You know that investing is one of the most stable ways there is to make money.

You’ve also probably heard that investing — including real estate investing — is a “long game”. It usually takes years before you can make a profit doing it.  Certainly it takes years before you can become “rich” (with a few random, lucky exceptions).

Now we come to the Catch-22 of the investing world: the longer you hold your investment, the more money you will earn. But the longer you hold your investment, the less time you will have to enjoy that money (and your life), once you cash in on it.

You might wonder, “how long will it take?”  And then the next, unavoidable question that many of us are too afraid to ask:

“Am I too old to invest in real estate?”

This is a very valid question. (Some people might feel embarrassed asking it, and call it a “dumb” question.  But sometimes “dumb” questions are the best ones).

The short answer is probably not .  Which is great news, as long as you are motivated and ready to put in the work!

The longer answer is, it depends on your goals and resources.  Let’s take a closer look and see which situation is best suited for you.

The Growth-Oriented vs. Cash flow-Oriented Approach

When you invest in real estate, you can choose to take one of two basic approaches.  These two approaches are:

Growth-oriented

And

Cash flow-oriented.

Of the two, the growth-oriented approach is more aggressive (read: risky).  It means more debt and a lower down payment upfront, with the idea that in 10 years your debt will be gone, or at least your rent income will be high enough to increase cash flow. 

The cash flow-oriented approach is the inverse of that: you will pay a lot more upfront, and as a result, owe less debt so that you can instead enjoy a higher cash flow. 

Now let’s talk about goals: 

If you are younger (more than 15 years away from retirement), it makes sense to go with more of a growth-oriented approach.  If you are “older,” but are more interested in having wealth to pass on to the generation after you (rather than for yourself to enjoy), then a growth-oriented approach also makes more sense.

But if you are older and are hoping to create wealth for yourself to live off, a cash flow-oriented approach is probably best for you.

Now that you know which approach matches your goal, it’s time to talk about resources (money).

With a grow-oriented approach, you need less money, but more time. If you don’t have time (because you’re “older”), and therefore you need a cash flow-oriented approach, then you will need more money.

Hopefully you have several options at this stage in your life. It may be in the form of a retirement account you are finally able to access, or a life insurance settlement from the death of a spouse. Whatever the case, the more cash you have that you can pay towards a property, the less debt you will owe, the less risky your investment will be, and the more money you’ll then be able to generate. 

I definitely recommend using  any of these options if you have them.  A cash flow-oriented approach to real estate is not only very secure, it’s very rewarding.  If you have the resources, there’s no need to feel it’s too late for you to enjoy owning and renting properties.

Consider, also, that age is not an issue if you are able to hire a property manager to take care of day-to-day tasks instead of doing them yourself. Another good option, if you are interested in commercial real estate, is a “triple-net” (NNN) lease. In these agreements, the business that occupies the building pays for all the building expenses except the rent.  This makes things hassle-free on your end as the property owner.

Keep in mind that even if you have plenty of cash on hand at the time of investment, returns don’t happen overnight. A decent rule of thumb is, expect a minimum of 5-10 years to see the fruits of your investing labor.

“What if I don’t have ‘enough’ money?”

Let’s say you’re 60 and want to retire in 2 years with an annual income of $100,000 from your rental properties. If you have $1 million in cash and find an investment that provides a 10% cash flow return, this could be possible. 

But if you have very little in cash, your goal is going to be a lot trickier. Without cash, you will have to take on debt, and most (if not all) of the income from your rental will go towards the mortgage.  What are your options?

Besides playing the lottery (which I don’t recommend), your only real option is to invest aggressively (growth-oriented) instead. You may not like this idea at first, but consider the following:

60 years old today is not as “old” as it was a hundred years (or even 50 or 20 years) ago. Health and lifestyle are less tangible but very important factors in determining how long and how well you will live. 

Maybe you are only 50 years old. Twenty years is plenty of time for a more aggressive investment to pay off, and at age 70 you may well still have a decade or two ahead of you to enjoy the fruits of your labors. You don’t have to figure everything on your own, either.  A good financial advisor will save you time and help you figure out the best option for you.

The more limited your resources are, the more creative you will have to be with investing in real estate.  But as long as you are willing to make some sort of sacrifice, there is probably a way for you to successfully invest in real estate. 

In summary:

When investing in real estate, you need at least one of two things: time and/or money. 

If you are “older”, you probably feel that you don’t have as much time.  This means you will need more money, so that you owe less debt and therefore generate cash flow faster to support yourself.  Savings, retirement accounts and other assets are all ways you can theoretically finance a real estate purchase at this stage in your life.  

Remember that your main two resources are time and money, but don’t forget also that health and wellness are resources.  Consider if you really are “old”, and whether you feel you need to retire or have a certain amount of money by a certain age.