We live in a world of specialization. There are legal, medical, engineering and many other specialists. These experts spend a significant amount of time and intense study to become well-versed in their fields. This sometimes creates a blind spot when it comes to investing for retirement. That blind spot can fool someone into thinking that they will always be able to create income with specialized skills. It can also lead to financial apathy, causing retirement planning to become an afterthought, and left to someone else to manage. This can be a great gamble.
Instead of leaving it to chance or putting off retirement, you can put the odds in your favor. One way is to create income through real estate investing that will support you now and in your retirement. How can a professional with a calendar full of appointments find the time and knowledge to participate in yet another specialization like real estate investing?
As a busy physician, my answer to that question was leverage. Anybody who has purchased a home with money borrowed from the bank has used leverage; it is a time-honored way of obtaining something of great value without having to come up with all the cash on the front end.
The use of leverage doesn’t stop with money. We can leverage other people’s time, knowledge, connections, and experience. This is how a doctor like me, or a lawyer, engineer or CPA, can invest in real estate without disrupting his or her career — or leaving retirement planning for someone else to manage.
The real estate world is also populated with its version of specialists, all of whom have expertise you can leverage to create a passive income stream. There are brokers of all types, specializing in commercial, residential, industrial, hospitality and other real estate sectors. Private equity groups, pension funds and family offices also specialize in their niches in the real estate world. Woven in between all the specialists is the entrepreneur, who has the vision and gathers the specialists together to create value and produce a final product. A busy professional typically does not have a background in real estate, and often lacks the time to produce the opportunities that the entrepreneur and the real estate professionals can.
By taking advantage of the expertise of real estate entrepreneurs and specialists, it’s possible to not only build a passive income stream, but to bring a new sense of freedom to your current career path and your future. Early in my investment career, my real estate job started after 5:00 p.m. and continued into the weekends. Initially, I acquired my own small properties with loans from the bank. As my appetite grew, I knew I needed help to increase my holdings. I read every book on real estate I could get my hands on, went to seminars and learned as much as possible about different types of real estate, financing, development and acquisition strategies. I was leveraging other people’s knowledge and experience. This can get a new real estate investor to a certain point of success, but many will want to go further.
Eventually, I sought out a mentor — one of my close friends was a real estate expert. I gained priceless knowledge and experience from his mentorship, as well as tangible value through the development of a successful medical office complex. Since then, my portfolio has grown, and I have continued to leverage the time, knowledge and experience of others. Currently, as the principal of a private equity firm in Austin, Texas, I’m able to utilize the time and knowledge of my partner and employees to provide solid opportunities for our investors, and for my own portfolio. Concurrently, the employees at my medical office continue to assist in patient care.
FIVE SIMPLE INITIAL STEPS
If your primary career is already in full swing and you would like to use some leverage to create more choices in your life, consider the following five steps to beginning in real estate:
- Become familiar with real estate and the process of syndication. The more you know, the better questions you will ask.
- Use your network. Ask your friends if they have had success investing in real estate. If so, find out who they work with or invest with. You can also join Facebook or LinkedIn groups. There is a group out there for everything, and you will learn where like-minded people congregate.
- Go to seminars. There you will meet the people, obtain the knowledge and create the leverage you will need to move forward. This uses less time leverage, but will drastically increase your knowledge, which increases your financial leverage.
- Find local meet-up groups in your area that focus on your interests. There are real estate meet-ups in almost every midsize city and above. Here you will meet potential sponsors and hear about local real estate.
- Act. Once you find an opportunity you like, or a sponsor who has an attractive project, make a small investment. This gives you access to the deal so that you can understand the process in real time. A small investment lowers the financial effect of a loss if things do not go right. You can always invest more as you become more educated.
There is no rule that states you have to wait until the end of your career to be able to retire. If you create ongoing passive income streams, you can methodically develop enough outside income to replace your current professional salary.
Real estate is not magic, and there are many resources available for those who wish to become real estate investors. With the right amount of leverage, you can create the passive income you want, the retirement you desire or a second career if you so choose.
Original article posted on Forbes December 11, 2018