What You Need to Know About Investing in Real Estate

Check out Jeremy’s latest podcast on real estate investing by listening on “Apple Podcasts” or “Google Podcasts” or read below to know What It’s Like To Invest in Real Estate.

#69 – If you’re consistently contributing to your IRAs, SEPs, or other retirement accounts, that’s great. But do you want to go beyond traditional investing?

If yes, then real estate can be a good starting point.

It helps you diversify your retirement portfolio and build an added source of recurring revenue in the long run.

In this episode, Jeremy Keil speaks with Matt Franklin, host of the Rogue Retirement Lounge Podcast, who has also appeared in the American business reality television series Shark Tank. Matt shares his experience of transitioning from a traditional investor to a real estate investor, and how real estate investing has helped him enhance his overall retirement plan.

Matt discusses:

  • What he likes the most about real estate investing
  • Situations when real estate cannot be a reliable source of “guaranteed income”
  • The benefits of joining real estate syndications
  • How retirement planning varies for self-employed people
  • And more

What You Need To Know About Investing In Real Estate

What You Might Like About Real Estate

The fact that land is a finite resource gets many people interested in real estate investing.

For stock, there can always be splits, buybacks, and new issues of shares. But we can’t create more land.

The finite nature of land, combined with a growing population, is why Matt Franklin believes that real estate will likely appreciate in the long run.

Potential Hassles

No investment is perfect. There are some hassles you might encounter with real estate, too.

A common one is dealing with bad tenants. If a tenant fails to pay their rent, your anticipated cash flow might take a hit. So, real estate can’t be relied upon as a source of “guaranteed income.”

Plus, there are several expenses that you might underestimate as a landlord, such as the recurring costs of fixing roofs, replacing furnaces, or other maintenance work.

Many real estate investors estimate a certain percentage of return, but are later disappointed to earn less at the end of the year. This can often be attributed to bad tenants and underestimated maintenance costs.

How do you deal with these hassles?

Invest in multiple units. If one tenant defaults on their rent payment, you’ll still have rental income from other units.

You can also have reserve funds in place. Matt suggests having at least $5,000 – $10,000 in reserve for every single family home.

Finally, you can invest in real estate syndications. We’ll discuss them more in the next section.

Real Estate Syndications

A syndication is basically an investment pool.

Several people get together and pool their resources, with one of them being the syndicator (a person or company who leads the real estate syndication). The syndicator forms an LLC and finds investors.

Using the pooled money, the syndication makes a down payment, gets a loan, and invests in rental units that could have been otherwise out-of-reach for individual investors.

Real estate syndications are an effective way to build passive income. If a tenant clogs their toilet, you don’t need to worry about it. The syndication manages the maintenance.

Although the returns might be less (because of the management fee) it can save you a lot of time!

People often try to actively manage their own real estate holdings as landlords in hope for better returns. However, they fail to factor in the time-cost associated with it. In reality, they get a better return on their money and time by paying someone else to manage the property.

An Additional Tip for Self-employed People

Matt Franklin, who exited the corporate world and has been self-employed for 15 years, shares interesting insights on how retirement planning varies for self-employed individuals on the Retirement Revealed podcast.

In Matt’s experience:

When you work for a company, your retirement savings is automatic. Your 401(k) contributions are deducted directly from your paycheck and your employer matches the contributions. It’s that simple!

However, when you’re self-employed, you’re responsible for making your own contributions. It’s no longer automatic.

The annual income for business owners often fluctuates every year. This makes it difficult to decide a fixed contribution amount every year.

You might also find it difficult to contribute right after you quit your job. After all, the first few years of a new business can be challenging.

But the more you keep delaying your retirement contributions, the farther your ideal retirement might get away from you! Focus on your savings and retirement planning from the moment you quit your job and start your business.

In fact, Matt frequently suggests, “if you’re not saving $1,000/month towards your retirement you need to get a side hustle just to do that!”

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To learn more about retirement planning and real estate investing, check out the resources below!

If you have any questions, feel free to contact us or connect with our guest Matt Franklin through the information provided below!

Resources:

Connect With Matt Franklin:

Connect With Jeremy Keil:

About Our Guest:

Matt Franklin has been self-employed for 15 years, and is currently in “pre-tirement.” After appearing on Shark Tank for one of his businesses, he has spoken to hundreds of entrepreneurs, and one thing he has noticed that’s almost universal is that we’re woefully unprepared for retirement. Obsessed with investing and retirement planning for the last five years, and through his research, along with some good (and bad) decisions, Matt has been able to shave almost 10 years off his working life. Matt also hosts the Rogue Retirement Lounge Podcast, where he talks about investing in cash-flowing assets to blow up your returns. He also covers tax-reduction strategies, asset protection, macroeconomics, and other financial goodness, along with other info you need to know as you approach retirement, including Social security, Medicare, travel, health, longevity, and more.

Content

Results and figures presented within the above links are hypothetical, unaudited, and are intended for illustrative purposes only.

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Keil Financial Partners assumes no liability, or responsibility for any errors, omissions, or other issues with the links and their respective contents. This includes both the website content and any potential bugs, viruses, or other technical threats.

No Tax Advice

Keil Financial Partners does not provide any tax advice. No information or results from the links should be interpreted as tax advice. Please seek guidance from a qualified tax professional for any and all tax-related matters.

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