Retirement Planning Made Easy with Real Estate

Retirement Planning Made Easy with Real Estate

A 2022 survey by Allianz Life revealed that 63% of non-retired Americans fear running out of money in retirement before they run out of life. 

It’s easy to understand that fear. What do you do if you run out of money and you’re too old to keep working? It’s almost too scary to contemplate. 

People with a high net worth are not immune. What if a bad stock market year at the wrong time leaves you with drastically-reduced means? What if you have to scale back your lifestyle? We imagine retirement as the “Golden Years” — in other words, the last time you want to be thinking about giving up your comforts and simple pleasures.

A core value of Investor Boardroom is to help pre-retired persons alleviate that fear. A big piece of the puzzle is to give them an alternative path to retirement as opposed to the one that society prescribes to them. 

The way we’re told to approach retirement makes it seem complicated, austere … even more scary than it has to be. We’re told to give up control and throw our fates on the mercy of financial advisors and the corporate boards of Blue Chip companies.

We propose real estate as the most direct path to a prosperous retirement. And we curate opportunities for real estate investment to make that path even easier.

The Problem with IRAs and 401(k)s

If you have been dutifully contributing to an IRA or 401(k), I don’t blame you. I get why it’s an attractive option. I’m sure your financial advisor and your employer made a good pitch.

But with your permission, I’m going to gently poke holes in the sanctity of these IRS-sanctioned retirement accounts. Remember, these plans were created by the government. Whatever side of the aisle you find yourself on, I think we can agree on one thing — When has the government ever done something out of complete altruism?

The individual retirement account (IRA) as we know it came into being as a provision of the Employee Retirement Income Security Act of 1974 (ERISA; P.L. 93-406). They were initially conceived as a retirement vehicle for employees without access to pension benefits. Access to IRAs was expanded to everyone in 1981. The Roth IRA became a thing in 1997.

As for the 401(k), it was created by Section 401(k) of the Revenue Act of 1978 as a way to defer taxes on stock options and bonuses saved for retirement.

So how do the people behind this retirement-savings revolution feel about what they created? Pretty good?

In 2017, the Wall Street Journal published an article titled “The Champions of the 401(k) Lament the Revolution They Started.” 

In it, they argue that “the proliferation of 401(k) plans has exposed workers to big drops in the stock market and high fees from Wall Street money managers.” Benefits consultant Ted Benna, often called the “Father of the 401(k),” is even quoted as saying ​​he “helped open the door for Wall Street to make even more money than they were already making.”

By setting up broker-dealers as the gatekeepers of the 401(k), millions of unsuspecting employees with minimal financial education have been funneled into the stock market, encouraged to accept harrowing volatility because “the market always goes up over time.” Of course, catch a big downswing at the wrong moment (age 62) and that villa in Boca may be replaced by a nursing home in Akron.

Meanwhile, the brokers have a captive audience of fee-paying “investors,” and the Blue Chips get a continuous influx of investment capital that they don’t even have to pay dividends on! The artificial demand pumps up the prices of the stock far beyond what is justified by their earnings. It’s the mother of all bubbles … but as long as Wall Street is getting rich, they don’t care. Until the bubble bursts, and then it’s nothing but cat food on the menu.

Of course, I don’t have a crystal ball. This could all be tinfoil-hat bullshit. But even if I’m wrong about the fundamentals, consider this … 

You Don’t Get to Decide When You Retire

I don’t know about you, but I don’t like being told what to do. 

Yet here come IRAs and 401(k) plans, telling us when we’re done working. No disbursal without penalties until you’re 59½ years old (what Magic Eight-Ball did they use to pick that number?) And if you haven’t started taking disbursals by age 72, you’re forced to start taking them or you face more penalties.

It’s all very heavy-handed. But all of us with IRAs and 401(k) plans accept it — we’re being told when we can retire. The government is deciding for us how long we need to be a tax-paying economic unit, sacrificing time and contributing labor into the Capital-E Economy.

Advantages of Real Estate over IRAs and 401(k)s

What if, instead of making contributions to your IRAs and 401(k)s, you saved that money until you could afford the down payment on a rental property? Or better yet — invested that lump sum passively in a multifamily syndication with an operator like Investor Boardroom, a completely passive investment with all the advantages of commercial scale?

This strategy compares very favorably to the IRA/401(k) conveyor belt. Let’s just run down a few points … 

  • It’s Still a Long-Term Strategy. One of the boons of an IRA or 401(k) is that it forces discipline on us. Once the money is in the retirement account, it has to stay there where it can experience compounding growth. You’re not tempted to pull it out early to buy a necklace or Lamborghini, because if you do, there are penalties and taxes.

Investing in real estate is a long-term strategy, too. After all, most real estate investments are not liquid — they can’t be traded on the open market like a stock. It’s a rather long and involved process to sell or refinance the property into a state of liquidity.

This is often highlighted as a disadvantage of real estate investing … but if the goal is to keep your greedy hands off the money so it can be put to work for your future comfort, the illiquidity of real estate investing actually starts to look like an advantage.

  • You’re Protected from Volatility. Real estate is much less volatile than the traditional bread-and-butter of IRA and 401(k) funds — the stock market. Yes, the S&P has marched up over time … but what if it takes a nosedive right as you’re about to retire?

This is not to say that real estate never loses value — it does run through cycles, and property values do go down. But the declines tend to lag behind the declines in the stock market, and they usually don’t crash quite so dramatically. 

Plus, operators like Investor Boardroom know how to examine market fundamentals and judge whether a property is likely to lose or gain value. Again, it’s not a crystal ball, but it’s a very educated presumption — much better than throwing money blindly into a black box.

  • You Get Cash Flow. One of the biggest sins of funneling employee retirement savings into the stock market casino is that the companies get to use the investment dollars without having to give any of it back. 

Yes, the stock may grow in value as the company grows … but unless it’s a dividend stock, they don’t owe you a dime’s worth of earnings. Who pockets the earnings of Tesla? TSLA owners … or Elon Musk and the managers and board of directors with their fat bonuses?

Real estate, on the other hand, produces cash flow, because it’s built into the business model. And with cash flow, you can start to set your sights on financial freedom, as we’ll discuss below.

But What About the Tax Savings?

Of course, the biggest selling point of the IRA or 401(k) is that you get to “grow your retirement savings tax-free.” Who wouldn’t want to take that deal?

Here’s the thing, though … There are huge tax advantages to real estate investing. The tax code was specifically designed to incentivize private investors to take on the risk of property development and maintenance — so the government wouldn’t have to shoulder the risk of developing the American frontier.

While it’s not exactly an apples-to-apples comparison, through tricks like accelerated depreciation and the pass-through deduction, real estate investors with savvy accountants can often avoid paying taxes altogether — whether or not the asset is held in the name of an IRA or 401(k). 

Plus, you get all the advantages I listed in the previous section. Sound like a good trade-off? 

Reframing the Goal — Financial Freedom

I have to come back to the fact that via IRAs and 401(k)s, the government is telling you how long you have to work and when to retire. I just can’t let that go — it pisses me off.

So what’s the answer? Redefining the question. 

I mentioned above that a core value of Investor Boardroom is making retirement-planning less complicated and less scary.

Another core value of ours is reframing the question away from “retirement” and toward a related but subtly different goal — financial freedom. 

What does it mean to be “financially free?” It means that you are no longer a slave to money — or rather, a slave to the earning of money. You no longer need to report to work or appease clients to keep money flowing in to pay the bills. Your bills are paid, whether you report to work or not.

Financial freedom is freedom from the rat race. Freedom from the commute, or the whims of overweening bosses. Freedom to spend time with your family, pursue your passions, explore the world, and make a difference.

If that’s the dream … What makes it come true?

I’ll tell you what — methodically replacing every dollar you have to work for … with a dollar that comes to you passively. 

Say, your portion of the rental cash flow from an Investor Boardroom syndicated investment in an apartment complex.

Look at the list of bills you’re on the hook for every month, as well as your outlay for incidental and discretionary spending. Maybe right now your job or your business income covers most of it, even all of it.

Start channeling your retirement savings into real estate. As the trickle of cash flow builds into a creek, then a stream, then a mighty river, you gradually cover more and more of your bills with that passive income. When your cash flow covers all of your expenses, that’s it — you’re free!

Of course, this assumes that you don’t take the cash flow as an excuse to dramatically increase your means — upgrade from a Honda Accord to a Lambo, an apartment to a penthouse, etc. The more you do that, the longer it will take.

But let’s flip the script — forget 72. Forget 59 ½. (Honestly, what the hell is up with that number?) Forget whatever script the government has cooked up for your one and only turn on this planet. As fast as you can achieve financial freedom … that’s how fast you get to enjoy it. 

You could get there at age 50, age 40, or even younger … and have the rest of your days to live life on your own terms. Work if you want to, on what you want to, and spend the rest of that time doing what you want to do … because for the financially free, our time is truly our own.

Investor Boardroom is here to crush the retirement blues and make the dream of financial freedom real for anyone who wants to reach out and grab it.

If you want to learn more about how we help our investors get there, check out our website and sign up to join our weekly newsletter. Our newsletter is JAM packed with info on money, investing, real estate and how to achieve financial freedom. 

If you’d like to chat with us to see if we may be a fit for your investing and wealth building goals, CLICK HERE to head over to our website and fill out the contact form.

Resources available to you:

If you’re interested in learning more about the kinds of private real estate investment opportunities I referenced in this blog, download my free ebook titled “The Rapid Millionaire Blueprint” by clicking the link HERE.

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All the Best,
Adam Balsinger
InvestorBoardroom.com

Multifamily Real Estate Investing

About

Our goal at the Investor Boardroom is to provide value – to our investors, to our properties and their residents, to our communities, our staff and our partners / vendors. For you, a possible investor of ours, we want to help you create passive income and build generational wealth.
 

Our partners have diverse backgrounds. We’ve been a C level executive in corporate America, an integral piece in a successful small business operating out of NYC and an entrepreneur in marketing / sales / real estate. This awesome array of experience has helped our partners arrive at the same conclusion – multifamily apartment syndications are THE BEST INVESTMENT for those looking to create passive income, build wealth and realize financial freedom.  
Our team conducts regular diligent research in order to identify emerging markets that are ripe for growth. We are constantly sourcing and analyzing high quality deals in these target markets in order to provide you with consistent high-quality multifamily investment opportunities. For most of our investments, you DO NOT need to be an accredited investor. We pride ourselves on opening our investments to non-accredited investors as we believe high quality investment opportunities should not be available to everyone. The minimum investment is typically $50,000. We invite you to start small and dip your toe into the water. Once you’ve had a taste, we’re confident you’ll invest with us again and again and we look forward to helping you create significant amounts of passive income while helping you achieve financial freedom. 

We’re ultra-conservative when we underwrite (or analyze) deals. For example, the average market increase in market rents may be 5% in one of our target markets, however we’ll only assume a 3% rent increase during our ownership. Our goal is always to under promise and over deliver! In addition, we make sure we have extra funds at closing and that we’re consistently adding to our reserves from cash flow; we look to secure long term debt which is important in the event of a market correction; we look for value-add opportunities with strong cash flow that we can stabilize in 12 to 24 months. Returns that consistently outperform the stock market are great yes, but we also look to provide investment opportunities with minimal downside risk. 

Communication and transparency are extremely important to us. We’re an open book to answer any questions or concerns you may have about an investment as our goal is to provide you with as much (or as little) information as needed to ensure you are 100% comfortable investing with us. And once we close, we provide you with monthly updates so you’re aware of what’s going on at the property and we also provide more in depth reports every quarter along with distributions. 

We are SEC Compliant and follow a defined process with every new investor. Once you join the Executive Suite Investor Club, you’ll receive our weekly newsletter full of articles, videos, podcasts and insights to help you fully understand the amazing power of investing in multifamily apartments while also helping you make better investment decisions. From there, book a call with our team so that we may understand your investment and financial goals while providing you with more details on our investment philosophy and strategy. If we are a good fit for one another, you’ll begin receiving alerts about upcoming investment opportunities. 

Don’t wait, join the Executive Suite today!