle and bustle of real estate is fascinating and it’s thrilling to be a part of it all. Investing in real estate provides experience in both the finance side and the construction side of things. But after a while, you may begin to feel like you need a more simple option. As we get older, life is more complicated instead of less so, we have kids in the house, and honestly, cleaning someone else’s mess is the last thing we look forward to. So, in an effort to continue to provide good quality housing for people, my approach has adjusted slightly over the years. Quite simply I want low effort, low-risk projects that provide cash flow so I can spend my energy with my own home and family. Hey, if you can dream it, you can do it. #1 - Low EffortThe investment trait that’s the most important to me these days is that the effort required from my end is low. Parenting also means you’re a master coordinator of swim class times and play dates and meal prep. This also means I barely have time to ensure my socks match, much less deal with tenant applications and maintenance requests. I’ve had tenants on the verge of eviction purposely clog sinks and leave water running only to damage not just one or two units, but three units! You better believe I had piles of insurance and repair paperwork to sort through. When my kids are tugging at my sleeve to come play with them, I never want to have to say, “Sorry honey, I have all this insurance paperwork to do.” Therefore, an investment opportunity must rank low on the required effort scale. #2 - Low RiskInvestments are like a playing piece in a giant game of Jenga. The whole thing topples over in a certain amount of time (the market cycle) and then you can re-stack the pieces and play again. When will the Jenga blocks begin to teeter so much that they crash? At this point, the tower is still standing, and many people like to speculate, but no one really knows how much time we have until the next market cycle will come around. I’ve been through multiple market cycles, and I want to position my portfolio such that I’m accounting for the possibility of that tumble. Thus, low risk is another main priority. #3- Cash FlowGamblers spend hours, sometimes days at the casino hoping for the chance to hit it big. More often than not, they come home empty-handed. In an extremely opposite manner, investing for cash flow is my game. I want my investments to cashflow as-is, before improvements. That way, if the Jenga blocks do tumble, I know that the investment will stay afloat until the tower gets built again. Appreciation is great, but I want to be able to sleep soundly, knowing that I can count on the cash flow. Attractive InvestmentsI’m no professional investor, but I do have a few years’ experience and have discovered my preferences for this stage of life. Investing passively in reals estate syndications have met my requirements of being low effort, low risk, and having positive cash flow. I like the idea of having an experienced team in place working the renovations and following the business plan on my behalf. They do the tough stuff while I receive regular cash flow checks, tax benefits, and progress updates. Meanwhile, I have all the time in the world to play with my kids. Passive investing wouldn’t have made sense for me as a spring chicken. I was way too excited to roll up my sleeves and get my hands dirty on a fixer-upper. But now? Naps and story time are much more valuable. ConclusionAt this stage of life, investing passively in real estate syndications that are low risk, low effort, and provide cash flow, allows me to have time freedom while simultaneously building wealth. It’s not a get-rich-quick strategy, but I’ll be so happy to look back and know that I made the best of my time with the kids while they’re little while also focusing on our financial future. That’s what it’s all about, right?  |
Justin GrimesAlly in generational wealth creation & protection. Archives
October 2020
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