5 Reasons to Passively Invest with a Pro

[Danny Randazzo]

I recently read a Forbes article comparing single family rental investing to passive investing alongside a professional in commercial or multifamily real estate. It's always an interesting comparison. Below are the top five reasons listed in the article and my input on what they mean when you passively invest alongside a professional.

1. Asset value correlated to net operating income (NOI): net operating income valuation allows the owner to control what the property is worth by either increasing or decreasing the NOI. Having a business plan geared towards increasing income gives another level of professional control and proven methods to achieve income growth.
2. Ability to co-invest with professionals: Inexperienced investors can passive invest with professional who have real estate experience which gives investors the ability to go further faster with proven strategies and models to increase income and decrease risk.
3. Diversification: By passively investing, investors have control to work with others and review invest opportunities in markets they want to invest in.
4. Loss limitations: Passive investors only put up their initial capital and are not liable for signing on the debt note.
5. Rationality: Market competition keeps the investment fundamentals in check which any solid professional can monitor and socialize with passive investors throughout the investment hold period to ensure performance goals are achieved. 

[Mike Dymski]

Hey Danny. Well said.

Active investing in SFRs and passive investing in syndications are not alternatives for the same set of goals. If an investor wants control, passive investing is not a viable strategy. If an investor does not have the time or interest in generating direct owned deal flow, active investing in SFRs is not a viable strategy. We are comparing apples to oranges here.