single family homes

What is Wholesaling Real Estate Investing & How to Get Involved

Want to build wealth sooner rather than later? You generally can’t go wrong with real estate investing, as long as you know what you’re doing. In fact, research shows that 90% of millionaires across the globe achieved their financial success as a result of real estate investing.

 

Of course, breaking into the real estate field can be a daunting task. Fortunately, that’s where wholesaling real estate investing comes in!

What is Wholesale Real Estate?

This refers to properties that are drastically discounted — or significantly under market value. If you choose to take part in wholesaling, you’ll essentially look for a discounted property that you can control via a purchase agreement. Then, while you’re under contract via this agreement, you’ll look for a buyer who wants to buy the contract.

What Else Is There to Know about Wholesaling?

As a wholesaler, when you decide to sell contracts, you’re not actually selling properties themselves. Rather, you’re selling to other buyers your right to purchase these properties. Basically, you’re looking for deals and then passing them along to end investors. The benefit of the wholesaling process is that it helps you to avoid risk and also avoid tying up your capital for as long as it would take to complete a rehab.

Steps for Wholesaling Real Estate Investing

To get started, it’s critical that you first research the local market in which you plan to find deals. For example, you should take a close look at what housing prices are there to see how low they go (the lower, the better). Then, you should start working on your list of buyers.

The buyers list is one of the most important tools you’ll use when wholesaling, or serving as a middleman between sellers and buyers. A practical way of building your buyers list is to attend local real estate networking meetings or to even going on real estate investing podcasts. The more individuals who know you in the industry, the more likely you are to get leads regarding properties you can pursue as a wholesaler.

The Capital Angle

It’s also paramount that you line up the capital you need to bring your deal to fruition. This is possible by aligning your wholesaling service with a hard money or private seller right away. In this way, you can purchase the house if you end up needing to do so.

Get Started!

If you are eager to create more wealth for yourself and your loved ones, wholesaling real estate investing is a smart place to start. However, failure to make the most of each step of this process will prevent you from experiencing the level of profitability your competition is quickly realizing. Take your time and review as many resources as humanly possible to learn all you can about wholesaling.

Top 4 Real Estate Market Trends & Red Flags to Look for For Before Investing

You no longer have to sip your cup of joe on your way to your 9-to-5. Instead, you’re sipping coffee as you browse the Internet from home, looking for the next piece of real estate to flip for a profit. All of a sudden, you shake your head and snap back to reality. You were daydreaming. But who says your dream of becoming your own boss as a real estate investor can’t become your reality?

 

Research shows that investment in commercial real estate in particular increased 17% between the fall of 2017 and the fall of 2018, and residential real estate also remains attractive to investors. So, if you’re asking yourself, “What is the best long-term investment?”, now appears to be as good a time as any to seriously explore investing in single-family homes, apartment communities, or even business spaces as your next career move.

 

Of course, just like the greater economy, the real estate market goes through various highs and lows, so it’s critical that you assess the current market before simply diving in. Here’s a rundown on the top four real estate market trends or red flags to look for before investing in a deal.

1. The Demand for Property

If you notice a slip in property demand and/or you see businesses folding in a real estate market, this is a sign that you should not invest your money in the area right away for two reasons.

 

First, if companies are shutting down rapidly, this means that property values overall may start to decline as people move away and seek new job opportunities. Second, if business owners are avoiding the area, this might mean that the demand for properties in that area is low for one reason or another. If you ignore these signs and move ahead with a property purchase there, you may not get much return on your investment when you decide to sell. Or it might take a while for you to unload it.

 

Reasons for Low Interest in an Area

If a certain area is not piquing the interest of buyers, the culprits could be increasing crime rates, new developments close by, subpar school systems, or a less-than-stellar economy. No matter what the situation may be, it’s a good idea to select locales that are established or are rising in popularity if you want to avoid profit loss in the future.

2. The Job Market

In a similar vein, before purchasing real estate in a certain market, you should take a detailed look at your target area’s current job trends. For instance, are hiring volumes climbing and what kinds of positions are available?

 

This is critical because job market trends have a correlation with real estate market trends. For instance, if jobs in an area are not high-paying and don’t offer much growth potential, there will be fewer reliable renters or buyers available to you.

3. The Commercial Sector

A commercial sector that is stagnant in an area is a major red flag for investors. If businesses in a locale haven’t been there very long or if there aren’t many new companies moving in, this area might not be the wisest place to pursue an investment property. Many companies invest in their communities, so areas with lots of industry or other businesses are likely more financially sound.

 

Also, see if any major employers are planning to close their doors or downsize in the near future. If it appears that large employers plan to stay put long-term, this is good news for you. You can find information about which companies are planning to stay or go by reviewing local newspapers or even city council meeting and zoning board meeting minutes.

4. Community Planning

If the community you’re targeting for your investment property has a solid master plan in place, it’s likely a good one to stick with. That’s because master plans essentially lay out communities’ visions for themselves, and visionless communities will likely end up fizzling out at some point.

 

Elements of a Solid Master Plan

 

A strong master plan at the community level should explain not only how the community sees itself but also how it plans to turn its vision for itself into a reality. This plan outlines truly realistic and relevant changes, and it also focuses on actual solutions. Furthermore, it fosters innovation and promotes problem-solving. If there is little evidence that a community’s master plan is being executed, you may want to bypass that community when it comes to looking for a real estate investment property.

Start Real Estate Investing Today!

If you’re asking, “What is the best long-term investment?” and you are interested in getting your feet wet in real estate investing, I can help. In no time, you can experience the unique monetary potential that real estate has to offer. Get in touch with me today to find out more about the current real estate market trends and to start earning money as a real estate entrepreneur.

Basics You Should Include in Your Real Estate Investment Strategies

One of the smartest moves you could make as you search for streams of reliable revenue (both passive and active) is to get serious about real estate investing. That’s because research shows that real estate is among the safest types of investments you could make.

 

The question is, how exactly can you get started? Here’s a rundown on the basics you should include in your real estate investment strategies.

Active Strategies: Rental Properties

When it comes to investing in property, you have a couple of avenues that could lead to real profits for you: active real estate investing and passive real estate investing. We’ll first take a close look at active strategies, which include rental properties.

 

Investing in rentals—which is among the most frequently used strategy—basically involves buying homes or apartment communities, advertising for tenants on social media or rental websites, and then renting out your properties for amounts that will cover your mortgage payments and operating expenses with cash flow left over. As an investor, you can choose to manage your properties on your own, but the process may be easier if you hire a property management company to oversee them instead. The property management company can locate and interview potential tenants, collect rent payments, and address complaints that might arise.

 

Real Estate Investment Strategies for Beginners: Who Should You Target with Your Rentals?

 

Note that research shows that millennials should make up around 30% of the pool of buyers over the next decade. In addition, nearly 50% of them live in the suburbs. Therefore, purchasing rental properties in the suburbs versus urban areas may be a smart move for your business.

Vacation Rentals

Buying vacation rental properties is another excellent component of some real estate investment strategies. After all, many people around the world prefer to stay in homes that are privately owned versus hotel rooms these days. You can simply purchase either a turnkey property or one needing repairs and get it ready for guests. Afterward, you can list your short-term rental on a website such as VRBO or Airbnb. The particular booking agency you use will likely handle correspondence and payments on your behalf for a portion of the profits you receive.

 

Vacation rental properties can be especially invaluable investments if you live in a location that receives many tourists. At the same time, you’ll need to be okay dealing with constant tenant changes, repairs, money handling, and cleaning, for example.

Property Flipping

If you are interested in fix and flip properties — perhaps because you’ve seen it done repeatedly on television — you are in good company. Research shows that home flips reached their highest number in 11 years in 2017 at more than 200,000.

 

If you decide to flip a house, you’ll need to look for properties that need multiple repairs. The great thing about these homes is that you can generally get them for very low prices. You can oftentimes find them on online real estate listings or even via word-of-mouth through local real estate investing clubs. Then, you can fix up the property and sell it for a larger amount than you poured into it. The process can no doubt be daunting, which is why many investors hire professionals to help them with it.

How Quickly Can You Sell Your Property?

Research indicates that homes featured on the Multiple Listing System (MLS) are selling much faster today than they did years ago. In fact, homes’ median length of time on the market was 91 days back in March 2012 compared with 34 days in March 2017. This is great news for investors like you who are interested in flipping and selling homes in the coming months!

Passive Real Estate Investment Strategies: Real Estate Investment Trusts (REITs)

Passive real estate investing is generally a good option if you don’t have much experience with managing rental properties or if you have significant funds and would like to diversify your income. For starters, you can invest in REITs—companies that finance or own commercial properties via equity investments or debt. REITs usually offer real estate portfolios, rather than single properties, to investors.

 

These companies will basically sell REIT shares to you and you’ll earn dividends on them. The benefit of this strategy is that you can earn money from various properties in a less risky manner than you might with rentals.

Online Real Estate Investing Approach

With today’s increasingly popular real estate investment platforms online, you as an investor locate portfolios that align with your interests and needs. In this way, you can choose which portfolios to invest directly in. Then, the team associated with the platform will identify, acquire, and manage real estate assets on your behalf.

 

These online platforms are a lot like today’s in-demand crowdsourcing platforms. One of the benefits of this approach is that it doesn’t have to cost you a lot of money. In fact, you can begin online real estate investing with a site such as Fundrise, which requires just $500 to get started.

Real Estate Limited Partnership (RELP) Approach

A RELP is a group of people who invest in properties together. Joining these types of partnerships is yet another one of today’s many promising real estate investment strategies.

 

RELPs usually have development firms or property managers as their general partners. Once they are formed, they seek extra financing from investors like you for their real estate–related projects. In exchange, they’ll give you ownership shares, and you can be a limited partner. In this role, your influence on real estate decisions might be limited, but you also limit your liability. Therefore, if your RELP ends up facing a hardship, you won’t be liable for anything beyond your own capital contributions.

Start Implementing these Real Estate Investment Strategies Today!

If you are eager to boost your income or even quit your 9-5, now couldn’t be a better time to start tapping into the above-mentioned strategies. Get in touch with me today to learn more about the many real estate investment strategies that can help your company financially.

investment plan written in notebook

What it Means to be an Accredited Passive Investor & the Requirements to Become One

Being an accredited passive investor gives you the ability to make and participate in a wide variety of real estate investments. These may include single-family homes, commercial spaces geared towards businesses, and even apartment syndications.

According to federal securities laws and the Securities and Exchange Commission (SEC), an accredited passive investor is defined as a person or entity that is able to invest in securities, such as apartment deals, and non-registered investments. Both securities and apartment syndications are an extremely lucrative way to build sustainable passive income. Whether you’re looking to build your investment portfolio or simply want an additional stream of income, becoming an accredited investor is the first step to making that a reality. So what are the accredited investor requirements and how can you ensure that you become one?

Your Income and Net Worth

In order to qualify as an accredited investor, you must meet at least one of the following requirements: have an annual income of $200,000 or more ($300,000 if you have a joint income with your spouse) for the last two years or have a networth that exceeds $1 million, either individually or joint. Basically, this ensures you can manage the risk inherent in investing.

When determining your net worth, be sure to exclude the value of your primary residence. Add the value of all your other assets (investments, bank accounts, vehicles, vacation homes, etc.) and subtract any liabilities (various loans, home equity line balance, etc).

Verifying Your Claims

Once you have met the accredited investor requirements, then you are considered an accredited passive investor. There isn’t a certificate or formal process to recognize you, but the SEC does require that individuals or entities selling to accredited investors verify that these requirements are met.

This process is known as due diligence and is taken incredibly seriously by all investors. Before you are able to make any investment, due diligence will be done to confirm all of your information. This means that you may be required to submit W-2 forms, tax returns, and any additional documentation that further confirms your financial standing.

Benefits of Accreditation

There are many benefits to becoming an accredited investor, particularly when it comes to real estate investing and building sustainable wealth through real estate. If you are able to meet the accredited investor requirements, then you will be able to meet with apartment syndicators, venture capitalists, hedge fund managers and more to further discuss your investment opportunities.

As a passive investor, it is possible to eventually live on cash flow brought in by your investments. When buying into an apartment deal, for example, you will get a portion of the rent from the residents, as well as the eventual sale of the property. This means bringing in money for bills and leisure while making time for the activities and people you love.

For more detailed information on becoming an accredited investor and to learn more about investment opportunities for accredited investors, check out my comprehensive Passive Investor Resources guide.

commercial real estate with unique architecture

How to Increase Your Return on Investment for Apartment Real Estate

There are many different ways to generate a return on investment for your real estate, but starting with your current apartment syndication could be a relatively simple way to generate some additional money. Here are a few ways to help you increase your profit, as well as the investment property value.

Keep Turnover Low

One of the best ways to ensure that you are getting a successful return on investment (ROI) is to make sure that you keep turnover low. As an investor, constantly losing renters and bringing in new ones increases costs in a variety of ways.

When a tenant moves out, you must then clean and repair the property to ensure that it is up to date. This means painting, repairing minor damages, and overall clean up to prepare the apartment. In addition, you must assume any advertising costs associated with listing the property in order to find a new tenant. All of these costs can quickly add up. By keeping turnover low, you not only minimize your costs, but also help to create steady income. Having high-quality tenants is another key aspect of keeping turnover low. The right tenant will pay their rent consistently and also take care of the apartment.

Increase Rent

Another way to increase the return on investment for real estate deals is to gradually increase the rent for long-term tenants. But, before changing the rent, be sure to do a full cost-benefit analysis to ensure that you are raising the rent by the correct amount. There are a variety of websites available today to check rent prices in your area and compare properties. It is also incredibly important to look at the market and discover the current trends across the industry so you’re staying competitive.

Another great way to increase rent is to coordinate maintenance to the buildings and related facilities with increased rent. Maintenance is an important part of sustaining your investment property value while also creating additional value for your tenant. For example, if you are planning to replace one of the appliances in the kitchen, it could be a good idea to coordinate the replacement with lease renewal so that your tenant can see the value in the additional cost.

Charge Late Fees When Necessary

Having tenants who pay consistently and on time is an important aspect of any apartment investment. At the end of the day, your tenant has signed a contract and it is your job to ensure that all transactions are done on time and according to the lease. If your tenant pays rent late, then you are entitled to charge a late fee. Late fees allow you to make additional revenue but also encourage your tenant to pay on time. Not charging could mean that your tenant learns it is okay to pay late or that they will get away with it. Always charge a late fee when necessary to ensure timely payment.

Have Multiple Revenue Streams

Having additional services that you offer is another way to generate additional revenue from the property. For example include cleaning, laundry, or landscaping services that you offer to your tenants for a fee. You can then work with a contractor so that you are able to make a profit. For example, you can hire a cleaning service to come and clean the apartment for $65 every month while charging your tenant $100 for the service. This increases your revenue by $35 every month or $420 every year per unit! Whatever the needs of your residents, see if there is a way for you to offer an additional service to help generate profits and keep tenants happy.

There are a variety of ways to not only increase your real estate profit but ultimately maintain and improve the value of your investment. To learn more about return on investment real estate and investment property values, check out my blog, which focuses on giving you the information and tools you need to become a successful real estate investor.

house decorated with Christmas lights

Tips for Balancing Real Estate Investment Deals with Family During the Holidays

The end of the year and the holiday season can be an exciting time for many reasons. While this is a great opportunity to focus on your real estate investment deals and planning real estate investment strategies for the upcoming year, it is also a time to spend with friends and family. It can be tough finding a balance between work and family any time of year, but this is especially true during the holidays. So what can you do to ensure that your deals don’t fall through as the end of the year approaches? Here are my top 3 tips for balancing business with family during the holidays.

Prioritize What Really Matters

With so many different things going on at the end of the year, the most important thing to do is prioritize your responsibilities. Make of a list of your top 5 to-dos for the end of the year and only focus on those specific things. Whether that means closing your last real estate investment deal, finalizing your new marketing plan, or making sure to spend every Saturday with your family and friends. These are the top things that you want to focus on in order to finish the year strong.

Expert Time Management

Time is the most valuable asset that you have. If you are able to properly manage that, you will be able to better manage a hectic holiday schedule. Having a career in real estate can be incredibly time-consuming if you don’t manage your time effectively.

Break down your day into sections that focus on your top priorities. For example, if you know that you’re most productive in the mornings, block those off to work solely on your real estate investment deals or completing research. You can save responding to emails, calling investors, and any meetings for the afternoon. Having clear sections for your day will make it that much easier during the holidays to plan time away from work and celebrate with family.

Set Actionable Goals

Goal setting is a technique that many of the world’s most successful people use to stay ahead. An actionable goal is something that is specific and clear for you to work towards. Setting actionable goals you can accomplish before year end is a great way to stay ahead this holiday season and ensure that you have a strong start to the next year.

To get the best real estate investment advice ever, visit my blog to learn more about creating wealth and financial freedom through real estate investing.

a row of homes in a neighborhood

Top Trends in Real Estate Investment

Real estate trends and investment opportunities are always fluctuating and changing along with the market. This year has been no different. Being aware of recent patterns will help you to better navigate the market and to make better investment decisions overall. Whether you’re looking to start investing in real estate or are an experienced, accredited investor already, here are some of the movements to pay attention to.

Single-Family Homes

Single-family homes have continued to be a real estate trend as the market continues to grow. This property type is defined as a single unit structure that is detached from anything else. As more and more individuals are looking to rent more than just apartments, this is creating a growing market for rental homes. As a result, investors are increasingly becoming more active in building this market segment.

Single-family homes can be a great long-term investment option depending on your individual financial goals. But there are a variety of important considerations that should be made before investing in a single family home. First and foremost, location is a huge factor that must be considered. Is the property located in a good area? What is the local school district like? Particularly since this property type attracts families, you want to ensure that you are taking that into account when developing an investment strategy.

Interest in Texas

It’s no secret that Texas is a state that continues to generate huge opportunities when it comes to real estate trends and investments. This year in particular, the industry has seen continued interest and growth in Texas. With the growing and profitable oil and businesses, there are more and more companies that are flocking to the Lone Star State. This growth is creating more and more real estate investment opportunity in the state, including commercial spaces.

A Rise in Rentals

Another trend that has been steadily growing over the last few years is the increase of rental rates, particularly in cities. As cities continue to boom and grow, so does the number of people looking to rent property. What this means for real estate investors is that there will likely continue to be more and more opportunities to invest in apartment syndications. This means making passive income from monthly rental fees and the eventual sale of the property!

If you’re interested in learning more about investing in apartments, I created an entire FREE apartment syndication school to give you a solid foundation on the subject and the basics you need to be a successful investor.

New Construction

Another real estate trend that has been sweeping the country recently is a rise in new construction. This property type is defined as a building or home that is brand new and has never been occupied before. As the population grows, there is a need for new houses or rental spaces. As a real estate investor, purchasing a new construction property or apartment complex in a stable area could be a great addition to any investment portfolio.

Use of Technology

All aspects of the real estate market have been impacted or updated due to the continued use of technology, and this especially applies to marketing and online listings. More and more, the use of online marketing is helping to build awareness of what’s going on in the real estate industry. With the popularity of apps continuing to grow, you can now search for property listing, check housing prices, and see what realtors are active in your area all at your fingertips. This access to information is also making it easier to meet and connect with other investors that are also interested in purchasing or investing in real estate.

But the technological impact has not just be limited to apps. This includes the use of professional photographers and videographers, as well as staging floor plans and designs. This means that, when looking at a property online or via an app on your phone, the quality and level of both photography and interaction has improved. This continued use of technology will raise the bar for investors and buyers alike. Technology is truly shaping the way that all stakeholders in the real estate industry interact.

Last Thoughts

Real estate trends and markets will continue to grow and develop with time. As you become more and more familiar with real estate investment trends you will be able to better recognize what opportunities you can capitalize on. Being aware of the trends and regularly keeping up with the latest market regulations will help you to be a more informed and successful investor.

To learn more about real estate investing and to get detailed advice on how to grow as an investor, check out my blog.

investment deal and handshake

Raising Real Estate Investment Funds

Getting involved in real estate and starting your own investment company is one of the best ways to generate sustainable income and build wealth. To enable you to buy into larger deals, such as apartment syndications, however, it may be necessary to get real estate investment capital from accredited investors who want you to go out and find the properties while they provide a portion of the financial support.

There are a variety of advantages that come from raising funds this way, including:

  • Larger Deals
    You may not have the real estate investment funds to purchase a 500-unit apartment community or a large commercial building, which is where your fellow investors come in. Combining forces (and capital) means you are able to bring them larger investment opportunities.
  • Additional Support and Advice
    It’s possible the passive investors you work with have been involved in real estate for a while, and you can gain some wisdom from their experiences and advice. Maybe you want the low-down on recent market trends in the area or you’re not entirely sure how to find potential buyers once you’re ready to sell. Similarly, being responsible for other people’s money will give you a great incentive to invest in only those properties you know will offer a big return!
  • Long-Term Capital Gains
    The larger the deal, the larger the potential return on investment (ROI). Your cut of the sale will obviously depend on the terms of your agreement with investors, but the revenue earned from an apartment deal is likely to be more than on a single-family home, for example. Plus, while a rental property is still in the hands of you and your investors, you will collect that rent as well.

It’s easy to understand why so many people today are interested in getting involved in real estate. But how do you know where to start looking for accredited investors? Particularly if you’re just starting out in the business, raising real estate investment funds can be challenging.

Here are my top 3 recommendations on how to raise real estate investment capital:

Build Trusted Partnerships

One of the best ways to raise the capital you’ll need is by using your network. Especially if you don’t know where to start, start with what, or in this case, who you know. Think of every person you’ve met and whether or not you think they would be interested in real estate. Once you have narrowed down your list of both personal and professional contacts, begin scheduling time to meet with everyone on that list to discuss your plan. Even if they are not interested in investing with you, they may be able to introduce you to someone who is. It is always important, particularly in business and real estate, to build trusted partnerships and relationships. Keeping in touch with the right people could help you land your first big real estate investment.

Develop a Strong Back and Forth Conversation

Once you’ve started identifying potential investors and contacts to target, you’ll need to offer them the deal and center the conversation around why you think it will be a good investment for them. Having a strong plan that grabs the attention of your investors, while also providing an overview of the project, is key.

One of the most important things to remember when preparing for the discussion is to be authentic. You’re asking people to invest their money in you and your knowledge, so you need to make sure that it is something that you fully believe in. Don’t be afraid to practice and rehearse until you have a strong command of what you want to say.

Time is precious, so you should be able to quickly brief anyone on your idea in a few minutes. After you’ve been able to get their attention, you can then go into greater detail about your idea and the investment opportunities.

Build Your Brand

Building credibility is one of the most important aspects of raising real estate investment funds. Investors only want to give their money to people they trust and know are credible. Building your own brand is a great way to build legitimacy when first starting out in the real estate business. One of the most effective ways to do this is by creating thought leadership content.

Having your own thought leadership channel is a great way to build your brand and also reach a broader audience. Examples of thought leadership channels include having a podcast, YouTube channel, blog, or being a contributor for a notable website or financial magazine. The key is to actively get your ideas and content published so that you are able to reach as many people as possible. In addition, regularly sharing your strategies, ideas, tips, and tricks is a great way to build your audience but also your credibility.

Raising real estate investment funds is a great way to begin your journey of investing in larger and larger deals. As the real estate market continues to grow and change, there are endless possibilities. By creating lasting relationships, having a strong conversation, and building a solid brand, you’ll be able to lay the foundation for a success in real estate.

Learn more about raising funds through various means here.

red and white apartment building

What Every Passive Investor Should Know About Apartment Syndication Deals and Income

Apartment syndication is becoming an increasingly popular real estate investment strategy for many reasons. Being a passive investor who is involved in apartment deals gives you the flexibility and freedom to use your time to pursue other ventures while still generating income.

While this is definitely a trending strategy today, apartment syndication is by no means simple. Learning the ins and outs of investing is crucial to becoming a successful real estate investor, particularly when it comes to closing deals. Here’s what every passive investor should know about apartment syndication:

The Basics

To start, gain a brief overview of apartment syndication from the perspective of a passive investor. Your role during an apartment syndication deal is to provide the general partner (GP) with capital to invest in the purchase of apartment complexes. This investment is similar to other investments in stocks or bonds but typically offers a much better return.

Essentially, you help fund the deal, which does not require that you be actively involved in the day to day management of the project. Most apartment syndications will require a minimum investment amount, so it is important to do your research and know exactly how much you are able to invest. Additionally, how often investors are paid depends on the general partner and overall business strategy. However, most investors are typically paid on a monthly basis.

How to Make Money

There are two kinds of passive income investments when it comes to apartment syndication. You would be either an equity or debt investor. There are advantages to both investment types and which option you choose depends on your financial goals and risk preference. For equity investments, a passive investor is able to make money through 2 different aspects: preferred returns and profit splits.

  • Preferred Returns
    A preferred return is defined as “the threshold return that limited partners receive prior to general partners being paid”. This amount is typically between 2-12% per a year, depending on the investment.
  • Profit Splits
    Profit splits involves sharing the profit of the investment between general partners and passive investor or limited partners (LP). This could mean a 50/50 split or 80% to the LP and 20% to the GP. Typically most deals will involve a mix of both preferred returns and profit splitting.

For debt investments, a passive investor makes money from interest payments. The interest rate is typically set by the general partner and will vary depending on the deal structure. Debt investors will also usually get their investment capital back before the apartment syndication is complete and the property sold.

Becoming an equity or debt investor depends on your individual investment goals. All passive income investments are different and will require you to thoroughly research and review the deal in order to determine if it will make sense for you financially.

Types of Apartment Syndications

Every passive investor interested in apartment syndication should be aware of the two key types of deals that are available: a distressed property or value-add property. Each property type has its own specific opportunities and risks. A distressed property is defined as a non-stabilized apartment complex. This type of property likely suffers from poor operations, problems with tenants, outdated facilities, and more, which all contribute to an economic occupancy rate that is lower than 85%.

In comparison, a value-add property is defined as a stabilized apartment complex that is well maintained but is either outdated or operating inefficiently. This type of property is stable with an economic occupancy rate that is more than 85%.

Know the Business

Regardless of what deal you are considering as a passive investor, it is always important to know how the real estate business works. This includes understanding both the opportunities and risk associated with a particular apartment syndication deal. Take the time to really analyze and discuss the benefits of the deal with the general partner before making any decisions.

Some key terms to know and study:

  • Accredited Investor
  • Net Operating Income (NOI)
  • Cash Flow
  • Breakeven Occupancy
  • Internal Rate of Return (IRR)
  • Profit and Loss Statement
  • Exit Strategy

Here is a full list of important terminology, with definitions and examples, that will help when reviewing any apartment syndication.

Every general partner should be open and transparent when it comes to any potential risks involved with the deal. Every investment has risks, so don’t believe anyone that tells you otherwise.

Having experience in the real estate business, and particularly apartment syndication, is incredibly valuable when looking for new passive income investments. Be sure to discuss with the general partner all of the previous deals they have worked on and how they performed based on the business plan. This will give you an idea of the level of risk, particularly if the rest of the team is inexperienced.

The Bottom Line

When it comes to passive income investments it is important to work with the right group of investors and general partners in order to make sure that you are meeting your financial goals. Part of being a passive investor is giving your control to other partners who ultimately make decisions on how your money is invested. Having the right team of people will limit the amount of risk in your investment.

For more information about this type of investment, check out my comprehensive passive investor resources!

$100 bills in a wallet

How to Earn Tons of Extra Cash-Flow While Still Working Your 9-5 with a Real Estate Passive Income

Most people know what it’s like to sit at a 9-5 job everyday and wish there was a way to simultaneously make more money. Real estate passive income is one of the best ways to not only generate passive income while still working your day job, but also to build wealth to one day not have to actively work at all. Investing in real estate doesn’t have to just be a dream. With the right tools and training, you can begin investing in real estate and turn your dream into a reality.

So how do you get started in real estate and set yourself up for financial success? Passive income through investing will take some time and research to set up but is well worth it in the long run. Doing the research to determine which investment strategy is right for you will allow you to make decisions that align with your overall financial goals. Having clearly defined goals is also important in guiding the entire investment process.

One of the first steps to getting started with real estate passive income is figuring out exactly how much money you have to invest in a particular strategy or deal. Once you know how much you can spend, you will be able to identify your target market. After that, you will then be able to explore which passive investment option is best for you.

Rental Properties

One of the most common ways to create real estate passive income is by owning a rental property. By renting out an apartment or home every month, you have the ability to generate significant income. As long as the price of rent exceeds the amount of the mortgage, maintenance, and management of the property, you will actually make money every month. That revenue can then to used to expand your investment options, retirement fund, or savings.

Having the right tenant and being able to easily attract tenants is also an incredibly important factor that should be taken into consideration when deciding to rent. With the right tenant who pays on time and cares for their space, investing in a rental property is one of the best sources of passive income.

Apartment Syndication

Apartment syndication is another profitable option for creating real estate passive income. This will often require you to partner with a syndicator who brings together capital from multiple investors like yourself to purchase an entire apartment complex. The process can be complex and is considered an advanced real estate investment option.

However, the complexity of the process is often well worth it. One of the biggest advantages of being a passive investor is being able to get the benefits of owning an apartment complex without having to commit all of your time like active investors. This option is similar to investing in stocks or bonds and is a long-term investment strategy.

Diversify Your Investments

One of the key rules to investing in real estate is to diversify your portfolio. This is particularly true as a passive investor just starting out because diversification helps to mitigate risk and increase profitability.

As an example, this may mean investing in both rental properties as well as single family homes or investing in rental properties in multiple states to expand your investment to a variety of different markets.

Learn More About Passive Investing

The more you learn about real estate investing and passive investment options, the better you will get at identifying the right opportunities. Take advantage of all the information available regarding becoming an accredited passive investor by taking online courses, attending training programs, and diving into as many books on the top as you can. Having a solid understanding and knowledge of real estate will give you the ability to make the best decisions for your financial situation.

Earning tons of extra cash flow while still working your 9-5 job is possible with real estate passive income. With the right preparation and research, you can start investing and work toward financial freedom.

contemporary apartment complex

Investing in Apartment Complexes: What It Takes to Become an Apartment Syndicator

Apartment syndication, which means making deals and investing in apartment complexes, is a complex strategy that can lead to an incredibly lucrative career. Whether you’re interested in active or passive investing, understanding the basics of apartment syndication is invaluable.

Here’s what it takes to become a successful apartment syndicator:

Some Basic Industry Knowledge

First and foremost, in order to become an apartment syndicator, you need to have a strong knowledge and understanding of the real estate industry as a whole. This means knowing and understanding basic real estate terminology, legal implications, and industry buzzwords.

Investing in apartment complexes requires meeting with potential investors and outlining all of the key aspects of a deal. Knowing the basics of real estate investing and apartment syndication, such as passive investment, target markets, due diligence, and off-market deals will give you a competitive advantage and is fundamental to not only getting a deal but closing the deal.

You can gain extensive industry knowledge through academic courses, online trainings, or certificate programs. There are a variety of ways to augment your real estate knowledge and expand your general knowledge.

Stay in the Loop

Continuing to stay up-to-date on all the latest industry trends and topics will also ensure that you have a strong foundation to rely on when becoming an apartment syndicator. This includes keeping up with the latest market trends and any updates to legislation that will impact the real estate industry and overall economic climate.

Staying in the loop is key to truly keeping up with the market. For real estate, this means understanding the property values and demographics in the area you’re investing in. Even following popular real estate blogs, podcasts, and thought leaders will give you an advantage and help you to learn about the issues impacting the industry.

Regularly reading industry magazines and publications will also help to make sure that you are staying up to date on the latest information available. Being aware of what is going on in the market will also allow you to have in-depth conversations with investors and can help with negotiations.

Business Savvy

Once you have developed a solid amount of industry knowledge and education, another key aspect of investing in apartment complexes is having overall business skills.

Basic business skills that are applicable to apartment syndication include:

  • Project management skills
  • Negotiating
  • Business plan development
  • Problem-solving
  • Communication skills
  • Marketing
  • Networking
  • Finance

Apartment syndication involves managing large amounts of investment capital and being able to determine a successful overall strategy that will offer investors timely return on investment. Just remember, find partners and create a team of experts so you don’t have to wear all the hats at once.

Becoming a Successful Apartment Syndicator

Investing in real estate is one of the best ways to generate wealth and create passive income. Combining extensive industry knowledge, business know-how and overall real estate experience will give you the foundation you need to be successful in apartment syndication.

If you want to learn more about investing in apartment complexes and apartment syndication, check out the only book available today to offer a comprehensive deep dive on the subject: Best Ever Apartment Syndication Book.