Published on: October 11, 2020
Generating passive wealth – making money while you sleep – is a nice idea.
But as a busy professional, most of the passive wealth generation ideas being bandied about aren’t truly passive. Or at least they won’t be truly passive until a few years down the road. Most require your active participation to get them up and running.
Based on your workload now, you just don’t have the time for that.
You don’t need a second job, just additional sources of revenue.
Therefore, you need a truly passive avenue to invest, which offers real returns.
Truly passive wealth means investing in assets that generate income for you. Your money works for you, not you working to earn.
The aim of passive wealth generation is to help you eventually replace your earned income to a point where you can choose to work or not. It frees up your time to take on challenges you want to focus on or spend more time with your family. For those who successfully achieve true passive wealth generation, they can retire from being “busy professionals”, and start to live life as they see fit.
You will notice that we didn’t use the term passive income, and that’s deliberate. Wealth creation is a long-term process and will not happen overnight. It also requires the discipline for reinvestment.
With passive wealth, it also means that in addition to your stable, predictable income, you are also enjoying asset appreciation. And that primarily comes from investing in real estate.
The typical real estate investment process requires that you essentially become a property manager. You’ll need to manage tenant problems, handle late-night phone calls, management issues – the works. And even if you outsource property management, these are still ultimately your responsibility.
On the other hand, there’s property flipping. This means buying, fixing, and selling a property. This requires your active involvement in all aspects of the process. Hence, this cannot be a source of passive real estate investment.
None of these equate to what we recommend as passive wealth creation through real estate investment. As a busy professional, you do not have the time to dedicate to these types of projects.
The third option is one that we have used at Xsite Capital to generate passive wealth for our clients who are often extremely busy professionals. To consider real passive wealth, you need to invest in real estate. And the best option for passive real estate investment is by investing in commercial and real estate projects where you won’t need to manage the investment or the properties.
In this option, active ownership of property doesn’t mean ‘landlord’ with the attendant headaches. With passive investment, you allow those with the expertise to generate and manage the property investments on your behalf. You enjoy the returns in terms of income, tax benefits, and asset appreciation.
This is often referred to as apartment syndication and is one of the smartest ways for real estate investment.
Building a strong wealth foundation – one that can last through multiple generations – should be your goal for passive wealth generation. As long as you have the discipline and the right investment partners with you, you can build your passive wealth system.
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