Real Estate Investing: Crafting a Passive Income Strategy for Retirement

 

Why Passive Income Matters

Building enough wealth to retire comfortably typically requires decades of active income from your career. But relying solely on active income to fund retirement has some downsides:

  • Your income stops when you quit working.
  • You are dependent on increasing your salary over time.
  • Burnout can result from working full-time for 30+ years.
  • You may be forced to work longer than desired if savings are inadequate.

Generating passive income solves many of these issues and is a key ingredient for an ideal retirement.

What is Passive Income?

Passive income is earnings received on a regular basis without having to punch a clock or actively work for them. The money is generated by assets or ventures that operate with minimal day-to-day involvement on your part.

Building even modest streams of passive income that supplement your career earnings can make a huge difference long term. Passive income can provide:

  • Cash flow without requiring your time and effort
  • Income diversification beyond your job
  • Financial freedom to retire early and on your terms
  • Ongoing earning power outside of employment
  • Residual lifetime income in retirement

Real Estate for Passive Income

One of the best assets for generating sustainable passive income is real estate. Rental properties provide passive income from rents consistently. And equity in properties builds over time as mortgages are paid down and values appreciate.

Founder of NT Capital and host of the Passive Wealth Strategies podcast, Taylor Loht, joined Jim Pfeifer on the Passive Investing from Left Field podcast to discuss the advantages of passive real estate investing. Taylor remembered when he came to realize that real estate was one of the greatest tools for passive investment: ”I had a light bulb moment when I heard about real estate syndication because it helped me see how people invest in all these big assets that we see around us.”

Long-term rental property ownership can generate strong ongoing cash flows decade after decade. The equity can also be tapped via refinancing or selling to unlock significant lump sums.

But owning and managing rentals yourself requires substantial hands-on work. Being a landlord can feel like a part-time job and comes with headaches like tenant issues, maintenance, and vacancies.

Thankfully alternatives exist to invest in real estate passively.

Options for Passive Real Estate Investing

There are several ways to invest in real estate beyond direct homeownership:

  • REITs – Real estate investment trusts allow you to invest in large-scale commercial properties as a shareholder. A passive way to diversify but offers limited control.
  • Crowdfunding – Platforms like Fundrise allow you to buy shares of a rental property along with other investors. More passive but higher fees.
  • Syndications – Pool capital with others to buy commercial real estate overseen by a sponsor. Very passive with higher return potential.

Passive options like REITs, crowdfunding, and syndications allow you to invest in income-producing real estate without having to deal with tenants and toilets.

Crafting an Individualized Passive Strategy

Within the passive real estate investing universe, you have to craft a tailored strategy that aligns with your specific goals and constraints.

Important factors to consider when developing your personalized passive real estate plan include:

  • Goals – What are your total return targets and desired cash flow levels? What is your retirement timeline?
  • Time Commitment – How much time do you want to spend on your investments? What’s your comfort level analyzing deals?
  • Overall Risk Tolerance – How much portfolio volatility and illiquidity are you willing to take on?
  • Liquidity Needs – Do you need regular cash distributions or prefer long-term capital growth?
  • Investment Size – What total amounts can you deploy? What are your per deal minimums?
  • Tax Considerations – How much passive gain do you need to offset with passive losses?
  • Diversification – How much portfolio concentration are you comfortable with per project, operator, or region?
  • Hands-On Interest – Do you want zero involvement or open to some optional engagement?
  • You likely have a mix of factors pulling you in different directions. Plot these out clearly before settling on a passive real estate strategy tailored just for you.

Passive Real Estate Syndications

One passive model that checks many boxes for investors is real estate syndication. Here’s how it works:

  • An experienced sponsor sources, acquires, and operates a substantial commercial property like an apartment complex or office building.
  • You pool capital alongside other private investors to fund the equity portion of the purchase. 
  • Ownership of the purchased property is structured as an LLC. As an investor, you own proportionate LLC shares based on how much you invested.
  • The sponsor executes the business plan as the general partner while you and other investors are limited partners who share in profits.
  • You receive periodic cash flow distributions plus your share of appreciation upon an eventual sale.

Syndications provide passive exposure to institutional-grade real estate while leveraging experienced sponsors to navigate the entire investment lifecycle. With little day-to-day responsibilities, you can sit back and collect consistent income from high-quality assets.

This path can generate strong risk-adjusted returns that may not be otherwise achievable as an individual rental property owner and operator. Top sponsors target 15%+ average annual returns on their deals.

Suitability for Retirement Investing

Intelligently selected real estate syndications well match the needs of retirement investing:

  • Diversification – Each deal represents just a fraction of your total portfolio. This dilutes risk compared to owning just a few rentals directly.
  • Cash Flow – Profit distributions provide tax-advantaged passive income to supplement your salary or retirement accounts.
  • Wealth Appreciation – The value of the assets often appreciates over the investment term, which can be 5-10+ years.
  • Reduced Tax Burden – Depreciation deductions offset taxes on rental income. Capital gains taxes can be deferred and reduced.
  • Wealth Transfer – Interests can be transferred to heirs in a tax-efficient manner.
  • Hands-Off – An experienced sponsor completely handles sourcing, execution, and management. You have no landlord responsibilities.
  • Reinvestment – Refinancing and sale proceeds can be recycled into new deals for further compounding.

A potential downside is liquidity options. Occasionally deals allow partial or full redemption options after a set hold period if liquidity is needed. However, this is rare.

A prudently assembled portfolio of syndication assets can generate perpetuating cash flow and equity growth for sustainable retirement income. As your equity base grows, so does your annual passive earnings potential.

Mesh With Other Investments

For most passive investors, syndicated real estate represents one part of a broader investment portfolio and retirement strategy. A traditional retirement strategy will have many investments like those listed below:

  • 401K, IRAs, etc. – Take advantage of tax-deferred compounding in retirement accounts.
  • Dividend stocks – Invest for quarterly income and growth in public stocks.
  • Alternative income streams – Build other passive revenue sources like online businesses.
  • Cash reserves – Maintain an emergency fund in cash.
  • Rental properties – If open to being active, directly own rentals.
  • Peer lending – Earn interest lending money on platforms like LendingClub.

However, by focusing on syndications, investors create passive income streams that they can then complement with traditional retirement savings. A diversified passive investment portfolio can provide multiple compounding income sources serving as the foundation to a retirement strategy. Then investors can supplement their retirement savings with the traditional sources, such as retirement accounts or stocks.

As real estate investor Taylor Loht suggests, “Have buckets of money that you allocate to different strategies, to different investments.” This balanced approach helps manage overall risk in both passive investing and in overall retirement planning.

Getting Started with Syndicated Deals

If interested in exploring passive real estate syndications, here is a high-level process for getting started:

  1. Learn about syndications – Plenty of free resources exist to learn about how syndications work, risks involved, anticipated returns, etc. Assemble a knowledge base. Left Field Investors is a great place to start learning the ropes.
  2. Determine your investing criteria – Decide which investment parameters match your current situation like investment amounts, cash flow needs, timelines, etc.
  3. Join investment communities –  Learn about syndications, sponsors, and deals by joining a passive investing community. 
  4. Evaluate potential deals – As investment offerings arise, assess the business plans, target returns, markets, asset types, risks, and sponsors. Compare these to your investing criteria.

Real estate syndications can be a powerful vehicle for generating passive retirement income. By partnering with experienced sponsors and leveraging their expertise, investors get access to institutional-grade assets with strong return potential. When combined with other income streams in a diversified portfolio, prudently selected syndications provide perpetual cash flow, steady appreciation, and tax efficiencies to fund your lifetime needs. Continue your passive investing education by joining Left Field Investors.

Chris Franckhauser

Vice President of Strategy & Growth, Advisory Partner

Chris Franckhauser, Vice President of Strategy & Growth, Advisory Partner for Left Field Investors, has been involved in real estate since 2008. He started with one single-family fix and flip, and he was hooked. He then scaled, completing five more over a brief period. While he enjoyed the journey and the financial tailwinds that came with each completed project, being an active investor with a W2 at the time, became too much to manage with a young and growing family. Seeing this was not easily scalable or sustainable long term, he searched for alternative ideas on where to invest. He explored other passive income streams but kept coming back to his two passions; real estate and time with his family. He discovered syndications after reconnecting with a former colleague and LFI Founder. He joined Left Field Investors in 2023 and has quickly immersed himself into the community and as a key member of our team.  

Chris earned a B.S. from The Ohio State University. After years in healthcare technology and medical devices, from startups to Fortune 15 companies, Chris shifted his efforts to consulting and owning a small apparel business when he is not working with LFI (Left Field Investors) or on his personal passive investments. A few years ago, Chris and his family left the cold life in Ohio for lake life in the Carolinas. Chris lives in Tega Cay, South Carolina with his wife and two kids. In his free time, he enjoys exploring all the things the Carolinas offer, from the beaches to the mountains and everywhere in between, volunteering at the school, coaching his kids’ sports teams and cheering on the Buckeyes from afar.  

Chris knows investing is a team sport. Being a strategic thinker and analytical by nature, the ability to collaborate with like-minded individuals in the Left Field Community and other communities is invaluable.  

Jim Pfeifer

President, Chief Executive Officer, Founder

Jim Pfeifer is one of the founders of Left Field Investors and the host of the Passive Investing from Left Field podcast. Left Field Investors is a group dedicated to educating and assisting like-minded investors negotiate the nuances of the passive investing landscape and world of syndications. Jim is a former financial advisor who became frustrated with the one-path-fits-all approach of the standard financial services industry. Jim now concentrates on investing in real assets that produce cash flow and is committed to sharing his knowledge with others who are interested in learning a different way to grow wealth.

Jim not only advises and helps people get started in passive real estate syndications, he also invests alongside them in small groups to allow for diversification among multiple investments and syndication sponsors. Jim believes the most important factor in a successful syndication is finding a sponsor that he knows, likes and trusts.

He has invested in over 100 passive syndications including apartments, mobile homes, self-storage, private lending and notes, ATM’s, commercial and industrial triple net leases, assisted living facilities and international coffee farms and cacao producers. Jim is constantly looking for new investment ideas that match his philosophy of real assets producing cash flow as well as looking for new sponsors with whom he can build quality, long-term relationships. Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Chad Ackerman

Chief Operating Officer, Founder

Chad is the Founder & Chief Operating Officer of Left Field Investors and the host of the LFI Spotlight podcast. Chad was in banking most of his career with a focus on data analytics, but in March of 2023 he left his W2 to become LFI’s second full time employee.

Chad always had a passion for real estate, so his analytics skills translated well into the deal analyzer side of the business. Through his training, education and networking Chad was able to align his passive investing to compliment his involvement with LFI while allowing him to grow his wealth and take steps towards financial freedom. He has appreciated the help he’s received from others along his journey which is why he is excited to host the LFI Spotlight podcast and share the experience of other investors and industry experts to assist those that are looking for education for their own journey.

Chad has a Bachelor’s Degree in Business with a Minor in Real Estate from the University of Cincinnati. He is working to educate his two teenagers in the passive investing world. In his spare time he likes to golf, kayak, and check out the local brewery scene.

Ryan Steig

Chief Financial Officer, Founder

Ryan Stieg started down the path of passive investing like many of us did, after he picked up a little purple book called Rich Dad, Poor Dad. The problem was that he did that in college and didn’t take action to start investing passively until many years later when that itch to invest passively crept back up.

Ryan became an accidental landlord after moving from Phoenix back to Montana in 2007, a rental he kept until 2016 when he started investing more intentionally. Since 2016, Ryan has focused (or should we say lack thereof) on all different kinds of investing, always returning to real estate and business as his mainstay. Ryan has a small portfolio of one-to-three-unit rentals across four different markets in the US. He has also invested in over fifty real estate syndication investments individually or with an investment group or tribe. Working to diversify in multiple asset classes, Ryan invests in multi-family, note funds, NNN industrial, retail, office, self-storage, online businesses, start-ups, and several other asset classes that further cement his self-diagnosis of “shiny object syndrome”.

However, with all of those reaches over the years, Ryan still believes in the long-term success and tenets of passive, cash-flow-focused investing with proven syndicators and shared knowledge in investing.

When he’s not working with LFI or on his personal passive investments, he recently opened a new Club Pilates franchise studio after an insurance career. Outside of that, he can be found with his wife watching whatever sport one of their two boys is involved in during that particular season.

Steve Suh

Chief Content Officer, Founder

Steve Suh, one of the founders of Left Field Investors and its Chief Content Officer, has been involved with real estate and alternative assets since 2005. Like many, he saw his net worth plummet during the two major stock market crashes in the early 2000s. Since then, he vowed to find other ways to invest his money. Reading Rich Dad, Poor Dad gave Steve the impetus to learn about real estate investing. He first became a landlord after purchasing his office condo. He then invested passively as a limited partner in oil and gas drilling syndications but quickly learned the importance of scrutinizing sponsors when he stopped getting returns after only a few months. Steve came back to real estate by buying a few small residential rentals. Seeing that this was not easily scalable, he searched for alternative ideas. After listening to hundreds of podcasts and attending numerous real estate investing meetings, he determined that passively investing in real estate syndications was the best avenue to get great, risk-adjusted returns. He has invested in dozens of syndications involving apartment buildings, self-storage facilities, resort properties, ATMs, Bitcoin mining funds, car washes, a coffee farm, and even a Broadway show.

When Steve is not vetting commercial real estate syndications in the evenings, he is stomping out eye diseases and improving vision during the day as an ophthalmologist. He enjoys playing in his tennis and pickleball leagues and rooting for his Buckeyes and Steelers football teams. In the past several years, he took up running and has completed three full marathons, including the New York City Marathon. He is always on a quest to find great pizza, BBQ brisket, and bourbon. He enjoys traveling with his wife and their three adult kids. They usually go on a medical mission trip once a year to southern Mexico to provide eye surgeries and glasses to the residents. Steve has enjoyed being a part of Left Field Investors to help others learn about the merits of passive, real asset investments.

Sean Donnelly

Chief Culture Officer, Founder

Sean holds a W2 job in the finance sector and began his real estate investing journey shortly after earning his MBA. Unfortunately, it could not have begun at a worse time … anyone remember 2007 … but even the recession provided worthy lessons. Sean stayed in the game continuing to find his place, progressing from flipping to owning single and multi-family rentals to now funding opportunities through syndications. While Sean is still heavily invested in the equities market and holds a small portfolio of rentals, he strongly believes passive investing is the best way to offset the cyclical nature of traditional investment vehicles as well as avoid the headaches of direct property ownership. Through consistent cash flow, long term yield and available tax benefits, the diversification offered with passive investing brings a welcomed balance to an otherwise turbulent investing scheme. What Sean likes most about the syndication space is that the investment opportunities are not “one size fits all” and the community of investors genuinely want to help.

He earned a B.S. in Finance from Iowa State University in 1995 and a MBA from Otterbein University in 2007. Sean has lived in eight states but has called Ohio home for the last 20+.  When not attending his children’s various school/sporting events, Sean can be found running, golfing, shooting or fly-fishing.

Patrick Wills

Chief Information Officer, Advisory Partner

An active real estate investor since 2017, Patrick Wills’ investing journey began like many others – after reading the “purple book” by Robert Kiyosaki. Patrick started with single family rentals, and while they performed well, he quickly realized their inability to scale efficiently while remaining passive. He discovered syndications via podcasts and local meetups and never looked back. He joined Left Field Investors in 2022 as a member and has quickly become an integral part of the team as Vice President of Technology.

An I.T. Systems Engineer by trade, he experienced the limitations of traditional Wall Street investing firsthand in his career and knew there had to be a better way to truly have financial freedom.

Unfortunately, that better way is inaccessible to those who need it most. His mission is to make alternative investments accessible to everyone who seeks to take control of their financial future and to pursue their passions in life.

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