Transitioning from Active Investments to Passive Investments

[Arn Cenedella]

I have invested in rental properties since 1986. These have mostly been single family houses. And they have done very well for me.

These are not grand slam investments but solid line drive base hits over time. They have provided minimal cash flow but solid appreciation and net asset growth. The equity developed in these rental properties is a significant portion of my net worth. I am set financially at the age of 65.

I currently own 7 rental properties with 13 tenants. I manage these properties myself and I have great tenants who often drop the rent off at my house. More often than not, when I lose a tenant it is because they bought a house. I am happy for them. Sorry to lose them as a tenant but happy they are on the road to success and financial stability. I remember how excited I was to buy my first home in 1980 - $107,500 with a $868.08 mortgage payment. I was scared and excited at the same time.

I have just started to change my investment approach for two reasons:

1. To increase my monthly cash flow

2. To lessen my property management responsibilities

This week I made my first passive income investment is a beautiful 232 unit apartment complex in Charlotte North Carolina.

Giving up control was a big step for me. I have always been a one man operation - doing it all on my own. I mean after all, who could do it better than I? 😊

Giving up control releases me from property management responsibilities and I will more than double cash flow return on my equity investment.

This recent investment is in an apartment syndication also known as a passive investment.

Over the next couple of years, I will sell or exchange my rental properties into these large scale passive investment syndications.

I would be interested to hear from other investors that created a portfolio of single family rentals and small rental properties over a long period of time and how they decided (assuming they did) to transition to passive investment.

What's been good and what's been not so good?

What's your experience been?