Real Estate: Balancing Wealth Building & Philanthropy

How can real estate investors balance their philanthropic aspirations with wealth building endeavors?

Finding the balance in building personal wealth and philanthropic goals can actually be one of the toughest challenges many real estate investors face. It can be far tougher than just making money from real estate, and balancing work-life. At least for those that really care, and want to get it right. So what’s the best way to balance the two? When should real estate investors start giving? How much wealth and passive income should you establish first? How can you manage helping others while on the way up yourself?

Philanthropy on the Brain

There can be many causes that constantly tug at the heart strings of intelligent real estate investors. They can include providing healthy, safe, and affordable housing; giving to those in desperate, urgent need; helping to solve social and health crises at home and abroad; improving education opportunities and much more. So where do you start?

The Chicken and the Egg

So what comes first? Do you need to make more money and invest before you start to give? Certainly the Mark Zuckerbergs, Warren Buffetts, and Bill Gates of this world are able to give a lot more, because they have more, right?  Some new real estate investors have limited funds and feel they have to choose between giving and investing. In this scenario, many would deduce that if they invest,  they’ll have more to keep on giving. If you can turn your $1,000 into $3,000 in real estate, you can give away $1,000, pocket $1,000, and reinvest your initial capital to do it all over again.

Of course, some have noted that pinpointing the right time to start giving back can be a challenge. There is always more to spend on, invest in, and do. So do you set a monetary line in the sand, or start pledging in another way earlier?

When to Start Giving

Few real estate investors seem to prevent their expenses from catching up with their rising incomes and wealth. In other words, it is easy to accumulate debt when you have more money. The trick is to limit the spending. At the same time, there is definitely something to be said for taking care of your own finances and family. After all; you don’t want to become the needy one asking for handouts because you gave it all away, and didn’t invest for the future. So there should be a literal figure where investors say that they have made enough to provide for their future. This number will vary for everyone. Every investor will find this easier if they establish a number before they start seeing truckloads of easy money coming in.

Why Start Giving Immediately

Giving is a personal choice. For those real estate investors that are really passionate about it, there can be great benefits of beginning right away, regardless of the amount. It creates a good habit. It makes it easier to stay on track. It means making a difference sooner, and being able to witness the results as they grow. For many, giving is equally as great a reward as all the gains from today’s best real estate investments.

While it can be argued that huge sums make more of a difference, sometimes the more money foundations and charities have, and the bigger they are – the less efficient they become. Perhaps your $300 given directly can have a direct impact that is far greater than $3,000 donated somewhere else later. Plus, the principle of equal sacrifice shouldn’t be discounted. Your contribution; whether it is a dime; a 99 cent box of macaroni and cheese, a water well, or a million dollars is all relative, and all valuable.

Ways to Give

Whatever you are passionate about, there is a ways to give or make a difference. For passive income real estate investors building portfolios of rental properties, some great options include:

  • Giving a percentage of net cash flow each month
  • Dedicating a percentage of each property’s net proceeds on sale
  • Committing the proceeds of a certain percentage of units to a trust

Some may even give shares of their real estate investment firm to a nonprofit. Others may start trusts and hold specific properties in it, and let that trust grow itself. However, there are many other ways to give for real estate investors too, including:

  • Gifts to tenants
  • Giving good tenants suffering tough times a fair break
  • Giving a little more in negotiations to those that really need it
  • Putting people to work on rehabs or cleanup jobs
  • Turning others on to the benefits of being able to provide for their families through real estate investing

How are you doing it?