Passive Income Isn’t a Myth

money house

At 38% of all homeowners, millennials are changing how America looks at homeownership. They are shifting the lens from the protection of a roof over their head and having it fully paid off to activating leverage to promote financial growth and opportunity.

Not only are millennials now the largest homebuying group in America, but they’re also the most educated with at least 79% having at least a bachelor’s degree or higher. There should be no surprise that the most educated generation in American history approaches financial decisions and investments differently than their ancestors, thanks to traumatic events like 9/11 and the 2008 market crash, the rise of social media, and extremely high student loans. An alarming recent study by Investopedia Affluent Millennial Survey reported, “46% of millennials say they aren’t saving enough money and 39% say they expect to be forced to work beyond retirement age.”

Believe it or not, expensive taste in coffee and avocado toast is NOT to blame for their economic outlook. For perhaps the first time in U.S. history, the millennial generation is worse off than baby boomers were at the same stage in life. “Millennials earn 20% less than baby boomers,” cites a study by Young Invincibles. Life, experiences, and trauma affect how generations behave, especially with their hard-earned money.

If you’re in real estate, you know how different millennials are in their approach to purchasing a home. They’re interested in the long-term investment of a home, plan to live in homes longer, and tend to focus on convenience and quality over the square feet. What they may not know is purchasing a home can create something they are ALL searching for – passive income, and it’s your job as a real estate agent to explain how it works.

You’ve read the numerous articles and blogs of entrepreneurs who live off “passive income” by investing in products or properties which add to one’s income without having to do a thing. For the most part, it’s true! Real estate investment properties can provide additional income, but you need to be smart and have a detailed financial investment plan, not an emotional “feeling” for a property.

It’s not a myth. Check out my interview with millennial Ryland Pyciak who just purchased his second home and – with my help, of course! – is on course to eventually own 4-6. Ryland knows his generation doesn’t have the same retirement options as his parents did with generous pensions, and he’s doing something about it.

Passive income will flow into your bank account if you purchase the right investment property, are tactical about any upgrades and repair work, and can provide a good home for a family who is willing to pay rent. It’s not as easy as simply buying a home and watching your bank account grow, but you can certainly reach that point with help.

My No. 1 advice for anyone who wants to get into investment properties: Build a trusted team of advisors. Not just your best friend who enjoys interior design. A professional team with an experienced mortgage lender and a real estate agent, whose advice you can trust to be sure your investment money turns into income. After all, all investments are inherently risky and you can’t afford to employ a losing strategy from the get-go.

Not only will you be able to call and ask for advice on unexpected issues you’ll face as an investment property owner, but you’ll be able to leverage our network of trusted contractors who can complete jobs well, on-time, and for a fair price.

As millennials debate where they should stick their money, the stock market is probably the last place they’ll put their dollar after the disastrous effect COVID-19 had on the markets and the constant ramblings of recessions. Alternatively, the real estate market is showing itself to be resilient in the face of pandemics as Denver homeowners see regular annual appreciation.

As the younger millennials start building their wealth as they start their careers, they’ll view a mortgage as an investment in their future and an opportunity to get out of sky-high renting. What they may not know is renting rooms out to their friends and family will provide the passive income dream they’re all chasing.

As a homeowner and investor myself, I know firsthand the personal and financial benefits of owning homes. I only wish I got into it way sooner like Ryland!

If you know someone who has mentioned moving into a dream home or who is interested in entering the investment realm, tell them to give me a call. We can develop a personalized plan with options on how to best leverage their resources to see long-term gains. As Denver’s top mortgage lender, The Rueth Team is here to help people find homes and earn financial security.