Ariah Rastegar says the best financial advice he ever got was that money is not what he thinks it is. He is a real estate entrepreneur and the founder of Rastegar Capital, a Dallas-based commercial real estate investment firm.
Money, Ariah Rastegar say, is nothing more than a tool, and understanding that it is only a tool has made all the difference in his professional life. “Money isn’t a thing on its own that people should strive for,” he explained. “They should strive to do something and build something that has so much value that money is a byproduct. And early in my career I was wanting to make money, and make money – and I was thinking about money. How I could do this, how could I do that? But as I grew a little bit older I realized that, you know what? I need to find a problem that I can fix. And if I can add value to that person, to our clients, to our customers, then the byproduct of that would be compensated for fixing something.”
Now, as a business person, seek to add value – to these people, to a solution and then money is produced. Versus just trying to make money. That realization was a major paradigm shift for me, and it also, incidentally, dramatically increased my income-producing capability.”
Is real estate a good way to generate strong returns for retirement? Absolutely. Having a reasonably steady, and a mostly predictable, income stream is the Holy Grail for retirees. This is why investors love real estate. You’ve heard it time and time again: Cash Is King. It’s most certainly a cliché, but its resonance becomes reality with real estate, particularly with this simple modification:
Here’s why :
According To Ariah Ratsegar Protecting Your Principal One of the most important goals for generating retirement income is lowering risk while protecting your invested capital. This is called principal protection.
Companies that produce consistently high and growing levels of free cash flow for investors (who realize income on a quarterly or monthly basis) are much less likely to go bankrupt and take all of your money with them. While cash flow is not the end-all-be-all to flawless investing, the greatest investors in the world candidly agree that there are times when they will be wrong, so they must plan for that possibility. Cash is that backstop.
Real estate opportunities offering current “cash on cash” returns (a metric used to describe the return you are generating on your initial capital contribution annually) should have enough cash to pay timely distributions and to pay all the expenses of operating and growing the bottom line.
Rental income say, from an office, retail, or multifamily property — is one of the best sources of passive income (called that when you’re not actively managing a property; someone else is) and it’s rivaled by strategically investing for dividends. The theory is simple: the property owner diligently sifts through applicants to find great tenants, and as a result, the investor can more often than not expect to receive current payments.
Buildings Make Sense
No one really knows for certain what actually drives a stock price up or down. But investing in real estate provides a greater degree of control over potential appreciation because there are things the owner can do to boost a property’s value and its income.
A good real estate investment starts with these qualities: a solid structure, an advantageous location, creditworthy tenants, ordinary (not excessive) repairs, annual or scheduled rental rate hikes and the ability to pay the mortgage every month.
There are various ways to invest in real estate. Ariah Rastegar personal preference: private placements, which are offerings that accredited investors can participate in through investment firms. (The Securities and Exchange Commission defines an accredited investor as someone who is financially sophisticated — typically with earned income over $200,000 or $300,000 jointly or a net worth over $1M alone or with a spouse, excluding the value of a primary residence.)
Work With an Adviser
In order to invest in real estate for retirement with the least risk and the potential to generate the highest returns, you must tap into specialized knowledge and skill. I believe for the novice accredited investor, the best way to do this is to speak with a Registered Investment Adviser (RIA) with experience investing in real estate.
An RIA is a fiduciary for you, doesn’t take an upfront fee and is dedicated to guiding you through the jungle of real estate options, which include private placements, private real estate investment trusts (REITs), limited partnerships and other securities. Each of these comes with its own set risks and rewards, as well as terms for participation, such as the required minimum investment or the duration of the investment. Don’t be afraid to tell your RIA what you want to get out of a real estate investment. Outlining your goals will help put you on the path to identify the best strategy for your retirement.
For instance, you could ask your RIA:
“Can I still get to an 8% return per year on my money after fees?” The answer is yes. Currently, real estate investments in emerging, secondary, or tertiary markets (think of areas like San Marcos, Texas or Columbus, Ohio), can provide an 8% return if done correctly.
Here’s another tip:
If you have personal access to the actual owner/operator or the professional investment manager of a property, you will put yourself in a position to potentially get superior returns after fees.
Talk Taxes, Too
In my experience, strategic tax planning is one of the most overlooked topics for investors new to the real estate landscape. So be sure to consult with your CPA to discuss the various tax benefits specifically suited for retirement. Talk about things like whether to invest through your IRA and how depreciation can help you keep more of the rental income you collect after taxes.
Key discussions with an investment adviser and a tax adviser can go a long way toward finding the most appropriate real estate investments for the retirement income you desire. These are some Important ways to invest in real estate by Ariah Rastegar.
Ariah Rastegar learned many lessons from the housing market crash of 2008 and the recession of that time. After heading a private equity investment firm’s opening of a New York City office, Ariah Rastegar returned to his home state of Texas where he started Rastegar Equity Partners, which primarily invests in commercial real estate throughout the United States. One of the primary investments he puts his eyes on it is in self-storage companies, which Rastegar and his associates consider recession-resilient. Here’s why they are usually good commercial real estate investments:
Simply put, self-storage businesses present excellent business and real estate investment opportunities because people use these businesses in times of economic stress and economic upswings. No matter what is happening with the housing market, people will always need a place to store their belongings. Amid a housing crisis, people will make more use of self-storage facilities as well. These recession-resilient businesses can give investors great opportunities even when the market seems sluggish and not worthy of investment. Ariah Rastegar believes in sharing his strategies, providing full transparency and educating the public.
Ariah Rastegar is an attorney who says that saving money is a good thing. You aren’t likely to get much disagreement with him there. We all need to save money for a lot of different things, many of them having to do with security and safety. We need to save for reasons both short and long-term.
Ariah Rastegar says you have to treat yourself like a business; you must be the CEO of your own life. “Look at where your rents are, where your static recurring costs are, and try to find those savings. But until you define reality, savings will be some idea that just never ends up happening.”
Ariah Rastegar became a firm believer in transcendental meditation soon after he started his successful career. He has worked a number of high-pressure, high-stress jobs throughout his career, including a music promoter and real estate investor. Ariah Rastegar currently runs Rastegar Equity Partners, a real estate investment firm based in Dallas, Texas.
Keeping everything in perspective and keeping away the anxiety and pressure of his various jobs over his career has become extremely important over the years. He recommends transcendental meditation for anyone dealing with stress.
Transcendental meditation is a mental technique used to avoid distracting thoughts and to promote a state of what meditation experts call ‘relaxed awareness’. This form of meditation was made popular in the United States in the 1960s by Maharishi Mahesh Yogi, who borrowed the practice largely from the ancient Vedic traditions of India.
Every day, usually in the morning, Ariah Rastegar practices transcendental meditation by sitting in a comfortable position, closing his eyes, and repeating a mantra in his head. A mantra is a meaningless sound, usually assigned by a dedicated instructor in the practice, that allows the meditator to clear his or her head and achieve what adherents call a ‘perfect stillness’. While research into the concrete health benefits of this practice is still spotty and anecdotal in most places, some studies have found that practitioners have reduced chronic pain, anxiety, hypertension, cholesterol, and the use of health care services overall.
Ariah Rastegar swears by his morning transcendental meditation routines, which he says keep him focused on difficult problems and their solutions for his long days at the office.