Real estate has been one of the cornerstones to achieving financial independence and gaining enough passive income to allow us to early retire! Learn what we did and where we invested.
Why Invest in Real Estate?
When Mr. Life and I started to analyze how to achieve financial independence we evaluated how we were going to get the cashflow we needed to pay our expenses after retiring. One way would be to sell investments like mutual funds or FTEs and the other would be to generate enough passive income to cover those expenses.
We felt much more comfortable getting the passive income than selling assets. We researched many options, from buying single-family residences and renting them, to investing as limited partners.
After talking to many turnkey companies, sponsors, and real estate investors, we decided to go entirely passive and own real estate through limited partnerships. That would mean that we wouldn’t need to actively manage the assets (nor the tenants!).
What Have We Invested in?
We have diversified both in terms of sponsors/companies we have invested in as well as asset class and location (though all in the US).
These are the asset classes that we currently own:
- Mobile Homes
- Light Industrial
- Self Storage
- Single Family Homes
- Senior Housing
Obviously, there is always risk in any investment so it’s important to diversify and educate yourself before committing any money. Do your own research!
How Have We Invested in Real Estate?
As we mentioned before, all our real estate investments have been made passively. We have invested a lot of hours (probably days) in researching the different platforms, sponsors, and investments until we decided on our first investments. Indeed, it took us more than 8 months to take that first step!
As of right now, we have invested in 8 different platforms and sponsors that offer different types of funds and assets. In order to invest with many of these, you need to be an accredited investor. In summary, this means that you need to have more than $200,000 income as a single person or $300,000 joint income or have more than $1 million individual or joint net worth, excluding the value of the primary residence.
List of sponsors/platforms
- RealCrowd: crowdfunding platform with a diversified range of investment opportunities. We use these investments for both capital growth and cashflow.
- RealtyMogul: crowdfunding platform with a diversified range of investment opportunities. We use these investments for both capital growth and cashflow.
- CrowdStreet: crowdfunding platform with a diversified range of investment opportunities. We use these investments for both capital growth and cashflow.
- NorthPeak: I learned about this company via an interview with the founder on BiggerPockets. The investment provides a 1099 (dividends, debt). They pay annually at a high interest rate (no upside, fix rate). We use it for cashflow
- Senior Living Fund: they are focused on senior housing and have different types of investment, at fix rates (debt) or variable (equity). They run several incentives usually. We are using it for monthly cashflow.
- PPR: they are focused on mortgage notes and provide short term and long term funds with very good interest rates (from 6% to 10% depending on term) and the option to compound. We use it for monthly cashflow.
- GSP: similar to PPR, they are focused on notes as well as single family residence funds. They also offer amazing interest rates (from 9% to 10% depending on term). We use it for monthly cashflow.
- Yieldstreet: they offer alternative investments (supply chain financing, art, real estate, etc.), both very short term and long term, debt and equity. We are using it for very short term investment of our emergency funds (3-6 months term).
Resources to Learn About Real Estate
We have used many different resources to learn about real estate but these are the ones that have been more useful:
- BiggerPockets: all about real estate. We listened mainly to the podcast but they also have a large forum and books. Special mention to this podcast:
- RealCrowd: apart from being a crowsourcing platform they have good educational resources
Remember that every deal/investment is different. Take your time to read many investment details to become familiar with the terminology and usual conditions.
Real estate is a very important part of our post-retirement finances and provides us with the passive income we need to sustain our lifestyle. This way we do not need to touch our invested capital and get some tax benefits on the side.
Questions? Send us an email to thelifejumpers at gmail dot com.