ER doctor hoping to diversify in passive real estate!
Madison, MS · Member since 2024 · 10 posts · 9 votes
ER doctor hoping to diversify in passive real estate!
Most Popular Reply
Ian IppolitoBusiness Member
Investor · Tampa, FL · Member since 2015 · 1k+ posts · 1k+ votesQuote from @Jonah Gunalda:
Hey BP community, I'm Jonah. I'm looking to learn more about passive real estate investing, syndications, and other passive or semi-passive streams of income or equity building. I'm 37 and about 8 years into my emergency medicine career. I love my W2 job and am not looking for replacement income, but I do want to diversify my investment portfolio in the real estate sector while keeping my focus on what I love and do best -- emergency medicine! Looking to connect with like-minded individuals on this platform, or those who have gone before me and can share their Dos and Don'ts from their own experience. I realize the RE world is vast and full of scams, jargoned underwriting, salespeople, and crooks. I'm hoping to broaden my real estate literacy and savvy, as well as learn how to source, evaluate, and secure sponsors and deals that meet my financial goals. Looking forward to connecting!
Hi Jonah,
I agree that there are a lot of very bad deals/sponsor out there. There's also some that I'm very happy with.
When vetting a syndication, every investor will do it differently because every investor has a different risk tolerance, comes from a different financial situation and has different financial goals. So a deal that look great to one investor will look horrible to another and vice versa.
I'm a very conservative investor and may look through a hundred deals a month, and at the end of the year only invest in 4-5. Here's how I do my due diligence:
1) Portfolio matching: (takes 30 seconds per deal)
a) Have an educated opinion on where I think we are in the real estate cycles (financial and physical market cycles)
b) Then and only then do I pick the strategies, capital stack, and specialized asset subclasses that make sense for that opinion. For example, I am a little concerned about some aspects of the business cycle recovery and a potential for a double-dip so I lean toward the safest part of capital stack which is debt (or low-debt equity). I won't go with the riskiest opportunistic strategies, and will stick to core and core plus mostly with some value-added. I won't be investing in the riskiest/most supportable asset subclasses such as hotels, and tilt my portfolio the ones that have historically been more stable such as multifamily and single-family housing. I also don't want refinancing risk, so any deals with only 3 to 5 year debt are out for me. For someone that's not as conservative, or a different view on the cycle, they might have a different opinion than me on all of this.
2) Sponsor quality check: (takes about 45 minutes per deal)
I believe that a great sponsor can take an average looking deal and make it great, and that in mediocre sponsor can take a fantastic looking deal and make it bad (especially if there is a severe recession). So I start with the sponsor first. Again, others might disagree.
a) Track Record: Get the entire track record for the strategy. As easy as this sounds, it's not simple and usually like pulling teeth. Many times they will claim it's wonderful and then try to hide their worst deals by only showing completed deals. Make sure to get unexited deals. Or if they are doing value-added multifamily, they will show you their hotel experience. That doesn't cut it for me. I want a specialist that's an expert, and not a jack of all trades and master of none. Also, in a mainstream asset class like value-added multifamily, I see no reason to take a risk on a sponsor that doesn't have full real estate cycle experience or that lost anything more than a small amount of money (and prefer no money lost). Again, other might feel differently here.
b) Skin in the game: as a conservative investor, I understand that the dirty secret of industries that the waterfall compensation is in the line with me and incentivizes sponsors to take more risk. So I require skin in the game (average is 5% to 15%) to offset this. Contrary to popular belief, this is not set because I believe it will give me a higher return. I believe it tends to give me a slightly lower return, because the sponsor is going to be more careful, and if there is a severe downturn will prevent me from taking catastrophic losses. Someone that is more aggressive, may want lesser even though skin in the game. Also, if the sponsor is new, I am fine with less skin in the game as long as it is significant to their net worth. On the other hand if they are a sponsor that is experienced in stopping a skin in the game, that's a huge red flag for me.
c) how open to scrutiny are they? I always discuss investments with others in an investor club because other people might think of things that I might miss. And even though virtually every sponsor agreement allows me to share investment information with others who might be advising me on it (especially when club members are bound by an NDA), I still ask the sponsor if I can share it, because it's a test. Most are fine with that, but a few will have problems with it and claim there are legal issues, etc.. That's a red flag for me.
d) death by Google: I Google everything I can about the sponsor. I check the SEC, FINRA, ratings websites for inside information on the principals in the company. I also look for lawsuits and see what happened in them. Many times it's an easy red flag. Sometimes it's ambiguous, but even then, why should I bother with the company that has numerous unresolved lawsuits, versus another company that is virtually the same but has none. Again, others might feel differently here.
3) property level due diligence: (takes seconds to weeks per deal): here is where I drill in with the low-level details.
a) pro forma popping: I examine all the assumptions, and see if they are overoptimistic or not. I look at every single item in the pro forma and imagine that it is complete BS, and see if I can challenge it. If there's a hole, it may be a red flag.
b) sensitivity analysis: I examine all the assumptions, and make sure I can live with the worst case scenarios.
c) "Stall and see": if they are getting money over multiple years, and there is no penalty for investing later, I would usually wait so I get some real performance data, versus having to look at theoretical pro forma information.
d) Recession stress test: I will not invest in anything, until I subject it to recession level stress and see if I can live with the result. And I take the worst recession I can find in the recent past. Sometimes there is only great recession data, and that recession was pretty mild on some asset classes, versus previous recessions. So I will usually 1.5x or 2.0x the stress. If the deal collapses and I would lose everything, I'm out. Others might be fine with taking risk, but least by doing this a person can get an idea of what might go wrong.
e) Legal document analysis: it will usually take a few days to go through the legal document properly, as almost inevitably there are tons of gotchas that either have to be explained, or mitigated with a side letter.
That is the very short summary of what I do. If you want more information, p.m. me and I can give you a lot more details.
The Real Estate Crowdfunding Review
25 Replies
- 1yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
hello Jonah and welcome. i personally have not invested in, and am not interested in, syndications. but i understand the appeal from your perspective. i'd advise you to network your way to something - you need people trusted by people you trust. so the thing you're looking for is likely something you can't find online.
i'd start networking in person in addition to whatever you can do over BP.
good luck
- 1yIan IppolitoBusiness MemberInvestor · Tampa, FL · Member since 2015 · 1k+ posts · 1k+ votes
Quote from @Jonah Gunalda:
Hey BP community, I'm Jonah. I'm looking to learn more about passive real estate investing, syndications, and other passive or semi-passive streams of income or equity building. I'm 37 and about 8 years into my emergency medicine career. I love my W2 job and am not looking for replacement income, but I do want to diversify my investment portfolio in the real estate sector while keeping my focus on what I love and do best -- emergency medicine! Looking to connect with like-minded individuals on this platform, or those who have gone before me and can share their Dos and Don'ts from their own experience. I realize the RE world is vast and full of scams, jargoned underwriting, salespeople, and crooks. I'm hoping to broaden my real estate literacy and savvy, as well as learn how to source, evaluate, and secure sponsors and deals that meet my financial goals. Looking forward to connecting!
Hi Jonah,
I agree that there are a lot of very bad deals/sponsor out there. There's also some that I'm very happy with.
When vetting a syndication, every investor will do it differently because every investor has a different risk tolerance, comes from a different financial situation and has different financial goals. So a deal that look great to one investor will look horrible to another and vice versa.
I'm a very conservative investor and may look through a hundred deals a month, and at the end of the year only invest in 4-5. Here's how I do my due diligence:
1) Portfolio matching: (takes 30 seconds per deal)
a) Have an educated opinion on where I think we are in the real estate cycles (financial and physical market cycles)
b) Then and only then do I pick the strategies, capital stack, and specialized asset subclasses that make sense for that opinion. For example, I am a little concerned about some aspects of the business cycle recovery and a potential for a double-dip so I lean toward the safest part of capital stack which is debt (or low-debt equity). I won't go with the riskiest opportunistic strategies, and will stick to core and core plus mostly with some value-added. I won't be investing in the riskiest/most supportable asset subclasses such as hotels, and tilt my portfolio the ones that have historically been more stable such as multifamily and single-family housing. I also don't want refinancing risk, so any deals with only 3 to 5 year debt are out for me. For someone that's not as conservative, or a different view on the cycle, they might have a different opinion than me on all of this.
2) Sponsor quality check: (takes about 45 minutes per deal)
I believe that a great sponsor can take an average looking deal and make it great, and that in mediocre sponsor can take a fantastic looking deal and make it bad (especially if there is a severe recession). So I start with the sponsor first. Again, others might disagree.
a) Track Record: Get the entire track record for the strategy. As easy as this sounds, it's not simple and usually like pulling teeth. Many times they will claim it's wonderful and then try to hide their worst deals by only showing completed deals. Make sure to get unexited deals. Or if they are doing value-added multifamily, they will show you their hotel experience. That doesn't cut it for me. I want a specialist that's an expert, and not a jack of all trades and master of none. Also, in a mainstream asset class like value-added multifamily, I see no reason to take a risk on a sponsor that doesn't have full real estate cycle experience or that lost anything more than a small amount of money (and prefer no money lost). Again, other might feel differently here.
b) Skin in the game: as a conservative investor, I understand that the dirty secret of industries that the waterfall compensation is in the line with me and incentivizes sponsors to take more risk. So I require skin in the game (average is 5% to 15%) to offset this. Contrary to popular belief, this is not set because I believe it will give me a higher return. I believe it tends to give me a slightly lower return, because the sponsor is going to be more careful, and if there is a severe downturn will prevent me from taking catastrophic losses. Someone that is more aggressive, may want lesser even though skin in the game. Also, if the sponsor is new, I am fine with less skin in the game as long as it is significant to their net worth. On the other hand if they are a sponsor that is experienced in stopping a skin in the game, that's a huge red flag for me.
c) how open to scrutiny are they? I always discuss investments with others in an investor club because other people might think of things that I might miss. And even though virtually every sponsor agreement allows me to share investment information with others who might be advising me on it (especially when club members are bound by an NDA), I still ask the sponsor if I can share it, because it's a test. Most are fine with that, but a few will have problems with it and claim there are legal issues, etc.. That's a red flag for me.
d) death by Google: I Google everything I can about the sponsor. I check the SEC, FINRA, ratings websites for inside information on the principals in the company. I also look for lawsuits and see what happened in them. Many times it's an easy red flag. Sometimes it's ambiguous, but even then, why should I bother with the company that has numerous unresolved lawsuits, versus another company that is virtually the same but has none. Again, others might feel differently here.
3) property level due diligence: (takes seconds to weeks per deal): here is where I drill in with the low-level details.
a) pro forma popping: I examine all the assumptions, and see if they are overoptimistic or not. I look at every single item in the pro forma and imagine that it is complete BS, and see if I can challenge it. If there's a hole, it may be a red flag.
b) sensitivity analysis: I examine all the assumptions, and make sure I can live with the worst case scenarios.
c) "Stall and see": if they are getting money over multiple years, and there is no penalty for investing later, I would usually wait so I get some real performance data, versus having to look at theoretical pro forma information.
d) Recession stress test: I will not invest in anything, until I subject it to recession level stress and see if I can live with the result. And I take the worst recession I can find in the recent past. Sometimes there is only great recession data, and that recession was pretty mild on some asset classes, versus previous recessions. So I will usually 1.5x or 2.0x the stress. If the deal collapses and I would lose everything, I'm out. Others might be fine with taking risk, but least by doing this a person can get an idea of what might go wrong.
e) Legal document analysis: it will usually take a few days to go through the legal document properly, as almost inevitably there are tons of gotchas that either have to be explained, or mitigated with a side letter.
That is the very short summary of what I do. If you want more information, p.m. me and I can give you a lot more details.The Real Estate Crowdfunding Review - Madison, MS · Member since 2024 · 10 posts · 9 votes1y
Wow @Ian Ippolito thanks! That's a lot to take in, so give me time to digest everything and I'll reach out to you if I have follow up questions, which I probably will. Sponsor vetting seems to be quite intense but necessary. I like that you talk to others about potential deals and allow them to poke holes in the details. Great advice about what to be wary of in the due diligence process. Thanks again!
- 1yBrian BurkePro MemberInvestor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
@Jonah Gunalda sponsor selection is critical—if you are investing with first-class sponsors you’ll mitigate one of the biggest risks in the syndications space.
Start with this book. Also check out BiggerPockets sister site for passive investments: www.passivepockets.com
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
Quote from @Jonah Gunalda:
Hey BP community, I'm Jonah. I'm looking to learn more about passive real estate investing, syndications, and other passive or semi-passive streams of income or equity building. I'm 37 and about 8 years into my emergency medicine career. I love my W2 job and am not looking for replacement income, but I do want to diversify my investment portfolio in the real estate sector while keeping my focus on what I love and do best -- emergency medicine! Looking to connect with like-minded individuals on this platform, or those who have gone before me and can share their Dos and Don'ts from their own experience. I realize the RE world is vast and full of scams, jargoned underwriting, salespeople, and crooks. I'm hoping to broaden my real estate literacy and savvy, as well as learn how to source, evaluate, and secure sponsors and deals that meet my financial goals. Looking forward to connecting!
Jonah
Welcome to BP. There are books written on the Do's and Don'ts (see brian burke book).
Without diving so deep into the weeds, the biggest factors I tell people who want to start out passively are:
1. Do your due diligence upfront on the person (simple google search with their name and lawsuit or scam can weed out many - as well as a search on BP)
2. Do not allocate more than 10-20% into one investment
3. Diversify - not only for risk but to also learn more about being an LP. see how GPs interact, communicate etc. You can quickly see how they operate and understand who is professional and who is not.
7e investments53 Reviews - 1yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Well you received reply's from the top heavy hitters in the passive game here on BP.
choosing wisely is key as noted.. real estate debt can be a great spot for the busy professional. And it can be done there locally.
When I was active in Jackson there was my company and another called SIF one of the owners was married to a local doctor if I recall. Jackson is very active for investor loans. So something you might look at but again choose wisely don't get stuck in SOJAC stick to Madison or Rankin counties.
The GFC unfortunately hit all of us lenders pretty hard and I had a concentration in Jackson and ATL and Memphis so I had to move to Jackson for a year to clean up my portfolio I thought I was going to be there for maybe a few weeks but that turned out to be a year and I got very fortunate I was able to rent the developers house at Reunion . Very much enjoyed that neighborhood.. Very nice people there in that neck of the woods. It was pretty wild I brought my plane down from Oregon and had it hangered at Hawkins field which I did not realize at the time was the middle of the hood.. but it was safe and Jackson was a good base to fly to my other markets.
Anyway we don't get a lot of members from Madison come on to BP so thought I would chime in.. U can safely invest in your market.. There is an investor meeting there called RIG and I suggest going to it.. you could meet some of the locals.. Like Bob Lucroy Ms. Julie Harrison and Walter Wofford etc.. all good people to know I have lent to all of them successfully. PS I can also tell you who to stay far away from in that market :)
- Investor · Pickering, ON · Member since 2020 · 46 posts · 14 votes1y
Hi Jonah,
I’ve passively invested in quite a few syndication and private fund deals. Definitely trust your gut and don’t invest if something doesn’t seem right.
Also, here’s a list of my top questions I ask the sponsor before investing:
- How focused are you on this deal/fund/syndication? Is this a side hustle or are you doing it full-time?
- How much of your own money is in the deal/fund/syndication?
- Mechanics of the fund:
- Lockup period
- Distributions
- Compliance requirements (KYC, AML)
- Reporting timeline
- Fee structure
- Can you share referrals?
- Can you share your track record?
- Who are your competitors? Why are you better?
- What happens if you die? Do you have a key man provision?
- What level of communication can I expect post close?
- What's the worst deal you've ever had or the worst that's gone wrong?
If you’d like to connect and chat about passive real estate, feel free to DM me. I can share more details about the types of deals I’ve invested in.
- Madison, MS · Member since 2024 · 10 posts · 9 votes1y
Thanks @Jay Hinrichs for the warm welcome and your encouragement and advice about my local market. I’ll take you up on your offer to send me your list of names, just shoot me a private message.
- Madison, MS · Member since 2024 · 10 posts · 9 votes1y
Thanks for your questions @V.G Jason. I anticipate my response may receive some criticism on this forum since I’m a newbie to the game. But, as I mentioned in my intro and my bio, I am fully engaged in my work as an emergency position and still really enjoy what I do. I’m not looking to get out of medicine anytime soon. So passive to me is something that allows me to fully engage in my work as a physician while also allowing my discretionary (investment) money to work for me in the background. I really don’t have an interest in being a landlord in any way. Even though rental properties can be somewhat passive, there are still things to keep an eye on, like collecting rent, making sure utilities get paid, ensuring property management is doing their thing, etc. Too much of a side hustle for me. And I realize everyone’s experience with rentals is different. I would rather do due diligence in vetting sponsors, building relationships (like on this platform), and evaluating deals, then place my investment and go back to being in the ER doctor while the GP does the work for me. Hopefully this view of passive is not too warped from reality!
I do understand that everything has risk. And I do not intend to leverage myself such that a complete loss of capital would be financially catastrophic. In the grand scheme of things, these are what I would consider first world problems. To have enough discretionary funds to be able to invest at this level means that even if a deal goes completely down the drain, I can still feed my family, tithe to my church, pay my bills, and try again later.
I do appreciate the probing nature of your questions! It is good for me to continue to reflect on my definitions and risk tolerance.
- Madison, MS · Member since 2024 · 10 posts · 9 votes1y
@Chris Seveney could you elaborate more on point number 2? I want to be sure I’m understand what your point of reference is. Thanks!
- Real Estate Agent · Memphis, TN · Member since 2019 · 365 posts · 264 votes1y
@Jonah Gunalda welcome to the forums and congrats on the first post! Always love seeing fellow Mississippians on here, I'm in Nesbit but am from Senatobia. I spent quite a bit of time in the Jackson area playing MRA, JA and Prep back in the day. Personally I'm not a fan of syndications simply because there is absolutely 0 say so and what you can and can't do. I'd prefer to own the asset and partner with someone who can manage the asset so it's completely hands off. There are companies that buy properties, renovate them, place a resident in the home, sell to an investor then property manage for the investor as well on the back end. It makes for an extremely passive way to invest in real estate but at the end of the day you do have the say so on what happens at your property.
Or if you have an investor friendly agent they can help identify properties that are in very good condition and link you to a property management company. While it's not as passive as working with companies like I mentioned earlier it's still a great option. Feel free to reach out if I can be of any assistance. Best of luck!
- 1yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
all the questions to ask / vetting tips that @Jonah Gunalda got are really good... but (and with the caveat that i do not invest in syndications) isn't the bottom line that he should KNOW anyone he invests with? like, he could send out a questionnaire to 100 sponsors and ask all the questions people suggested. and i think mostly what he would get back is... nothing, because lots of them would just ignore it.
to put it a different way - he's a doctor. anything he invests in should be something that i, for example, don't know about, and wouldn't be let into. =) i don't know if it's going to be found with a Google search.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
Quote from @Jonah Gunalda:
@Chris Seveney could you elaborate more on point number 2? I want to be sure I’m understand what your point of reference is. Thanks!
If you have $100k to invest, I would not put more than $10-$20k into that investment and spread that investment out between 3-5 investments.
7e investments53 Reviews - Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes1y
@Ian Ippolito provided a great list!
Prior to investing, you should be spending a lot of time with discovery. You need to be looking for good sponsors who are providing you with opportunities that fit your investment criteria and risk profile. Finding the best sponsors is the most challenging part, so take your time with that.
Also, understand the role of the capital raiser. There are a ton of people raising for other people's deals. This isn't a bad thing if that fund raiser is doing strict due diligence on the sponsor, has done multiple deals with them, etc. Just know the layers involved and be sure you are still able to complete due diligence on the sponsor.
- Madison, MS · Member since 2024 · 10 posts · 9 votes1y
Thanks for reaching out @Brian Burke. I have a copy of your book and have been making my way through it for the last couple of months. A lot to digest but some gold nuggets of information and wisdom!
I have a copy of your book and have been making my way through it for the last couple of months. A lot to digest but some gold nuggets of information and wisdom!
There seems to be quite a bit of polarity in those who invest in syndication and those who do not, for whatever their reason is. Your book makes a strong argument for the benefits of this form of passive investing.
In reading through the comments, there seems to be quite a bit of polarity in those who invest in syndications and those who do not, I’m sure for legitimate personal or logical reasons. Your book makes a strong argument for the benefits of this form of passive investing.
however, for those who do not invest in syndications, I would ask these questions to fully understand your decision:
1. Do you have any personal experience in investing in indications and that’s why you choose to not/no longer invest this way?2. Do you currently work a full-time job as I do, or is real estate your full-time gig? If you do work full-time, how much of your real estate investing (including BRRRRing properties if you own rentals) occupies your time?
3. Are you primarily motivated by the idea of ownership in the assets rather than someone else owning and managing it?
Value everyone’s thoughts, opinions, and experiences! Quote from @Jonah Gunalda:
Thanks for your questions @V.G Jason. I anticipate my response may receive some criticism on this forum since I’m a newbie to the game. But, as I mentioned in my intro and my bio, I am fully engaged in my work as an emergency position and still really enjoy what I do. I’m not looking to get out of medicine anytime soon. So passive to me is something that allows me to fully engage in my work as a physician while also allowing my discretionary (investment) money to work for me in the background. I really don’t have an interest in being a landlord in any way. Even though rental properties can be somewhat passive, there are still things to keep an eye on, like collecting rent, making sure utilities get paid, ensuring property management is doing their thing, etc. Too much of a side hustle for me. And I realize everyone’s experience with rentals is different. I would rather do due diligence in vetting sponsors, building relationships (like on this platform), and evaluating deals, then place my investment and go back to being in the ER doctor while the GP does the work for me. Hopefully this view of passive is not too warped from reality!
I do understand that everything has risk. And I do not intend to leverage myself such that a complete loss of capital would be financially catastrophic. In the grand scheme of things, these are what I would consider first world problems. To have enough discretionary funds to be able to invest at this level means that even if a deal goes completely down the drain, I can still feed my family, tithe to my church, pay my bills, and try again later.
I do appreciate the probing nature of your questions! It is good for me to continue to reflect on my definitions and risk tolerance.
You seem to understand what you're getting into then. I would highly recommend doing some deep diligence not just ordinary on any syndication you enter, or note fund you enter.
- 1yBrian BurkePro MemberInvestor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
@Jonah Gunalda you fit the profile of a large segment of the passive investing community--someone who has a good income from something they are really good at, and would like exposure to real estate in their investment portfolio without distracting them from that very vocation that put them in the position to make such an investment in the first place.
There probably isn't a "typical" profile of folks who do not and would not invest in syndications. In my experience, there are several avatars here. Active real estate investors who can't get comfortable not being in the driver's seat, people who just don't like real estate as an investment, those who can't get comfortable with the risks, those who just don't understand syndicate investments, those who have heard bad things about this type of investing from others, and people who have invested in syndicates and experienced bad results.
- Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes1y
@Jonah Gunalda, being a physician there is a group called White Coat Investors. They seem to cover all sorts of topics, beyond investing, and certainly talk about real estate investing within the forums/courses, etc.
At the end of the day, there are pros and cons to all types of real estate investing. Anything from REIT mutual funds to direct ownership (which depending on your definition is "passive" to many, including the IRS), to direct asset syndications and funds. And even within REITs, while most people think publicly traded, you can also get into Private REITs, non-traded REITs, etc.
Your desire for control and liquidity are likely the two biggest assessments you need to make first, as this will start to narrow down your choices very quickly.
- Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes1y
Start with learning the fundamentals of real estate investing then vet a ton of different syndicators/fund managers. Stay on their email list with updates, choose the operator that has the best investment thesis, track record/experience, and deal.
- Madison, MS · Member since 2024 · 10 posts · 9 votes1y
Thanks for your insight @Evan Polaski! Yes, I'm familiar with WCI and have followed the blog/podcasts since I was in residency. Jim Dahle is an active investor in syndications and speaks a lot about REITs and other types of RE investments. Regarding control, I generally do like to have control in most areas of my life. I think we all do to a degree. However, control and time are directly correlated. The more control one has over something, the more of their time it demands. I'm at a stage in life where my time needs to be allocated most to my career as a physician, to my family, my church, and my other commitments, duties, and hobbies. I don't have the interest or the margin to spend my discretionary time actively managing real estate. I guess I have yet to be convinced that owning rentals is a truly passive ("set it and forget it") thing. I do see the tax benefits of owning rentals and how that income can offset my W2 income from a tax standpoint. I just don't know that I want to have an AirBnB side hustle on top of my main job and my other life responsibilities. I'm look more for a vehicle that I can place my investment, let it work for me in the background, and I can reap the returns while I go about my career and family duties. But this whole process of learning about different options is really fascinating and gets me excited about what all is avaiable!
- 1yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
not sure if you were asking these questions rhetorically but i thought they were good so here goes.
1. Do you have any personal experience in investing in indications and that’s why you choose to not/no longer invest this way?
I have no experience in syndications, and as I stated in a previous post, I am mostly not interested. In addition to direct real estate, I invest fairly heavily in index funds. I seem to have timed some REIT investments well too - nothing I did, just classic DCO. In a syndication you have low control and also limited liquidity. I want either full control - an individual property - or total liquidity - a REIT or index fund. Maybe many years out I'd be more interested, but it doesn't fit what I am trying to do right now. (I'm not trying to talk you out of it!)
2. Do you currently work a full-time job as I do, or is real estate your full-time gig? If you do work full-time, how much of your real estate investing (including BRRRRing properties if you own rentals) occupies your time?
I work 9-5 and invest in real estate 5-9. I have a portfolio of LTRs in 3 states. I try to do 1 BRRRR a year but have not been able to get one in 2024 because I keep being outbid. My portfolio is stabilized and while it's not totally passive, I have strong PMs in place. I spend a few hours a month paying bills, answering questions from my PMs and approving large bids, and then occasionally handling a turnover. I have taken all my taxes and insurance out of escrow, and I run them through credit cards to rack up points, so I pay a lot of bills every year.
3. Are you primarily motivated by the idea of ownership in the assets rather than someone else owning and managing it?
Yes, exactly.
you nailed it - control and liquidity. i want at least one (right now.)
- Madison, MS · Member since 2024 · 10 posts · 9 votes1y
@Nicholas L. Not a rhetorical question :-) So I'm happy you answered, and I hope others will chime in.
I appreciate you sharing your investment strategies and your philosophy behind why you do what you do (re: control and liquidity).
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