This particular strategy is one that I have heard from family offices and high net worth individuals who have created a medium to large portfolio of properties. They will either sell their assets to REIT or a Fund, or they will convert their real estate assets into a REIT or Private Fund as an exit strategy. Usually the minimum size in order to do this is 30 million asset base.
This helps them in a number of different ways. It makes it easier for them to pass along their assets intergenerationally and it allows for partners on their assets to exit or pass along their assets intergenerationally as well. There is a lot of overhead costs that are associated with this strategy and requires properties to have a particular coverage ratio in order to make sense.
This is a highly sophisticated strategy that requires the advice of professionals across different financial and legal areas. It also converts what was once something that was easily directed by one person into something that does not require that person to continue to operate the Private REIT or Private Fund.
These are the eleven ways that I have seen real estate entrepreneurs use their properties to retire:
Quentin D’Souza is the Chief Education Officer of the Durham Real Estate Investor Club. Author of The Action Taker's Real Estate Investing Planner, The Property Management Toolbox: A How-To Guide for Ontario Real Estate Investors and Landlords, The Filling Vacancies Toolbox: A Step-By-Step Guide for Ontario Real Estate Investors and Landlords for Renting Out Residential Real Estate, and The Ultimate Wealth Strategy: Your Complete Guide to Buying, Fixing, Refinancing, and Renting Real Estate.
Using Real Estate for Financial Independence (Retirement)
Sell Some Assets and Private Lend the Money for Financial Independence (Retirement)
VTB Mortgages on Apartment Buildings then Private Mortgages for Financial Independence (Retirement)
Sell Some Assets and Pay Off the Rest for Financial Independence (Retirement)
Cash Flow from your Property Portfolio for Financial Independence (Retirement)