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It is Passive If You Are Doing It Right?

The greatest virtues of real estate is leverage, favorable tax treatment for investors, and the most important one of all it is passive! In effect, I suggest you take advantage of everyday inflationary pressures to ensure ever-increasing cash flow and equity stakes in my rental portfolio. It’ll require some management / oversight from you but the payoff is well worth it.

I use property managers to manage my rental properties so I am at a point where QC’ing the monthly rental statements to ensure I am not double billed, that rents are being collected and that they are adjusted to fair market rates timely, and that repair / maintenance service provider warranties are being enforced is about the extent of my involvement. When I bought my first rentals I was the property mgr. I did that for about 5 years until I had a good feel for how the job should be done and then opted to outsource it to save me TIME at the cost of money (5-10% of gross rents). It was great training and I’d recommend newbie investors do the same. In addition, the best class I have ever taken (it cost me $99 back in 1991) was the H&R Block Tax Preparer’s Course. Taking that class actively listening for anything and everything that would be of concern to a real estate investor opened my eyes to reality of the tax code and how to organize my personal life and finances in conjunction with my business finances to ensure the most favorable tax result for my family. Read “Rich Dad, Poor Dad” by Robert Kiyosaki for an entertaining dissertation on how the rich organize their finances…. . It may be fictional but that is really irrelevant since it is all about a mindset if you are looking to build wealth. Think about it…..