First RE Investment Question

7 Replies

I get that sense that most here are direct investors in single properties and personally manage the properties owned. I am leaning, however, more in the direction of private real estate investing and crowd-source funding due to the time I am spending already in 2 businesses.

Have many here gone this route for their first foray into RE? Or is the axiom around here that managing one yourself is the best way to get your feet wet? I do hold REIT ETF's, but have realized that's not at all sufficient.

TIA

Originally posted by @Aaron Boyce :

I get that sense that most here are direct investors in single properties and personally manage the properties owned. I am leaning, however, more in the direction of private real estate investing and crowd-source funding due to the time I am spending already in 2 businesses.

Have many here gone this route for their first foray into RE? Or is the axiom around here that managing one yourself is the best way to get your feet wet? I do hold REIT ETF's, but have realized that's not at all sufficient.

TIA

Aaron, there are many people that start out investing passively, in the way you described. You just have to use the keyword 'syndication' and a dozen people or so will chime in and help point you in the right direction :) 

@Ben Leybovich @Brian Burke @Joe Fairless @Dan Handford are a few people who specialize in this area, and could give you some pointers.

Aaron, I think the biggest hurdle is the intellectual worth. The obvious answer, if you desire to be passive, is to look at private placements. However, these are complex investment vehicles which require in-depth understanding from you, as you reverse-engineer the offering to assess risk/reward. If you are capable of this exercise, then participating in syndicated private placements may be a good option for you.

@Aaron Boyce I know a bunch of people who have directly gone into passive real estate investing. most that go this route understand the power of real estate investing (and the tax advantages) but don't have the time to actively invest. It's a great route to go if this describes you. 

I'd be happy to answer questions if you have them!

@Aaron Boyce my guess is that your observation that most people on BP are direct investors (or want to be direct investors) is correct.  However, there are a significant number of folks on BP who only invest passively, whether through private offerings or public offerings such as REITs.  And there are also plenty who invest both actively and passively.  It really just depends on your goals and the time you have available to pursue those goals.  I'd say that a large percentage of the passive investors that I know are in your exact situation--they have capital to invest, but don't have the time to chase property and actively manage the process.

@Aaron Boyce  

You have received a ton of great feedback. Ultimately the final decision is on you as to what works best in your particular situation. Some people want and can be active, others may want but don't have the time to be active and so forth. So your first step is to figure out whether you want and have the time to be active investor. The following article should provide guidance in that direction:

https://www.biggerpockets.com/member-blogs/10850/84064-what-type-of-investor-to-be-when-i-grow-up-active-or-passiv

Your next step will be to look at the niches within the strategy you chose as an above exercise.  And then you concentrate on such niche until you excel in it and take massive action.

Best!

Originally posted by @Ben Leybovich :

Aaron, I think the biggest hurdle is the intellectual worth. The obvious answer, if you desire to be passive, is to look at private placements. However, these are complex investment vehicles which require in-depth understanding from you, as you reverse-engineer the offering to assess risk/reward. If you are capable of this exercise, then participating in syndicated private placements may be a good option for you.

This is pretty much what I have been attempting to do thus far in my research. I think as I really dive into this sector I'll find that I am quite conservative and may never budge from that risk attitude. I was really intrigued by the real estate crowdfunding review site I came across and honestly had a hard time putting it down as his risk tolerance seems to very well align with mine and the research seemed solid--at least from a beginner's perspective.