What’s the difference between being efficient and simply being busy? Why is this difference so important and how can you boost efficiency? You must be currently swamped so that you are overwhelmed by it all. After all, most busy professionals that want to delve into the world of real estate “just don’t have the time.”
These individuals are very aware that this market is very lucrative and offers an opportunity for great wealth. However, they are unable to balance both work life and creating the time to look for 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 kind of every day, life-changing 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, usually from a long distance. Their objective is to make the total real estate investment process as easy as possible, so all you have to do is “turn the key.” When it comes to buying properties, doing renovations, and managing the property, there’s comfort in knowing your investing experience is in good hands with a reliable turnkey company. A career professional can trust that a turnkey investing strategy will basically take care of itself, but also provide the flexibility, freedom, and solid returns that you desire.
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. At times you might feel alone or confused, and every investor should have a ‘team’ that they can depend on. Finding and befriending other investors creates a community where you can share ideas and strategies that can assist 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 people collaborating in the real estate market to achieve a single objective. Starting any new business venture (and that includes a real estate investing business) can sometimes require more capital than readily available.
The ability to merge multiple talents to form a better, more refined team is one of the major selling points of a real estate partnership. Teaming up with a partner is beneficial because it allows investors to play to individual strengths and the ideal partnership is one where both people bring something different to the table. Investing in real estate requires a considerable amount of time and energy to be successful. Like any investment, it also comes with a certain amount of risk. Forming a partnership, however, can easily help alleviate 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 greater chance of turning properties over faster. In the end, forming a business partnership comes down to finding someone with the same goals and visions and someone with qualities that compliment your own. Nobody said it would be easy– only that it would be worth it.
The cost-obvious negative to real estate partnerships is that rather than getting 100 percent of the equity in any given deal, you just receive 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 might want to consider. That being said, for bigger properties, it is really hard to acquire private funding to cover the complete cost of the property.
Investing in Multifamily
Multi-family real estate is also very suitable for property investors who want to build a fairly big portfolio of rental units. The security and tax benefits that come with investing in multi-family homes is what capture 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 purchasing, 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 whole process efficient, consistent, and easy to navigate.
Having several sources of rental income is a great way to build equity by repaying the mortgage. This will help you repay it quicker and therefore build equity over the property since there is a guaranteed income from multiple sources.
Investing in multi-family homes may require a large amount of start-up capital, but getting approved for a mortgage loan can be easy for commercial multi-family properties. Approving loans for a multi-unit property with multiple tenants is a lot easier for lenders. This is because multifamily housing reduces the cash flow dependence on one tenant. From the lender’s perspective, there is much 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 day-to-day management of the property. The most work is identifying which sponsor and investment opportunity to invest in.
Real Estate Investment Trust (REIT)
Real estate investment trusts (REITs) enable individuals to invest in large-scale, income-producing real estate. A REIT is a company that owns and operates income-producing real estate or related assets. Unlike other real estate companies, a REIT does not develop real estate properties to resell them.
REITs generate revenue, therefore 90 percent of that taxable income must be distributed to the shareholders regularly. REITs generate income from the properties they buy by renting, leasing or selling them. As an indirect real estate investment vehicle, the REIT’s primary purpose is to invest and hold income-generating real estate assets. This requirement makes REITs favor acquiring income-generating assets while not favoring high option value properties. The rise of the REIT industry just makes the competition for REIT-suitable assets more intense, which drives up prices and lowers returns on properties. This fact might make management lack the incentive to pursue high option value assets that might potentially be ‘home runs’ for the REIT shareholders.
Real estate is an excellent investment option. It can produce continuous passive income and can be a good long-term investment if the value increases over time. You might even use it as a part of your overall strategy for accumulating wealth. Investing in multifamily properties without day-to-day management duties is bound to be a smarter way for busy people. While every investment in every asset class carries some risk, investing in multifamily homes has the potential to make wise 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 handled by a professional management team with a previous track record of success. Also, with larger 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 volatile 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!