We are busy retail store owners in our early sixties and we are getting the itch to slow down and retire. Having paid off our house and an established retail clientele, we’d like to transition from our active business income to a more passive income during our retirement years. Having tried many different investments from mutual funds and stocks, to raising ostrich’s and even a few pyramid schemes (by accident of course), we are looking to invest our money safely. Real estate has always been the safest, the best performer and the one we have had the most control over. So, how do we invest passively in real estate at our age without being landlords, dealing with tenants, or doing renovations? Or, are we too late to start investing? – Rob and Joanne
     
     
    Rob and Joanne had a steady retail business with more than twenty years invested into a loyal customer base. Realizing that their business’ goodwill was difficult to valuate in the open market made them even more motivated to make a change. At their age they needed safe, none speculative types of investments. Since the majority of paper assets (other than GIC’s) are speculative in nature and real estate was their preferred asset; that decision had already been made. They were use to an active business income for more than twenty years. Now they were ready for passive income so that they could retire and pursue other hobbies and interests.

They had paid off their principal residence several years ago, had $60,000 in RRSP’s, no personal debt, $110,000 in savings, a business worth $250,000 and good credit. Once they retire, their biggest challenge may be in obtaining traditional financing without an income. However, with the different lending programs available and different types of real estate investments, they might not need traditional lenders anyways. With a little education, we were confident that we could show them how to create passive income and transition into retirement without being landlords or renovating.
     
     
    Couple, re-married, 3 adult children from previous marriages, transitioning into retirement.  
     
     
    Unsure how to convert their existing real estate and business assets into “passive type” income for retirement. Not interested in stocks or bonds.
     
   
    Examine their current situation, skills, resources, investment objectives and personalities, and evaluate the best investment strategy to meet their needs.
     
     
    Passive income during retirement, able to pursue other hobbies and interests without financial worry.
     
     
    Household income $72K net/yr, $60K in RRSP’s, $110K in savings, $0K credit card debt.
     
     
    Principal Residence: $550K value w/ $0K mrtg, cashflow = (-$400)/mo PITI RRSP Investments $60K = 0.3% Average return per year for past 10 years
     
     
    They had assets with equity and even though they owned their own home, they did not know how to make money with real estate, as an investment. First, we educated them on investment real estate and then showed them alternate ways to invest without fixing toilets or swinging hammers. This was the plan we helped create for them.

1. Gather all their information.
2. Create a plan.
3. Get educated about the different ways to invest in real estate passively.
4. Understand the benefits and risks associated with them.
5. Select their desired passive investments and start investing.
6. Over the next six to twelve months, make the business as attractive as possible to a prospective buyer.
7. Sell the business within twelve to eighteen months.
8. Once the business is sold, sell their principal residence in Alberta.
9. Move to their desired retirement location near Vancouver Island with enough passive income to cover all expenses.
10. Continue investing in passive investments.

Many people hand over their money to an advisor and hope for the best. With Rob and Joanne, we spent approximately six months thoroughly educating them on investment real estate so that they wouldn’t have to rely on an advisor for their investment decisions. That way they won’t need us or anyone else, as they’ll have the knowledge and confidence to make their own decisions.

They grew their knowledge and understanding about different ways to invest in real estate in a passive way including syndications, joint ventures, REIT’s, 2nd mortgages, discount mortgages and rent-to-owns.

Within the first six months, they purchased their first investment property for $215K including closing costs, and re-sold it as a rent-to-own to a first time buyer for $241K. This was a low hassle way to invest in real estate without the typical tenant management hassles, vacancies or maintenance costs. It also gave them control over their investment. They invested $58K and made $28K within 18 months - a 32% annual return.

They also bought a two-acre parcel of land on the west coast overlooking the ocean from a private seller where they would build their retirement dream home. The seller agreed to an installment contract whereby they gave the seller a deposit with the balance to be paid out in 18 months with no monthly payments. That secured their building lot in BC.

Fourteen months into the plan, they sold their business for $250,000.00 within a few months of listing it.

Then they sold their primary residence to a land developer for $550,000.00 with a quick closing and a four-month lease back after closing. This gave them time to wind down, pack up and say their good byes. The quick close also gave them access to their capital to invest sooner, which they did.

Along with their rent-to-own investment, they invested into several 2nd mortgages on other investors’ properties using their cash and RRSPs. They also invested into several mid term (2 to 5 year) joint venture real estate partnerships for capital growth.

In summary, the 2nd mortgage investments along with their pensions provide enough passive income to cover their daily living expenses. And, because the 2nd mortgage payments they receive are interest only, there initial capital never goes down. The joint ventures continue to grow their capital and provide additional sums of money to either re- invest or use as desired.

Rob with Joanne moved into their new dream home on the west coast overlooking the ocean in a small town inhabited with local artists, musicians, farmers and retirees. It's scattered with numerous quint restaurants and shops. With all the free time on their hands, Rob and Joanne started a new business that thrives in the summer months as they sell organic chocolate and fresh fudge to the locals and tourists at the farmer’s market.

For the rest of they year, they pursue other hobbies and interests while overseeing their real estate portfolio.
     
   
     
   
 
 

 
 
 
 
Real Estate Seminars   |      Real Estate Mentor   |   Investment Realtor   |   Buying Investment Real Estate   |   Becoming a Millionaire   |   Real Estate Investment Articles

Copyright © 2013 Inspired Wealth Corp. Everyday Real Estate Millionaires™ is the property of Inspired Wealth Corp.   |  Website Terms of Service & Privacy Policy  |  Powered by MarlaBean