Strategies for passive investment

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Strategies for passive investment

David S.
New to Real Estate · BC Canada · Member since 2020 · 4 posts · 4 votes

Hey BP sages and fellow investors. I'm brand new.

I'm a busy family doctor, husband and father of 2 toddlers. I'm also very excited about all that I've learned from reading the forums, books and listening to podcasts about REI.

My dilemma is that I see the value of things like BRRRR, but despite having the passion and the capital to hit the ground running, I don't have the experience, energy or time. Making time, would just reduce my abilities as a doc/dad/husband right now, and isn't feasible, but I hope it will be one day.

So I'll need to be somewhat passive. I dream about having a team that provides the things I can't, and yet still delivers me good returns on investments, but am not sure if this is realistic. I wonder if it just makes more sense to find good buy/hold cashflow multi-unit properties.

Does anyone out there have any advice to maximize the use of my capital/passion, while minimizing the use of my time/energy?  Willing to invest anywhere the #s make sense, with people that are like-minded/trustworthy and good persons.

Many thanks.

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Taylor L.
Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
6y
Originally posted by @David S.:

Hey BP sages and fellow investors. I'm brand new.

I'm a busy family doctor, husband and father of 2 toddlers. I'm also very excited about all that I've learned from reading the forums, books and listening to podcasts about REI.

My dilemma is that I see the value of things like BRRRR, but despite having the passion and the capital to hit the ground running, I don't have the experience, energy or time. Making time, would just reduce my abilities as a doc/dad/husband right now, and isn't feasible, but I hope it will be one day.

So I'll need to be somewhat passive. I dream about having a team that provides the things I can't, and yet still delivers me good returns on investments, but am not sure if this is realistic. I wonder if it just makes more sense to find good buy/hold cashflow multi-unit properties.

Does anyone out there have any advice to maximize the use of my capital/passion, while minimizing the use of my time/energy?  Willing to invest anywhere the #s make sense, with people that are like-minded/trustworthy and good persons.

Many thanks.

Welcome to the site! You've hit the nail on the head - people. That's numero uno. Trustworthy, experienced, and like-minded are all qualities I like to look for.

Start by quantifying your goals and assets: What do you want your investments to produce, and by when? How much time & capital do you have to invest? (FYI, never post how much capital you have to invest publicly...)

There are a few top options that typically fall under the passive investor purview: syndications, private lending, notes, turnkeys, and triple net properties.

You can learn the basics and principles of those from podcasts, books, and YouTube channels. Then pick one to pursue and go for it! Daily action, even for passive investors, will push you further, faster. Small steps done consistently turn into big results.

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  • Whitney HuttenPro Member
    Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
    6y

    @David S. If you have money, but no time and little experience, you may want to consider turnkey or syndication investing (if you are well-capitalized, I would suggest the syndications as it is truly passive). PM and we can discuss! Also, if you are CN and want to invest in the US, for syndications, you will need to set up a US bank account and LLC with an EIN... then you are good to go!

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    1Reply
  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    6y

    "I wonder if it just makes more sense to find good buy/hold cashflow multi-unit properties."

    Unless you want to be a general contractor or have an equally skilled brother-in-law, it's better to buy something turn-key and hire a manager if you're already busy.

    You won't get the max return like people that do the BRRRRRR thing, but that takes sweat equity and time locating and fixing a property.

    If you do hire a manager, understand the operating numbers since you need to make decisions. The conversation you want to have monthly with your prop mgr is: "What are the x things we're going to do this month to increase NOI."

    Disclaimer - I have ZERO clue about how Canada treats investment income.

    0Reply
  • Chris K.
    Attorney · Nashville, TN · Member since 2015 · 1k+ posts · 1k+ votes
    6y

    @David S.

    Based on what you wrote, probably syndication deals are your best bet. But there is some prep work you would need to do to invest in syndication deals as a US Citizen. Perhaps you can find syndication deals in Canada. 

    Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

    0Reply
  • Brian Garrett
    Real Estate Investor · Palm Beach County, FL · Member since 2017 · 3k+ posts · 2k+ votes
    6y

    Consider being the bank and doing some HML.

    You can get 8-12% rather easily plus points on the loan.

    It's also collateralized by the property so you're protected.

    0Reply
  • Daniel McNulty
    Financial Advisor · Indianapolis, IN · Member since 2018 · 294 posts · 165 votes
    6y

    @David S.

    I would also agree that syndicate investing provides the best returns while being the most passive. 

    Its important to understand that evaluating syndicates / operators is far different than evaluating a property. Its a much more nuanced process as you are now investing in people, their process, their philosophy, etc. In the end it can deliver just as much value for less ongoing work, but the upfront sourcing / diligence process should not be taken lightly. 

    Ultimately, you should ask for transparency into their operations, people and properties as well as timely (at least monthly) contacts.

    It is rewarding though after the initial hurdles, just like other RE opportunities. 

    0Reply
  • Andrew HoganPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2016 · 560 posts · 463 votes
    6y

    @David S. as Daniel said. Focus on underwriting successful sponsors themselves that will be able to execute on what they do best and you'll not only preserve but grow your capital far better than by taking your own valuable time to do it.

    0Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    6y
    Originally posted by @David S.:

    Hey BP sages and fellow investors. I'm brand new.

    I'm a busy family doctor, husband and father of 2 toddlers. I'm also very excited about all that I've learned from reading the forums, books and listening to podcasts about REI.

    My dilemma is that I see the value of things like BRRRR, but despite having the passion and the capital to hit the ground running, I don't have the experience, energy or time. Making time, would just reduce my abilities as a doc/dad/husband right now, and isn't feasible, but I hope it will be one day.

    So I'll need to be somewhat passive. I dream about having a team that provides the things I can't, and yet still delivers me good returns on investments, but am not sure if this is realistic. I wonder if it just makes more sense to find good buy/hold cashflow multi-unit properties.

    Does anyone out there have any advice to maximize the use of my capital/passion, while minimizing the use of my time/energy?  Willing to invest anywhere the #s make sense, with people that are like-minded/trustworthy and good persons.

    Many thanks.

     Welcome aboard David.

    0Reply
  • Dave Wolcott
    Investor · Sarasota, FL · Member since 2015 · 17 posts · 10 votes
    6y

    @David S. good question. We have many Doctors, Dentists and others professionals in our investor club that are all similarly challenged with time so choose to invest in syndications. Over the years I have started several businesses, managed rental properties, and invested in syndications and I have definitely learned that time is your greatest asset. Less passive investments like BRRR definitely require more time which is often never calculated in ROI projections. If it is your passion then go for it. For me, I like building a team that can do the things I don't have time for or am less competent. This drives exponential scale financially and in life which is the ultimate in passive.

    Additionally, I know several Canadian financial planners who say that many of the tax benefits we enjoy in the US on RE are very limited in Canada.  @Chris K. is exactly right in that it is possible to invest in syndications in the US but there is some legwork required to set up properly.

    Best of luck

    1Reply
  • Trevor Ewen
    Rental Property Investor · Weehawken, NJ · Member since 2014 · 1k+ posts · 704 votes
    6y

    @David S.

    Welcome. I am a passive investor like you. Once you embrace it, it's an excellent way to go. Here are some of the strategies I have pursued over the years:

    - Turnkey properties.
    - Buying multi-family with management and team in place (on turnkey).
    - Private lending.
    - Syndications.

    Each has played a role in my experience, I can definitely speak to each at length. Beyond this, I find many ways to stay 'involved' in real estate. My hands-on involvement (outside of finance) usually amounts to digital and marketing strategy for deals and partners that I have worked with. There are a million ways to add value, and I am sure you can find more than one, once you get started.

    2Reply
  • John FortesPro Member
    Multi-Family Syndicator · Abington, MA · Member since 2017 · 603 posts · 347 votes
    6y

    Quick options that come to mind for investing passively are private lending and syndication investing. Turnkey still has some active role but not a huge time commitment. Private lending can become active if the lender fails. Syndications allow you to leverage the experience of an operator with a team already. 

    True financial wealth is achieved when passive income outpaces your expenses. Play the long game!

    Happy investing!

    2Reply
  • Taylor L.
    Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
    6y
    Originally posted by @David S.:

    Hey BP sages and fellow investors. I'm brand new.

    I'm a busy family doctor, husband and father of 2 toddlers. I'm also very excited about all that I've learned from reading the forums, books and listening to podcasts about REI.

    My dilemma is that I see the value of things like BRRRR, but despite having the passion and the capital to hit the ground running, I don't have the experience, energy or time. Making time, would just reduce my abilities as a doc/dad/husband right now, and isn't feasible, but I hope it will be one day.

    So I'll need to be somewhat passive. I dream about having a team that provides the things I can't, and yet still delivers me good returns on investments, but am not sure if this is realistic. I wonder if it just makes more sense to find good buy/hold cashflow multi-unit properties.

    Does anyone out there have any advice to maximize the use of my capital/passion, while minimizing the use of my time/energy?  Willing to invest anywhere the #s make sense, with people that are like-minded/trustworthy and good persons.

    Many thanks.

    Welcome to the site! You've hit the nail on the head - people. That's numero uno. Trustworthy, experienced, and like-minded are all qualities I like to look for.

    Start by quantifying your goals and assets: What do you want your investments to produce, and by when? How much time & capital do you have to invest? (FYI, never post how much capital you have to invest publicly...)

    There are a few top options that typically fall under the passive investor purview: syndications, private lending, notes, turnkeys, and triple net properties.

    You can learn the basics and principles of those from podcasts, books, and YouTube channels. Then pick one to pursue and go for it! Daily action, even for passive investors, will push you further, faster. Small steps done consistently turn into big results.

    3Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    6y

    @David S.

    You could invest in a fund or be a private lender as it’s much more passive and takes less time

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    1Reply
  • Brian Briscoe
    Real Estate Coach · Salt Lake City, UT · Member since 2017 · 273 posts · 414 votes
    6y

    I'll add my 2 cents.  Investing passively in syndications seems to be a good fit.

    @Taylor L. made some good points about defining your investment goals first...  BTW, Taylor is a syndicator and has a solid reputation.  I'm in DC - he's in Richmond.  I've never met him, but I know several people that speak highly of him.

    @John Fortes is another syndicator that I trust.

    I'd recommend talking with several syndicators to find someone you like that can help you meet your investing goals.

    A few people also mentioned private lending... also worth looking in to.

    2Reply
  • David S.
    OP
    New to Real Estate · BC Canada · Member since 2020 · 4 posts · 4 votes
    6y

    I'm very thankful for everyone's time and wisdom. I will look into syndication, but I'm more interested in passive "turnkey" type investing in small multifamily properties. I'm aware it is less passive than other strategies.

    I hope that over time as I learn markets and get a few deals under my belt, I will be able to find a team that can support other options like BRRRR/wholesaling/fix-flip that are less onerous that without the team.

    Thanks again.

    0Reply
  • John FortesPro Member
    Multi-Family Syndicator · Abington, MA · Member since 2017 · 603 posts · 347 votes
    6y

    Appreciate the love @Brian Briscoe! I share the same sentiments about you and Taylor. I met Taylor in Boston at a conference last year and had good conversation. 

    Always enjoy our conversations as well Brian!

    1Reply
  • David S.
    Investor · Bay Area, CA · Member since 2014 · 165 posts · 45 votes
    6y

    @David S. Can you share where you are in BC Canada? I ask because I have relatives who own in the metro Vancouver area and at least according to this article, turn-key opportunities may come up as government programs put in place due to Covid, wind down over the summer. You will not have to deal with cross border issues if you invest in Canadian real estate.

    https://www.cbc.ca/news/canada/british-columbia/covid-19-may-real-estate-1.5562836

    0Reply
  • Account Closed
    Realtor · Portland, OR · Member since 2020 · 87 posts · 43 votes
    6y

    @David S.

    Do not do turn-key rentals, property management co's mostly suck. Do not do BRRR (you dont have time) and definitely do not do syndications, the guys running them 9/10x have no skin in the game and charge ridiculous upfront fee's etc.

    Best thing to do is partner with an experienced guy, (someone who is doing deals in your area). 50-50 split. You bring the money. He brings at least 25% of the money (has skin in the game), and gets the deal done. This would be the ideal situation.

    But—- if you want really passive income. Buy sf retail properties at the average joe can afford (hopefully at a discount). Mark them up 10-20% and sell them subject-to /owner-finance on 3-5 yr balloons. Require 10% down etc.

    Hope this helps

    0Reply
  • Steven Silman
    Rental Property Investor · Vancouver, BC · Member since 2020 · 57 posts · 25 votes
    6y

    Hi @David S. - sounds like you've done some good reflecting - being honest with yourself about your abilities will go a long way towards improving your odds of success. Selecting a geographical area you think is promising is one part of the equation, the class of investments is another part, and arguably the most important is people. You can go into a good area, invest in a solid property and still struggle if the people you're dealing with are not the right fit - I know, I've done that! Even when you're investing locally it can happen and the effect is magnified many times when investing out-of-area. Take your time, make some contacts (in person is ideal but somewhat difficult in these times), and start small until you know you can trust the people and the situation. 

    Regarding buying "good buy/hold cashflow multi-unit properties" - they are still not hands-off as you will need to make decisions about maintaining, renovating, etc that can have a big effect on the success of the property. A good property manager can make a huge difference but you will want to make sure you have a handle on the situation and it takes time to find and grow to trust a property manager. Expect to spend some time on things for at least the first six months or so.

    If you know people in different markets, even friends or family with only a passing interest in real estate, they can help be boots on the ground to keep an eye on the investment for you. If you're starting from scratch in an area it will be harder but still very do-able. Feel free to message me if you want to bounce ideas around or ask questions - I'm in somewhat the same area as you and happy to help. Good luck!

    0Reply
  • Taylor L.
    Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
    6y
    Originally posted by @David S.:

    I'm very thankful for everyone's time and wisdom. I will look into syndication, but I'm more interested in passive "turnkey" type investing in small multifamily properties. I'm aware it is less passive than other strategies.

    I hope that over time as I learn markets and get a few deals under my belt, I will be able to find a team that can support other options like BRRRR/wholesaling/fix-flip that are less onerous that without the team.

    Thanks again.

    Be sure to check out @James Wise's YouTube Channel to learn about folks who lost enormous sums of money in turnkey, which they could have avoided. He provides extremely helpful advice that, had those folks followed in the first place, they may not have lost a dime. Many of the lessons are applicable beyond turnkey as well.

    1Reply
  • Julie Toh
    Specialist · Mortgage Broker Canada · Member since 2015 · 316 posts · 118 votes
    6y

    @David S.@David S.Welcome to BP. I'm live in Vancouver, Canada and am a seasoned investor. You ask some insightful questions and if you DM me, I'd love to share some of my experience. 

    0Reply
  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    6y

    Turnkey typically do not achieve the advertised return.  They are also not easy to research.  Anyone who thinks otherwise should search "Clayton Morris".

    Syndications have been mentioned numerous times and can produce solid returns.

    One that I have not seen mentioned (maybe I missed it) is NNN properties. The safer the tenant typically the lower the return, but can be very passive.

    Syndications and NNN take time to research the investment (like virtually any self managed investment), but after that should be hands off.

    More passive than syndications and NNN are REITs. Basically choose a category such as senior living REIT and check out the REIT's track record. Possibly 30 minutes or less.

    Good luck

    0Reply
  • Huong Luu
    Specialist · Vancouver, BC · Member since 2016 · 315 posts · 145 votes
    6y

    @David S. If you have the cash but not the time, then private lending may be the way to go. You can partner up with mortgage agents and other private lenders to lend out funds. You won't get the equity growth or mortgage paydown, but you will get the cashflow. There are JV opportunities too where you are the money partner.

    0Reply
  • Jessica King
    Member since 2019 · 11 posts · 4 votes
    6y

    @David S.

    You can consider crowdfunding or REITs. But to my mind, crowdfunding is better because it gives more control and transparency and may be easier to track how the properties are performing.

    And what about time lack... There is an article about how you can combine your work being busy with real estate investing. Here is the link: Real Estate Crowdfunding For Busy Professionals

    Hope it will be useful for you!

    0Reply
  • David S.
    OP
    New to Real Estate · BC Canada · Member since 2020 · 4 posts · 4 votes
    6y
    Originally posted by @David S.:

    @David S. Can you share where you are in BC Canada? I ask because I have relatives who own in the metro Vancouver area and at least according to this article, turn-key opportunities may come up as government programs put in place due to Covid, wind down over the summer. You will not have to deal with cross border issues if you invest in Canadian real estate.

    https://www.cbc.ca/news/canada/british-columbia/covid-19-may-real-estate-1.5562836

    I am on Vancouver Island, just a short distance away from Vancouver. Costs to get into Vancouver deals are off-putting to me, but this is likely in part due to my lack of experience.

    0Reply
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