Active vs Passive Real Estate Investing (A 10 Year Story)

Without a doubt, there are investors on both sides of the table. Some looking to be actively involved with real estate and others looking to use a passive approach. When I started out in real estate a little over 10 years ago, I had every desire to be passive, but I didn't see a clear path to achieve it. I began my real estate adventures with single-family flips, buy and holds and vacation rentals. Yes the ROI was great and I felt like I was crushing it, but it was starting to consume a lot of my time as I was building up my portfolio. I had every intention of scaling up to 50 or 100 single-family properties over a lifetime, but I was creating a job for myself in the process. 

Suddenly I had an epiphany! Do you ever have those moments where something becomes abundantly clear? My epiphany was to hire a property manager to oversee my rental units. What I found out quickly, was that I still had tenant issues and now I also had the task of managing a property manager. Sadly, this decision had only made things worse. I began wondering if real estate investing was really worth pursuing. I asked myself "how do truly wealthy investors scale up, how do they invest millions of dollars in real estate and not run into this same issue? Back to the drawing board... 

After much more research, reading, and networking I learned of a new concept called syndication investing. The idea is that you pool your money together with other investors and purchase a large asset, for example, an apartment complex. The idea was mind-boggling that I could invest as little as $50,000 and become a partial owner of an apartment complex! What?? But even better than that, the syndication is structured where a general partner does all the heavily lifting and oversees the management and team in order to effectively execute the business plan while a professional property management company handles the day to day operations on the ground. This structure allowed me to actually be 100% passive in a real estate deal. The thought of never managing a tenant again, not having to drive neighborhoods to find deals, not dealing with move-outs, turnovers and setting up LLCs and bank accounts for each project was inspiring. Was this all too good to be true?

After much more research and due diligence, I decided to try this model out and see if it was the real deal. I sold one of my single-family properties and took part in my first syndication as a limited partner and had $50,000 invested. I sat back and watched it unfold for about 6 months. I received monthly distributions, monthly updates and I had an open line of communication any time I had a question or concern. It was a brilliant model for me, and best of all, it required NONE of my time. I had finally found the passive investment model I was seeking years ago. 

Fast forward to today; I have partnered with over 14 different syndicators and I've invested in everything from multifamily apartments, to self-storage, to private note-lending funds to distressed debt funds. It's been a highly rewarding experience and has allowed my wife and I to travel the world and obtain what we refer to as "Time Freedom". Time Freedom is the ability to do what you want, when you want, as much as you want, with your time. 

With all this said, syndications are not the best approach for everyone, especially those who want to maintain full control and decision making over their investment. I'll admit I did enjoy the hands-on experience with single-family homes and trying out different strategies... for a while. But in the end, Time Freedom is what mattered most to my wife and I. We truly enjoy being passive investors and being able to dedicate our time to the things we enjoy the most. One of my favorite quotes by Tony Robbins is, “Most people overestimate what they can achieve in a year, and underestimate what they can achieve in a decade." As it's now been a little more than a decade in real estate for me, this has certainly held true. I encourage you to keep moving forward with your vision and what you love doing! IT IS possible to achieve and likely not as far off as you might think. To your success!