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Paula Sindelar in Tombstone, AZ

Arizona experts offer advice: Invest in real estate to create retirement income By Jimmy Magahern


etirement years may seem the perfect time to buy investment real estate you’ve always wanted to own. Perhaps it’s a cozy bar, or the type of restaurant you’ve always felt could make a killing in your neighborhood. Or maybe it’s a little shop to sell those collectibles you’ve loved since childhood. Beware, says Michael Pollack of Pollack Investments, one of the largest independently owned real estate companies in Arizona. Delving into “enthusiast” projects generally isn’t the smartest path to growing retirement income. “What I recommend for creating retirement income is not to simply invest in something that you’re passionate about,” he says. “A movie theater, for example, or an ethnic restaurant or whatever. Although it can be fun, it takes a lot of work. And when you get into retirement years, most people don’t want to work that hard!”

Follow your passion, with caution Such advice can sound contrarian coming from a tireless 61-year-old entrepreneur who has himself invested hundreds of thousands of dollars into at least a couple of enterprises that are clearly passion projects. Pollack launched his real estate company in 1973 and is best known for remodeling old strip malls throughout central Arizona into revitalized shopping districts. The redeveloper is also the owner of Tempe’s Pollack Cinemas, a popular movie house, and the Pollack Advertising Museum, a private, by-invitationonly collection of vintage advertising memorabilia that occupies 8,000 square feet in his Mesa office building. While Pollack admits he enjoys being involved in both the movie theater and museum, he advises others to steer clear of pouring money into such offbeat investments unless they’ve got “money to

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burn.” “I think it’s wonderful if you can be in a business that you truly love,” he says. “And I always encourage young people to follow their passions. “But you have to be able to afford your passion, and you have to be able to afford your hobbies. And if you’re interested in community involvement or have a philanthropic side, that’s great, too. “But you don’t decide you’re going to open up a discount movie cinema, like I did, with the idea that it’s a profitable investment. Movie theaters are very difficult to operate and very expensive to run. And the museum business, that’s a whole ‘nother world! The only question there is how much you’re going to lose.” Pollack’s best advice: RLS, and stay out of debt Instead, Pollack advises clients in or near retirement wishing to generate income to invest in real estate in one of three ways: • Real estate investment trusts (REITs) • Limited partnerships • Single family homes, for the purpose of renting them out “Most REITs are publically traded, so you can invest in them just as you buy stocks,” he says. “Some are better than others, so you have to really research the company, its principals, and find out what their track records are through good times and bad times. “Anybody in the real estate business

who’s successfully emerged from the great depression of 2008 through 2010 without losing any properties to foreclosures — that’s a person I would automatically consider. That tells me they’ve probably got some pretty good experience.” As for limited partnerships or limited liability companies, he explains, “They usually are created privately. There will be a sponsor who seeks out investors who, individually, would not have enough money to invest.” Before entering this kind of investment, Pollock suggests “vetting the sponsor to ensure he or she has the experience and necessary skill sets” to make that kind of investment successful. “For example, they may think they want to be in the shopping center business. Well, just because you have extra money doesn’t mean you belong in the shopping center industry. “Or they might think they want to be in the apartment business. It’s not nearly as simple as some people make it look. And so the experience level of the sponsor is critical.” The third option, Pollack says, is investing in good, old-fashioned single family houses — especially for the purpose of renting them. He doesn’t encourage retirement debt. “I know that a lot of times it’s not recommended by investment gurus to pay off your home and own your house or condo or townhouse free and clear,” he

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Lovin' Life After 50: Phoenix - Dec. 2016  
Lovin' Life After 50: Phoenix - Dec. 2016