What Is Passive Real Estate Investing?

What’s the difference between being efficient and just being busy? Why is this difference so important and how can you maximize efficiency? You must be currently swamped so that you are overwhelmed by everything. After all, most busy professionals that want to tap into the world of real estate “simply do not have the time.”

These individuals are well aware that this market is very lucrative and provides an opportunity for great wealth. However, they are not able to balance both work life and create the time to seek an alternative investment. However, to be successful, you must not lose your ability to manage your business with grace, poise, and a firm iron fist.

To continue your seemingly strenuous journey into real estate investing, what sort of day-to-day, life-altering choices do you need to start following when you are much too busy?

Investing in Turnkey Properties

Turnkey real estate investing is a loosely defined investment strategy in which the investor purchases, rehabs, and has a property managed through a third party, typically from a long distance. Their objective is to make the total real estate investment process as easy as possible, so all you need to do it “turn the key.” When it comes to purchasing properties, doing renovations, and managing the property, there’s peace of mind knowing your investing experience is in good hands with a reliable turnkey company. A career professional can trust that a turnkey investing strategy will essentially take care of itself, but also provide the flexibility, freedom, and solid returns that you seek.

Though turnkey real estate investing is primarily passive, it can still be overwhelming and stressful. That’s why finding a network of support is very important. Sometimes you might feel alone or confused, and every investor should have a ‘team’ that they can depend on. Seeking and befriending other investors creates a community where you can share ideas and strategies that can help you along your investing journey.

Real Estate Partnership

In its simplest form, a real estate partnership is exactly what it sounds like: two or more individuals collaborating in the real estate market to achieve a single goal. Starting any new business endeavor (and that includes a real estate investing business) can sometimes require more capital than is readily available.

The ability to merge multiple skills to create a better, more refined team is one of the major selling points of a real estate partnership. Teaming up with a partner is advantageous because it allows investors to play to individual strengths and the best partnership is one where both individuals bring something different to the table. Investing in real estate requires a significant amount of time and energy to be profitable. Like any investment, it also comes with a certain amount of risk. Forming a partnership, however, can easily help relieve the degree of responsibilities associated with investing in real estate, while also splitting the amount of risk involved. A partnership will allow investors to share both the risks and rewards associated with real estate investment. For busy professionals, real estate partnerships represent a unique opportunity to take your business to the next level by focusing on the tasks that best suit you and your skill-set. That also means a better chance of turning properties over faster. Ultimately, developing a business partnership boils down to finding somebody with the same goals and visions and somebody with characteristics that complement your own. No one said it would be easy– just that it would be worth it.

The cost-obvious negative to real estate partnerships is that rather than receiving 100 percent of the equity in any given deal, you only get whatever percentage you negotiated with your partners. There are other ways to raise money for potential deals that allow you to keep the entire deal– such as hard money loans– that you may want to think about. That being said, for bigger properties, it is very difficult to receive private financing to cover the complete cost of the property.

Investing in Multifamily

Multi-family real estate is also quite suitable for property investors that wish to build a fairly large portfolio of rental units. The security and tax advantages that come with investing in multi-family homes are what catch the attention of investors. The best investment property for your portfolio is one that generates large returns. Multi-family homes are the best income property for wealth building.

The total process of buying, managing, or selling a bigger multifamily property is income-focused. The majority of sellers do not get emotionally attached to their properties, buyers come to their offers based on financials, and both parties are typically sophisticated investors. This makes the entire process efficient, consistent, and easy to navigate.

Having multiple sources of rental income is a good way to build equity by paying back the mortgage. This will help you repay it faster and therefore build equity over the property since there is a guaranteed income from multiple sources.

Investing in multi-family homes might require a large amount of start-up capital, but getting approved for a mortgage loan can be simple for commercial multi-family properties. Approving loans for a multi-unit property with multiple tenants is much easier for lenders. This is because multifamily housing minimizes the cash flow dependence on one tenant. From the lender’s perspective, there is less risk.

As a busy professional, one of the primary benefits of investing in a multifamily apartment/syndication is it is a completely passive investment for limited partners. As a limited partner, you will receive the benefits of direct real estate ownership without the frustrations of the daily management of the property. The most work is determining which sponsor and investment opportunity to invest in.

Real Estate Investment Trust (REIT)

Real estate investment trusts (REITs) allow individuals to invest in large-scale, income-producing real estate. A REIT is a company that owns and operates income-producing real estate or similar assets. Unlike other real estate companies, a REIT does not develop real estate properties to resell them.

REITs generate income, and so 90 percent of that taxable income must be distributed to the shareholders regularly. REITs make money from the properties they buy by renting out, leasing, or selling them. As an indirect real estate investment vehicle, the REIT’s main purpose is to invest and hold income-generating real estate assets. This requirement makes REITs prefer acquiring income-generating assets while not preferring high option value properties. The growth of the REIT industry only makes the competition for REIT-suitable assets more intense, which increases prices and reduces returns on properties. This fact might make management lack the motivation to seek high option value assets that may potentially be ‘home runs’ for the REIT shareholders.

Real estate is an excellent investment option. It can generate continuous passive income and can be a good long-term investment if the value increases over time. You may even use it as a part of your overall strategy for accumulating wealth. Investing in multifamily properties without day-to-day management responsibilities is bound to be a smarter way for busy people. While every investment in every asset class carries some risk, investing in multifamily apartments has the potential to make smart additions to an investment portfolio.

If you’re a busy professional, investing in multifamily will allow you to participate in the benefits of direct real estate ownership. Your investment can be managed by a professional management team with a previous track record of success. Also, with bigger properties, you will benefit from economies of scale, and the risk will be spread across multiple units. You will expand your portfolio outside of the unpredictable financial markets, allowing you to focus on your career or business.

With Mission First Capital, you can start your investment journey alongside other military members and veterans! If you have questions or would like to talk about potential partnerships or investment opportunities, don’t hesitate to reach out. Give us a call at +1 (844) 632-3863 or visit our website MissionFirstCapital.com to learn more and let’s invest today!