Getting good at passive investing

[Justin Lee]

Hi BP, I really like the idea of passive investing via syndications or crowdfunding, but to jump in on a deal now feels risky, as I have little to no experience in REI. Sure, I'm reading as much as I can about deal analysis and due diligence, but is it foolish to start out without any hands on experience buying, managing, and selling my own properties? Listening to the BP podcasts, it seems like a lot of successful, experienced investors are now offering opportunities to put money into their deals or funds. If someone has a successful business model that would take me years to emulate, why shouldn't I take advantage of their expertise? They can probably get higher returns than me, and I would gladly take a lower rate of return in exchange for not having to put in the work of finding the deal and managing the property and eventually putting it up for sale. What do you think is the minimum amount of experience needed to be able to successfully vet deals and sponsors? Can I do it just by reading and learning without any hands on experience? Or would I just be gambling? Justin

[Joel Owens]

Hi Justin,

I can tell you depending on how it is set up that you need to be an accredited investor.

I am doing a Retail investment fund soon but my buy in minimums will be in the 6 figures per investor.

The reason is too many investors for investing 25,000 etc. It's better to have a group that you keep syndicating with that has substantial liquid cash.

In this way instead of having to new investors each time they already know me and I know them. Each time you do a syndicate you do not want to re-invent the wheel each time.

I have had a couple of friends invest in syndicates and they have done well passively. The operator you go with is critical for a chance of success.