Shifting Strategies: From Landlord to Lender

The Call that Sparked a Transformation

It was a routine call, or so I thought. A casual discussion about investments and future strategies took an unexpected turn when you mentioned a simple yet profound idea: “If you have $2 million and make 10% a year lending, that’s $200k, and you get to keep your crypto.” Those words lingered in my mind, resonating deeply as I contemplated the implications for my own financial journey.

Current Situation: Owning Commercial Property

As it stands, I own a commercial property valued at around $2 million. This building, with its reliable leases, generates a gross income of approximately $236k per year. On the surface, it seems like a lucrative venture. However, the reality of managing commercial property is far from straightforward. The gross income quickly diminishes when you factor in the numerous expenses and responsibilities that come with property ownership.

The Hidden Costs of Commercial Property

Owning a commercial property involves a myriad of costs and commitments. From property taxes and maintenance to repairs and utilities, the list of expenses is extensive. Additionally, managing tenants requires significant time and effort. Ensuring compliance with codes and ordinances, negotiating contracts, dealing with potential evictions, and the need for legal representation are all part and parcel of being a landlord.

Here’s a breakdown of some of these hidden costs:

Property Taxes: These can be substantial and are a recurring expense.
Maintenance and Repairs: Regular upkeep and unexpected repairs can significantly impact profitability.
Utilities: Even if tenants cover some utilities, landlords often shoulder common area maintenance (CAM) costs.
Insurance: Protecting the property and liability insurance is essential but costly.
Tenants and Evictions: Managing tenants can be challenging, and evictions can be lengthy and expensive processes.
Legal and Compliance: Navigating legal requirements and maintaining compliance with local codes and ordinances is a constant responsibility.

The Lending Strategy: A Simpler, More Profitable Path

Your suggestion of becoming a lender opened my eyes to an alternative investment strategy. By leveraging $2 million in a lending scenario, I could potentially earn a 10% annual return, translating to $200k in passive income. This strategy offers several compelling advantages over owning commercial property.

Advantages of Lending Over Property Ownership

No Property Taxes: Unlike property ownership, lending does not entail paying property taxes.
No Maintenance or Repairs: There are no physical assets to maintain or repair.
No Employees or Utilities: Lending eliminates the need for employees and the responsibility for utility payments.
No Insurance or Tenants: There’s no need for property insurance, and there are no tenants to manage.
No Evictions or Legal Hassles: The lending process is straightforward, with no eviction procedures or legal complexities.
No Compliance Issues: Lending does not require adherence to property-related codes and ordinances.

Moreover, if the lending is done through a Self-Directed Crypto Roth IRA, the returns can be tax-free, even when withdrawn for retirement. This tax advantage further enhances the attractiveness of the lending strategy.

Calculating the Real Return

To fully grasp the potential benefits of this shift, let’s compare the real returns from property ownership versus lending.

Property Ownership:

Gross Income: $236k
Expenses (estimated at 30%): $70.8k
Net Income: $165.2k
Taxes (estimated at 30%): $49.56k
Final Income: $115.64k

Lending Strategy:

Gross Income: $200k
Expenses: $0 (excluding minimal administration fees)
Taxes: $0 (if within a Self-Directed Crypto Roth IRA)
Final Income: $200k

The Decision: Adjusting My Assets

Given the stark contrast in potential returns and the significant reduction in responsibilities, the decision to adjust my assets seems clear. Transitioning from a landlord to a lender not only promises higher returns but also offers a simpler, more manageable investment approach.

Conclusion: Embracing a New Investment Philosophy

This journey from property ownership to lending is more than a financial adjustment; it’s a transformation of my investment philosophy. By focusing on lending, I can enjoy the benefits of passive income without the burdens that come with managing commercial property. As I embark on this new path, I am filled with a sense of excitement and optimism for the future.

By aligning my assets with this new approach, I am not only optimizing my financial returns but also simplifying my life. Here’s to a future filled with smart investments and minimal hassles. Happy hunting indeed!

Appendix: Additional Resources

I would suggest exploring the Crypto Lab Research Program for personalized guidance on building your DeFi portfolio. Get Your free course below

https://lucasrubix.samcart.com/referral/freestuff/cbL58isszhGp687r

Self-Directed Crypto Roth IRA: Learn more about the tax advantages and investment opportunities.
Lending Strategies: Explore different lending platforms and their potential returns.
Property Management: Understanding the true costs and responsibilities of owning commercial property.

#InvestmentStrategy #PassiveIncome #FinancialFreedom #RealEstate #CryptoInvesting

Duncan Wierman