I'm not quite decided on what niche to select. My current career requires me to travel for work from time to time and I really enjoy the flexibility it provides. However, I'm aware that to invest in RE, one must be around and available because things often come up.
I'm looking at various niches such as buying multi-family properties and renting out but the downside is that I would become a landlord. Also buying and rehabbing sounds appealing, but again, very time intensive .
I guess I'm looking for ideas and advice on more hands-off approaches to RE investing, that way I would still be able to maintain my current position until I'm committed to jumping in F/T and dedicate myself to a specific niche .
Thanks for reading and I welcome all feedback .
In your situation there are multiple avenues. Each one requires a different level of cash to start with and cash on cash pre-tax yearly expectations.
You could invest in mortgage notes. You could be a hard money lender. You could buy shares in a REIT company. You could buy a share as a passive investor in a syndicate.
If you want NO hands on at all you could buy absolute NNN commercial property. Those properties run into the millions of dollars to buy with a minimum of 25% down.
It's all about what you have to start with cash.
Thanks Joel, those sound like pretty interesting avenues to explore. I see a lot of exploring on BP and Googling in my future.
It definitely depends on your current financial state and future goals to know where to start with limited time. If you want lump sum profits as many investors do in the beginning, finding a flip/ rehab manager is a good way to make money while having detailed reports on the process.
I was going to suggest pretty much exactly what @Joel Owens did: mortgages, notes, NNN commercial. Nice rentals will be less hassles but lower ROI. A large enough multi-family will support onsite management.
These are mostly tools of the big dogs on the porch. The middle of the road normies like us have it tougher. Gotta have money or time. Do you know anyone in your area with time and expertise you could partner with? Are you able to invest larger sums of $ @Manuel Savorelli ? Are notes and mortgage investing an option for you?
Manuel, you seem to understand something which a lot of people overlook when getting into this business: real estate is not really a passive investment. Making it passive can, in a lot of situations, making it a losing proposition. Even if you hire a management company to oversee your property so you can focus on other things, managing the management company will take time and effort. NNN is probably the closest thing you will get to true mailbox money in a direct investment.
My advice is that, if you are not ready to become a landlord, look to invest in someone else's deals. It then becomes their job to manage the property or manage the manager, depending on how they are structured. Look for someone with a strong track record of performance and a reputation for integrity.
If you do this, you will start to receive monthly or quarterly financial reports and commentaries from the investment manager. If you read these carefully, you will start to gain insights into how to evaluate properties financially and what is involved in running them. And, if you have invested in someone's deal, you can bet that they will be willing to sit down and share their knowledge with you about the industry. Perhaps they can even become your coach. After all this, if you find you want to dig deeper and get more involved, then you might want to strike out and start buying and managing properties on your own.
Investing in other people's deals can provide you with an education with a relatively low level of risk and without a lot of distraction from your real job that would come from those 2:00 am clogged toilet calls.
All the best,
Turnkey and syndicated deals are a nice way to go hands off. People complain that these deals take too much meat off the bone. Spoiler alert: They do take meat off the bone, everyone needs to make a living.
The question I then ask is 'Are you better off making .0...01% interest with savings and money markets?' I like ETFs and institutional investments, but they are really highly-valued at the moment.
Basically, if you can show me anything that's interesting and will do better than 10% ROI, I am interested. That's as someone who is happily employed, much like yourself.
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I really like the advice that @Jonathan Twombly gave. I think the one factor that is often missed by most investors is the partnership. There are people out that who love the chase and capture, meaning there are those who love looking and acquiring the deals. They are jazzed by the prospect of rehabbing and flipping or rehabbing and managing. And then their are those folks, like you, who don't have the time or the inclination for the chase, but still want to participate. Put these two together and you may have a good working partnership.
@Paulette Midgette is exactly on point, @Manuel Savorelli . It's important to figure out what kind of investor you are. Are you the kind of person who just needs to go tear down sheetrock and do a reno himself? Or do you like the idea (as I do) of owning property and managing it as a financial investment for others? Or do you believe that real estate is a great investment, and as long as you are benefitting from owning it, that's enough -- you don't need to be hands on? In real estate, as in life, you will always be most successful by understanding who you are and acting consistently with who you are, then trying to be what others expect or what you think you "should" be. Investors can make money in so many different ways with real estate, and I don't think that in objective terms any way is better than any other way. But what is good for me is not necessarily best for Paulette or for you. So keep exploring around BP and find out what is most appealing to you. And then jump in.
I work in the turn-key industry and you fit mold of an investor that would benefit from a passive RE investment solution. However, you should note that although you may not need to worry about construction or property management when you partner with a turn-key provider - you do need to do your due diligence in vetting that provider. I work and am affiliated with some great, reputable providers (full disclosure I work for MACK Companies - arguably the nation's longest tenured turn-key provider) but I've seen investors get burned working with the wrong people
The bigger pockets-based group that launched http://turnkey-reviews.com/ can provide some insight as well.
Vet a turn-key provider like you would a GC, a Property Manager and a business partner. When you find the right one - it can be a great solution to passive RE investments
everyone has their own strategy. My husband is active duty navy. He travels a lot and home is relative to his current set of orders. I also travel overseas and have managed to do all that while self-managing. We buy houses we can self manage anywhere. We currently had 7 with a goal of 16. Therefore these houses are more expensive with a higher class which causes smaller margins. On the other hand we are able to keep a much tighter control, and have was expenses.
We currently manage 3 houses on the easy coast from California. While we certainly have had our stress moments. To has worked out amazing for is financially.
Hey Manuel! There are definitely hands-off approaches. I own multiple rental properties and I don't do a single thing on them. I have a property manager who handles them. The most I ever have to do is respond to emails asking for approval on a maintenance item or occasionally ask a question about the statement. I literally spend maybe, grand total, of an hour or less a year on my properties and they all cash flow great.
So many wonderful and educational responses from everyone on this board. It could literally take me over an hour, and would make for a very hard to read post if I were to quote bits and pieces of each individual post that has helped or sparked an interest. Having said that, I'd like to send everyone a "collective" thank-you.
After reading all these responses, the clear-cut option for me would be NNN investment. However, like everything else in life, there are always barriers-to-entry, otherwise, everyone would be doing it, right? After doing a bit of research on my own, I noticed that one could invest in NNN properties either locally or long distance. Also, cap-rates are directly correlated with risk involved (tenant credit rating, etc), and time of lease remaining. The biggest hurdle to overcome is clearly the start-up capital needed to get off the ground. these leases go for $M's and I need to figure out how to properly finance a deal, and calculate the ROI's.
Other options, more reasonably attainable at this point in my venture, may include building a portfolio of rent-and-hold properties that cash flow positive (preferably multi-unit), and collect passive income, while hiring a property management company to handle all the day-to-day... but as @Jonathan Twombly correctly stated, "managing the management company will take time and effort."
I'm still not quite certain as to which avenue I'm going to pursue, however, I do know that I tend to lean more towards the investor role, as opposed to the "let's go demo that wall" type of guy. Therefore, if I could figure out the proper channels for NNN investing, I think that might be my preferred method of investing.
All feedback is always welcomed.
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