Generating passive income through self storage investments is all about having your time work for you. One of the most important factors is how you can use time to your advantage either by learning more about how to make deals or increasing your personal earning potential. To break it down, let’s categorize time in two different ways.
- Priceless Time – This is time that is used in pursuit of life enriching activities. This includes fitness, faith, eating, or spending time with your family. It can’t be replaced by utilizing other people, and it will never be automated. It can also be spent on hobbies, woodworking, dance, hunting, camping, meditating, or helping others improve their lives.
- Earning Time – This is spent to build wealth or make money. In most cases, this will be your career, side jobs, or what you’re an expert at. Depending on your current rate of earning, it’s a good idea to look into other wealth building opportunities that will accelerate your financial position.
If you are a doctor, attorney, engineer, salesperson or an expert at a high paying trade, then the value of your time very well might be in the role you’re already an expert at. In this case it might be better to earn more money at your trade and invest that money to earn passive income.
Passive Investing In Syndications
Syndications allow you to focus on what you do best and continue to make money through your career expertise. Financially, this is often a better alternative than learning a complex new field while trying to perform at a high level in your career.
If you’re a passive investor who is going to focus on syndications and investing in other peoples deals, it could be a good idea to combine Warren Buffet’s advice in dollar cost averaging along with investing in syndications.
Rather than going all in on one syndication with one operator, you can spread out your investments. Diversify and invest in several operators who you trust and believe in with multiple syndication opportunities.
Finding An Operator For A Self Storage Syndication
You may find one operator who you really like but it still may be a good idea to spread your funds across multiple syndications. This will mitigate your risk if one deal severely underperforms, and increase your gains if one of them flourishes. The idea is that it’s balanced out by other deals.
Multiple Syndicators
You can take this even a step further by finding multiple syndicators who you know and trust. Spread out your risk by investing in multiple deals that they have.
One idea is to find a general partner who is an expert in a certain field. Let’s say you find a fantastic multi-family apartment complex syndicator, an excellent self storage syndicator and another that deals with apartments. Mitigate your risk by spreading your funds across all three syndicators and multiple deals.
Example Investments And Mitigating Risk
If you have $450K to invest, it might be better to put $150K into three different Syndicators at the minimum investment per deal. If the minimum is $50k per deal, then that would be three deals per syndicator and nine deals total. If one deal does go south, you’ll be glad you invested in others to counterbalance any losses or low performing investments.
Non-Real Estate Passive Income
There are many non-real estate routes that are good.
Warren Buffet, is an advocate of dollar cost averaging into index funds. This means taking the same amount of money each month and investing in an index fund whether it’s high or low compared to prior months.
Overall, this allows you to grow with the economy. The highs and lows balance out to give you a stable overall position. It’s long term and it works best if it’s done for ten years or more.
If you’re very into the stock market, you could become an expert at reading financial statements and understanding the intrinsic value of companies and their stocks. This is a time consuming approach that people spend their lives mastering. Again, focusing on your own career and investing with professionals may be the best path to financial growth.
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