Why YOU Should Invest in Apartments

Question

For the average working professional, real estate investing provides the best path to generate additional income and wealth for their family. However, true wealth comes with the ability to leverage time and to stop trading hours for dollars. That is why passive investing for real estate is such a key driver for the wealthiest people on the planet.

It is said that 90% of the richest people in the world hold a portion of their portfolio in real estate. In fact, Kanye West was just added to Forbes annual list of billionaires with an estimated $81 million in real estate - nearly as much as he made from music and publishing at $90 million.

Kanye and other wealthy people are not real estate experts, but get all the advantages of owning real estate. Being rich doesn’t have to be your goal either. In fact, most people are just looking to generate extra money to cover retirement, a special vacation, an emergency fund, send a kid to college, or give a loved one a head start. These hard workers and busy professionals don’t have to be rich OR real estate experts to get all of the advantages that come with real estate investing. In fact, people can invest passively, just like most of the names on the annual Forbes list using various strategies.

Steven Pesavento · Answer

I have seen investors go down the path to do both. Typically what happens is investors invest passively, get an understanding of the business and then start trying break in actively. Most decide passive is the path, because they realize active investing is more than a full-time job. However some find a path & find themselves on a mission to grow, which brings them to success on the GP side.

Its a great way to get a feeling for what you actually want, without taking all the risk of being the manager.

Jeff Anzalone · Answer

As a full time practicing periodontist, I chose the passive route as I'm too busy to actively invest. For my wife and I, syndications were the BEST way to go.

I had a wake up call during a snow skiing trip. After injuring my wrist, I realized that relying on ONLY one income stream was too much of a RISKY way to live.

Justin Goodin · Answer

@Dave Spooner Thank you!

Really depends on your goals. What are your goals you have with real estate investing?

If you are going to be on the active side with apartment investing, this will be a full time job. More than a full time a job. It will take a ton of time commitment, self education, and persistence.

If you are looking to be on the passive side, you can enjoy all of the benefits real estate has to offer without any of the bad T’s (toilets, tenants, termites). Meaning you won’t get calls from tenants. You won’t be called when something needs repaired. Passive investors are able to make one capital investment in the beginning and essentially collect ‘mail box’ money.

Either route, I would recommend reading books, listening to podcasts, networking, and joining Facebook groups. Biggerpockets is also a great resource!

Let me know if I can help further 👍

Justin Goodin · Answer

Great points made by everyone.

Just to echo what I said earlier, being on the active side is a full time job. More than a full time job. It takes 110% commitment and is not something you can do on the side, in most cases. Yes, it can be done. I used to juggle apartment investing while also working full time, but it is the goal of most people to go full time with real estate.

Many busy professionals choose the passive route because it’s just that…passive. Because real estate is not their main focus or their expertise, they can leverage the experience of others while also doing what they want.

That might be working on their career goals or spending time with family. But they can enjoy the benefits of real estate and create generational wealth (something your 401K will not do) 👍

Steven Pesavento · Answer

What do you want & why do you want it? This is the core question I ask my high-performance clients over and over again... and its the same question I ask my LP passive investor clients too.

Once you answer that question, its easy to pick the route you want to go. Passive investing is the right path for those who want to leverage other peoples time, experiese, access to debt/capital and network to grow their wealth. Active investing is great for those who look to replace their full-time job, who want to serve active investors and love managing all the details of operating real estate. One is not better than another, simple one is hands on and the other is passive.

We cover this a ton on the Investor Mindset Podcast too.

Dave Spooner · Answer

Awesome! Thanks Justin

Jaimin Patel · Answer

@Justin G.  even in times of eviction moratoriums, is investing in apartments still a good idea?

Baroni P. · Answer

@Jeff Anzalone - I can absolutely relate. My wife and I work for the same company. Too many eggs in one basket for sure.

@Steven Pesavento - Great question. Have you seen investors have success doing a little bit of both? Perhaps a strategy towards attaining income independence would be to initial passively invest, learn how to raise money, then move into syndicating your own deals once you have the experience, reputation and contacts.

Dave Spooner · Answer

@Justin G. You make a pretty compelling case for real estate investing. Any good tips for those just getting started?

Baroni P. · Answer

@Justin G. - Looks like Kanye gets it.  Real Estate Investing is a proven path to accumulating and maintaining wealth in which we all can prosper and in turn enrich the lives of others.

In responding to @Dave Spooner, you centered the advice upon an individual's goals.  Let's say, for example, that the goal is to replace a few hundred-thousand in annual income with earnings from your real estate portfolio so that you could quit your W-2 in 3 years.  Of the 2 paths that you mentioned, "active" or "passive", which one makes sense for an accredited investor?  I realize that there are a lot of details that are left out of this scenario, but I'd be really curious (and grateful) if you could share your thoughts on it.

Thanks again.

Why YOU Should Invest in Apartments

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