All Forum Posts by: Joe Archbold

He's right and wrong.
Dave discusses how real estate compares to the stock market and that it performs well for him, but says it takes a lot of work and can be a hassle.

For an active investor, this is true. But as a passive investor, you received the same advantages as an owner without the hassle.
Monthly Cash flow from rental income
Tax advantages as an owner through depreciation
Significant returns at equity event or sale
It's still a good video. Check it out.

Would love to hear your comments below-

https://buff.ly/3m3IFXL

If you’ve been at it a while you end up running through most scenarios in real estate investing.

• Single family rental
• Multifamily rental
• Fix and Flip

And the alternative methods to acquire the asset

• OPM- Other people’s money (partnering)
• Owner financed
• No money down

I am sure there are strong arguments for each camp as investors have been successful in each and many have done all three. But which is the easiest, has the least risk and still make a strong return.
For someone starting out, a single-family seems easiest, it's only one tenant. Right? That to me is a trap. Most bad experiences in real estate are due to only having one unit and a very bad tenant. Your occupancy is very digital either 0 or 100%.
So maybe its fix and flip that way there are no tenants. Buy low, add value, sell for more and keep the profits. But the market needs to be right for that and unless you are Jim Dandy Handy you will be paying someone to handle it. You’ll need the down payment and the funds to improve the asset. And you will pay on the note while holding the asset.

Then there’s multifamily. All tenants at the same location. Mechanicals and repairs are generally cookie cutter as the units are very similar. One bad tenant has less overall impact as the number of units goes up. But as the number of units goes up so does the barrier to entry. Large multifamily buildings are not only expensive but may require a property management group to oversee the asset and the tenants.

Maybe its not a particular asset type. Perhaps its how you invest. Hands on investing requires you to learn the market, find the right asset, and build a business plan to manage the asset and have at least one exit strategy. And done right will provide an excellent return.

Easiest, least risk investing might include a REIT or now an ETF but they do not really offer any tax advantage. Passive investing through a syndication allows you to participate financially with no active involvement. Investors pool their funds to leverage into a large asset alongside the operator/ sponsor. As an owner, you will benefit from the returns and have tax advantages. You will want to review the due diligence, understand the scope of the project and vet the operator.

H2H,

Joe

Daniel,

As @John Kunick said- Investing in the LP side of a syndication will in general provide 5-9% preferred annually and have a 70/30 split at equity event with 70% going to LP side. This will generate almost 2X of your investment. Most syndications plan a 3-5 yr hold. Additionally, this will provide tax advantages like your existing real estate holdings. The Syndicator will depreciate the asset and may use cost segregation which will add passive losses that will reduce your taxable passive gains.

H2H

Joe 

Spot On Jorge.

Interesting Forbes article Re: bitcoin and retirement investing. 
Benefits And Risks Of Buying Bitcoin For Your Retirement Plan (forbes.com)

Ryan,

Congrats on the gains. An important question for your strategy has to be- what are your objectives? Is this a hedge while you let your runners run? Or are you getting off the roller-coaster? What is your time horizon? Syndications will provide a very good tax advantage throughout the project and into the next. And more importantly, can provide risk-mitigation associated with real estate ownership. Opportunity Zones might be an alternative, but will they address the risk? Can they be a solid hegde? Not sure. 

Good Luck,

Joe

Stephan,

I agree totally with @John Warren. I live in Naperville the stock for Multifamily is pretty low in and around Dupage county. My Investments are to the West in Kane county. Although I very much prefer Multifamily, just this week a modest home across the street from me has tenants moving out and new ones moving in. I hadn't thought much about it until I heard that it rents for almost $4,000 a month. My best advice FTIW- decide if you are going to manage yourself and be active or if you will be passive. More doors will reduce your risk. 
Passive Real Estate Investing provides significant advantages in putting your money to work. — Chicago (antheminvesting.com)

Regards,

Joe

Well said Justin. Beyond an individual's personal residence, real estate as an asset should be diversified.

Regards,

Joe

Anthony,

Lots of good advice here. My only input is to caution anyone that goes all-in on one unit. The biggest horror stories I hear are from investors with 1 Unit and their tenant falls apart and so does the investment. Usually they don't stay in real estate after that. With 1 unit your vacancy is either 0 or 100%, the same as the income. I would try to get to more units to spread risk. The Passive approach would allow you to jump in and see income. Depending on the project you could be a partial owner of a Multifamily Complex controlling 200+ units in the sunbelt with a small investment. To reduce your risk ever further there are Multifamily Funds that are holding multiple assets.

Good Luck,

Joe

Congrats Justin,

Sounds like a good project. Would love to hear the numbers when you get to completion.

Regard,

Joe