What really is passive income and how do you best acquire it for either retirement or supplemental income from your normal job?
Passive income is described as getting a check in the mailbox with no work or aggravation connected to it!
Through many commercial real estate strategies, whether triple net leases or joining others that are seasoned pros that allow you to place some of your equity into their investment property, you, the investor, can gain passive income with tax benefits. Many related commercial real estate deals can be entered into without loan responsibility and gain depreciation against the net income earned giving off close to a tax-free return on your investment dollars.
Since you are not expected to be an authority on the subject matter but just looking for extra income, you need to be guided by real estate pros directing you into just the right income property based on age and risk-reward expectations.
The selection is varied and each sector requires an understanding of its advantages and disadvantages with no guarantee behind any decision. The world economy changes like the wind and interest rates along with cap rates change with the economic climate so your selection will always be somewhat susceptible to these changes for good or bad outcomes.
Certain strategies are more directed to older investors while the riskier ones for younger more aggressive investors. No one wants to lose equity but the returns of 4% to 8% are the range to expect. Now the internal rate of return over many years when the property goes full cycle can go as high as 12% to 15% with the proper well thought out strategies.
To start, figure out in your own mind the amount of equity you want to risk along with any loans you may or may not want to take on. What in your own mind is your expectation of cash on cash return and how long you wish to invest? Do you want full control of decisions or will you consider more seasoned pros running the show?Tags: commercial real estate strategies, equity, investors, passive income, tax benefits, triple net leases