If you’re a fan of real estate passive income, cash flow producing properties, then we think it’s totally amazing, valid, and worthwhile consideration for you to utilize real estate to make money.
Utilizing real estate investing has been an instrumental part of the Kitti Sisters’ journey to financial freedom. It’s allowed us to take the driver seat of our lives, be generous with our family, and create new relationships. Utilizing cash flow from real estate allows us to hop off the hamster wheel and live life in a more impactful way.
But we think a lot of people start to think about real estate investing and get tripped up by lack of experience and/or knowledge and time. And just those thoughts can quickly begin to overwhelm and crowd out the benefits real estate investing can deliver, which we honestly believe are beyond worth the roadblocks or growing pains that come with simply starting one! So instead of focusing on working for real estate, focus on having your real estate work for you.
For us, that “aha” moment came when we attended a real estate seminar and the speaker was talking about passive income real estate.
We were like – oh my gosh, that’s how wealthy people become wealthier. They get their money to leave their house instead of them putting the work clothes on and leave the house to trade time for money. Their money goes out there and makes friends a.k.a. “interest.” And bring that money back in or produce a constant flow of PASSIVE income.
Today we want to show you the how, the 5 ways to utilize real estate to make money for you. Are you ready to get all the feel-good affirmations you’ve been waiting for to finally go for your lifestyle dreams? Let’s do this! 🙌
REAL ESTATE PASSIVE INCOME: GROWS YOUR WEALTH
By all means, real estate is not a get-rich-quick scheme, but you can surely utilize real estate to build long wealth by investing wisely. There are 5 ways apartment syndication can help your passive income grow faster and easier for you.
- Cash Flow
- Tax Benefits
Whenever we look to invest in anything, we always ask ourselves, does it check off all 5 of the above? Does this investment produces cash flow, is it leveraged, do we have equity participation, will the asset appreciation in value over time, and are there any tax benefits. If the investment opportunity doesn’t check off all 5 boxes, then we will pass on the opportunity.
When we look at the publicly traded stocks, we can see that it doesn’t produce cash flow, yes, you may say dividends, but it’s not available on all stocks and it’s not as lucrative as cash flow income from real estate.
In the last few months, we believe the point has already been made about cryptocurrency. The wild swings are too much for most investors to handle, especially those who are relying on the investment to an income stream. Cryptocurrency-type investments also do not provide any tax benefits and are more and more subject to regulation crackdowns.
Investors hoping to earn their way into retirement from cryptocurrency probably have to be very early adopters otherwise the price now is way too high to be part of a successful retirement strategy.
Now, that we have shown why it’s important to only invest in asset classes that check off all 5 boxes, let’s dive deeper into each category.
1. CASH FLOW
Earning passive income is probably one of the top properties for investors. When passive income earned equals to or exceeds your expenses, that’s when you have achieved financial freedom.
This is probably contradictory to what you’ve been told in the past by your parents, teachers, friends… many of them probably told you that you need to save a huge nest egg in order to live out your lifestyle dreams; this is completely false! You do not need to have millions of dollars in the bank in order to enjoy your life.
We have all heard this saying before, debt is bad! And in our society, we have people like Dave Ramsey who talk about this so much that people take it as the truth. While of course, bad debt is BAD…
But this doesn’t apply to all debt. In fact today, the wealthiest people are using leverage more than ever to help grow their wealth, it’s part of the borrow, buy, and die principal that allows them to earn passive income while avoiding capital gains tax. The cost of financing properties is at an all-time low, so this makes perfectly good sense to leverage on a deal whenever possible.
Your passive investment lets you leverage expertise and and their experience.
General partners or GPS have devoted their lives studying the in and outs of the market and passive real estate investing provides you with the chance to gain from their deep knowledge.
One of the cardinal rules that we the Kitti Sisters always abide by is to invest in real estate that gives you ownership or aka equity. Of course, earning interest from debt investments is fine, but we would rather also participate in the property’s upside as well. Now, with Apartment Syndication, things get even better because the equity you get doesn’t come with sweating it out or working on it at all, nope it comes to you completely passive.
In a climate where the annualized inflation jumped to above 5% in the month of May 2021, real estate investments is the best choice for those who are looking to not only hedge inflation but also BEAT IT! Yes, Beat it! When inflation typically is cruising at 2, 3, 4% but real estate is appreciation at 10% or more (in the right markets).
5. TAX BENEFITS
There’s a saying that true wealth is measured by how much money you keep in your pockets, not how much you earn. And this is definitely a true statement. Many high-income earners have felt this pain of seeing 40, 50 or 60% of their earnings go straight to Uncle Sam.
This is why we hear on the news or stories of people who earn $300,000, $400,000, or even $1,000,000 living paycheck to paycheck. Having such a huge tax burden feels like you are trying to collect water with a pale that has tons of holes punched out of it, no matter how hard or faster you dunk the pail the minute you pull out you end up getting next to no water left in the pail…this is because water is going out almost as fast as it’s coming in!
Now all our goals are to gain enough passive income in order to be financially free, but you can imagine how much more difficult that goal will be to reach if you are literally giving away 40, 50% of what you earn each and every day.
This is where Multifamily has a massive unfair advantage compared to other asset classes. Thanks to the magic of bonus depreciation, passive investors are able to see up to 85-90% of their investment amount come back as phantom K-1 paper losses.
It’s called phantom loss because even though the property is cash flowing, you see passive income pouring in monthly or quarterly, in the eyes of the IRS the property is losing value. These amazing depreciation can translate to $85,000 to $95,000 or more in K-1 losses that can be used to offset other passive income gains from your other rental properties, stock gains, etc.).
*Disclaimer, we are not CPAs, so please consult your tax and legal professional for your specific scenario.
THE BIG PICTURE
The opportunities are endless with real estate investing. Our action of attending that one seminar has changed our life trajectory and we have no doubt that you’ll experience the power of real estate investing if you decide to give it a try. It certainly takes some effort; however, as PASSIVE investors, most of the heavy lifting work will be done by your team members.
You can get cash flow, use leverage to build long-term wealth, gain equity and appreciation while enjoying massive tax benefits. We mean, we guess you could say we’re sorta real estates’ biggest fans – but rightfully so!
We fully believe that investing in real estate, especially in apartments (anything 65+ units or more) can transform your life and accelerate your path to financial freedom FASTER.
If you’ve been waiting to get started and would like to connect with us then fill out a short questionnaire! A whooooole lot of opportunity is waiting for you on the other side. Time to grow your PASSIVE income. 💪
Until next time!
Palmy ➕ Nancy
The Kitti Sisters