Almost nothing is what it seems in real estate. This is nowhere more apparent than in income-producing real estate. The entire premise of rentals is not what it seems.
Now, I know that you don’t enjoy hearing the truth that contradicts with your perception any more than the next guy. But it is what it is — take it or leave it!
Why People Buy Rentals
When we talk about rentals, we primarily focus on the income, right? We are not wrong, but neither are we totally right.
Truly, we go “there” to solve a problem — to separate ourselves from the necessity to earn W2 wages. For some of us, it is the reality of our health, and others just don’t like their boss. One way or another, the focus behind generating passive income, which is only passive according to the IRS but not passive at all in reality, is to replace 1099 and W2 income.
This Conversation Could Go Two Ways
I could agree with you. Yes, diversified revenue streams afforded to us by the rentals we own are a good thing. The extreme flexibility of this income as it relates to taxation is also not a bad thing. Combined, yes — we can certainly achieve a measure of financial stability and freedom that are impossible by definition within the sphere of earned income.
On the other hand, I could also tell you that you are quite stupid thinking that cash flow will make you rich. Why? Because cash flow has never made anyone rich. Equity is the thing that makes us rich.
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