Imagine with me, that your workday began with the usual routine, but halfway through your morning, you received the news you’d been laid off.

For most Americans, that means zero income starting tomorrow morning. 

Now, let’s pretend that during your employment, you leveraged your money.

 

The rich don’t work for money. They make their money work for them. – Robert Kiyosaki

 

Three Types of Income

Most people’s income is active, which means they have to work to receive it. But wealthy people typically earn residual or passive income (or both!).

 

Active Income

Active income is from your employer and requires activity in exchange for money.  When you stop, the income stops. 

 

Residual Income

Residual income means you receive money after the work is done. For example, every book an author sells provides residual income.

 

Passive Income

Passive income is earned with very little effort and continues flowing even when you aren’t working. Real estate investments are one of the most stable sources of passive income. 

Remember the job loss scenario? Let’s pretend you’d built passive income, on the side, during employment. 

Since being laid off, your earnings decreased by your monthly salary amount, but you still have income. 

Financial freedom is achieved when your earned passive income surpasses your active income.  Actually, once your passive income covers all of your living expenses, you could consider yourself financially free. 

 

Investing in Stocks vs. Real Estate

Historically, the stock market returns about 8% annually, which means $100,000 would produce roughly $8,000 per year. That’s only $667 per month.  To make matters worse, those gains are “unrealized” until you sell the asset.

Putting that aside for now, to replace an income of $3,000 per month using the average returns from the stock market, you’d need $36,000 per year, which would be 8% of $450,000. 

However, with real estate, $100,000 could buy a $400,000 rental home. How? 

The bank brings $300,000 to the table.

You put in 25%, the bank puts in 75%, and you earn 100% of the profits.

A $400,000 home renting for $3,600 with a mortgage of $2,100 would net you $1,500 per month. Theoretically, 2 investments of this size could replace a $3,000 monthly income.

The total rental income plus $25,000 in additional equity (based on 5% annual appreciation) equals $43,000, or 43% return in just one year.

 

But I Don’t Want to Be a Landlord

The numbers look enticing, but being a landlord does not.

This is where, instead, you join a small team to acquire real estate in a syndication. 

When investing $100,000 in real estate syndication, it’s feasible to earn $8,000 per year (8%) in passive cash flow, similar to the stock market, except for these gains are “realized” as income…..money in the bank, and usually tax free.  As stated before, you can’t collect your 8% from the stock market unless you sell the stock.

However, a further advantage that seals the deal with real estate lies in the sale of the asset. Syndications hold the property for about 5 years. During this time, building improvements are made, the income of the property increases, and we force the appreciation of the asset.  On top of that, the land market value typically rises as well from natural appreciation.

Upon the sale, you receive $160,000 ($60,000 in profit). This, plus the passive income of $8,000 per year (totaling $40,000), equals $200,000, which is a 20% average annual return.  This is the typical return you will see in a syndication.

So if while employed, you’re able to consistently invest in real estate syndications and create passive income streams, you could potentially be in good shape if ever facing a layoff.  You may even find yourself celebrating unemployment or maybe…retiring early.

 

Ready To Learn More?

The best way for you to learn more about real estate syndications, as well as our current, previous, and upcoming deals, is to join the Sterling Rhino Capital Investor Club.

Through the Sterling Rhino Capital Investor Club, you’ll get first looks at all the deals we offer. We’ll work with you to figure out your investing goals and to help you find the best deals to meet those goals. We’ll then walk with you every step of the way as you invest in those deals.

So if you’re ready to be done with the headaches of being a landlord, sign up for the Sterling Rhino Capital Investor Club, and get started on your path toward becoming a passive real estate investor.