Passive Apartment Investing Options

10 Replies

I’m an accredited investor looking for options on how to invest ~$175K-$200K in Apartment complexes, passively. I have traditionally invested in single family homes but prefer to self manage and I’m about at my limit while I still have a full-time job. Are there any investment funds that also use leverage (like from commercial lenders vice just accredited investors) so that I can multiply my investment faster? Where should I start my research?

Congrats on being in such a strong position!  Just curious what your current portfolio looks like and where you've a capped out on self managing? I have heard that most of the better investments aren't able to publicly advertise, you just have to find them through networking. I would check with your local investors network and see where they're putting money.  A lot of the publicly advertised funds get returns in the 5-7% range, but if you're looking for better than that, you'd have to find it through your network as opposed to through a publicly advertised fund.  

Thanks for your response. I’m close to my limit on self management because I work a demanding full-time job and my properties (5 SFRs) are geographically dispersed across the United States. 

You have confirmed what I thought. If that’s the average returns, I’d rather just be in the stock market until I have the bandwidth to take on more SFRs. I’ll look around within my local network first though. Thanks for the pointer.

Student rentals with a property manager may be the way to go. $200k-300k usually and pull $500-850  a room in most states. I am in Ga and that's the typical numbers. So easy cashflow potential if you have cash to put down on 2-3. I am averaging $900 a month cash flow on 2 and $500 a month on another smaller one. If i self managed then it would be 1200x and 800 (single fam) or try to find under 5 unit apartments and rent by the room to students. Easy $ and require a co sign for most to keep them straight.

or find a partner that is willing to do the work and bring some $/other value to the table. Plenty of $ to go around even in that space. (especially 4plex if you look in the right areas)

@Landon Bleau I have considered turnkey providers. My position on them is that they are mostly in areas that I'm not interested in investing in. Additionally, I do not want property managers, I have had them in the past and never had a quality experience. Before I went with a turnkey provider, I'd just purchase another SFR in one of my existing markets.

@Andrew Barrett Hmmm, doesn’t seem very passive. I don’t have the time to manage poor quality property managers or any additional units. I have a proven system, just don’t have the time to grow it any larger right now. Looking for something more passive at this point.

Originally posted by @Sean Barber :

@Andrew Barrett Hmmm, doesn’t seem very passive. I don’t have the time to manage poor quality property managers or any additional units. I have a proven system, just don’t have the time to grow it any larger right now. Looking for something more passive at this point.

Fair enough- I pay 8% to a property manager that has 58 single family homes under them and they handle everything. I haven't got a phone call or had any vacancies. :) They have pple lined up way before the lease ends and any other tenant issues are dealt with in the rental agreements immediately. I don't think i have been to my properties in a year, except for minor inspections that i really didn't need to do- i just wanted to double check the prop manager's work. They are also a real estate company so I expect perfection from them or i am on to the next and they see the long term goals - which is them managing all 10 of the properties i am lined up to buy in the next 2-3 years.

**I guess my only suggestion would be to invest in taking the time to hire the right managers if passive is ideal. Even if it means paying them more. If you want to be 100% hands off then work it into the deal and if it makes sense then go for it.

You could find a partner to do all the work and your contribution would be exclusively the money but i know that quality person is hard to find. I have helped a client w/ a partnership deal where he gave a trusted- hungry partner a $450k budget and said go buy what you can. We bought 6 homes and they split the cash flow 70/30 (about $5300 a month net) one guy collects 70% checks and the other invested his time in keeping them full and maintained but the 30% of something is worth it to him.

There is no shortage of syndicators willing to take your money to invest in apartments. They all use varying degrees of leverage so in a way your money is leveraged but you don't expose your own credit. Thats an advantage of syndications.

Those funds are going to be more institutional. More reliable but lower returns due to more overhead. The key is finding an operator with experience and track record and not a noobie.

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