All Forum Posts by: G. Brian Davis

Hi Sean, a couple quick points: 

1. I wasn't differentiating liquid vs. non-liquid assets. 

2. Every investor has to decide how they want to break down their own asset allocation. Some people don't mind putting 100% of their investment funds in real estate. I personally aim for around 50/50 stocks and real estate, and before I get to know an operator, I prefer to only invest around $5K with them. As I develop trust and confidence in them, I invest more, and I've come to have a significant portion of my net worth invested with some operators. 

When you're first getting started, you may not have the luxury of limiting your exposure in any one real estate investment to 1% of your total net worth. That's especially true if you're buying properties directly, or investing by yourself in a private equity real estate investment. But it's even true if you invest with $5K as a member of our Co-Investing Club. As you build your net worth, you get more granular control of the percentage of it that you can put into any one investment. 

Just to clarify, there's no minimum net worth for investors to join our Co-Investing Club. Anyway hope all that helped!

Hey Jay, we handle it by being a subscription-based investment club. We charge a flat membership fee, rather than taking a cut of any of the money invested. Quite the opposite - I invest my personal money as just one more member, in each investment we end up doing as a club. 

So we're not selling securities. Think of it like a stock investing club that meets monthly to discuss, vet, and invest in stocks, except it's passive real estate investments. 

My company SparkRental organizes a passive real estate investment club, called the Co-Investing Club. We meet twice a month: once to vet a passive investment together, and once to bring in an outside expert to present on their area of expertise. 

Any member can go in on any investment with $5K or more, all group investments are optional. My partner and I don't get a cut of any of the money invested, it's a flat-fee membership club. We create a new joint LLC for each investment, and each participant gets listed as an owner of the joint LLC.

We're really big on diversification. We invest in every property type, in cities across the country, with different syndicators or private partners. I don't want to try to predict the next "hot market" or "hot asset class." I've found that every time I've tried to get "clever" in my investments and pick the next hot thing, I've gotten burned. 

I look at it through the lens of dollar cost averaging my real estate investments. If I can invest $5K a pop instead of $50-100K, I can invest every single month, no matter what the "mood" of the market is. I don't have to worry about trying to time the market, which I think is a fool's errand no matter what the gurus say. 

@Don Konipol I totally agree. I actually aim for not having any one real estate investment make up more than 1% of my net worth. I do that by going in on them with other people through an investment club (I can invest $5K in each investment). 

To your point, passive real estate investment returns tend to form a bell curve, with a few underperforming, a few overperforming, and most falling in the middle of the bell curve. When you only invest in one or two, the returns could end up anywhere on that bell curve. When you invest in one a month (like we do), they form a classic bell curve over time, averaging stronger returns than the stock market. 

Do high returns always come with high risk?

No. In fact, there's a term for this in finance: "asymmetric returns."

Don't get us wrong, some passive real estate investments do come with high risk. But others deliver on their promised returns while mitigating the major risks.

So how can you spot the passive real estate investments with low risk and high potential returns?

We’re going to break down six risk factors to check in a free workshop :-)

A few topics we'll discuss:

• Tips to find investments offering asymmetrical returns
• How to quickly assess the most common risks in real estate syndications
• Risks that don't apply to syndications, that DO apply when you buy properties directly
• ...and of course your questions and comments.

Excited to chat with you in the workshop!

I'd be cautious about overleveraging yourself, as an inexperienced investor. Creative financing works best for expert investors who can mitigate the higher risks with greater experience. 

You might consider house hacking a small multifamily (2-4 units) for your next home. You may or may not want to keep your current home as a rental, depending on how well it would cash flow. 

Or you can skip all the landlording headaches and invest passively instead :-)   That's the only way I invest nowadays.

Buying properties directly takes both a lot of skill and a lot of work, at least if you're going to minimize risk and consistently earn strong returns. Anyone who says otherwise is selling a course on how to do it :-) 

Most people aren't prepared to start a side hustle in real estate investing, which is what active real estate investing is. It's why I invest passively nowadays.

 Out of curiosity which sponsor is it? 

We're constantly updating our watchlist of struggling sponsors to be wary of, so it helps to hear other investors' experiences. 

 The lengthy accusations are starting to feel like a personal vendetta Melanie. I invited you to come sit in on a club deal discussion to see exactly how we work. If you are genuinely interested, please message me and I'll send you an invitation link. If not, please stop heckling me on the forums.