Have you ever wanted to just invest your money, sit back and let it grow in value? Of course you have. This is what financial planners call “letting your money work for you.” The question is, do investment opportunities like this really even exist?
The short answer is yes, however, whether you truly have the ability to sit back and relax while your money works for you depends on the type of investment you choose and who you choose to invest with. If done right, multifamily real estate investing can be a passive investment that also pays highly lucrative returns.
Advantages for the Passive Multifamily Real Estate Investor
One of the most popular investments that has stood the test of time is passively investing in multifamily real estate. Investing in multifamily real estate has at least three distinct advantages.1. Hands Off & Hassle Free
Many people are baited into thinking that it is easy to invest in multifamily real estate and manage it yourself. You can do this yourself, but if you do, there will be nothing passive about it. Owning an apartment building or other multifamily investment is no different than owning a business. It will be a full-time job. You will be juggling every aspect of running a business, that business will just happen to be an apartment building.
In order to do this successfully yourself, you would have to be well versed in business issues such as sales, marketing, competition, customer service, accounting, employees, zoning, banking, compliance with all laws, maintenance, roofing, plumbing, electrical, the list goes on and on. This is the exact opposite of a passive investment.
On the other hand, passively investing in multifamily real estate, usually by investing with seasoned real estate professionals and a real estate investment firm, will allow you to truly ”invest your money, sit back and let it grow in value.”
In order to do this, all you need to do is find the right real estate investment firm to work with. You must find a firm who has both a solid management history and proven investment track record of experience. The right firm will not only do everything possible to mitigate any business related risks associated with your investment, but they stay acutely focused on generating a high return on your investment - which was the whole point to begin with, wasn’t it?
When vetting investment real estate companies, be sure to ask questions such as:
- How long have they been in business?
- Do they invest their own money in the deals?
- Do they implement the strategic plans in-house or do they use a 3rd party management company?
- Did they own and manage property during difficult times such as the recession of 2008-2010?
- Have they ever lost a property due to foreclosure?
- Have they ever lost money on a deal?
Knowing the answers to these questions will give you a better understanding of how well they will manage your investment overall.2. Experienced Investment Management Team
One of the greatest benefits of passive investing is avoiding the learning curve associated with learning something new. If you are not personally experienced in the business of multifamily real estate investing, it can take you years to learn what you need to know and you will no doubt make many costly mistakes along the way. Don’t let someone convince you that real estate is simple. It is not. It has all the complexities of running any business as I outlined above, not to mention all the hard work that goes into finding a property worthy of investment.
Once you find an experienced investment firm with which to work, you will instantly be the beneficiary of years and years of experience and that experience should show up as extraordinarily high risk adjusted returns on your investment.
It’s what every investor wants. The lower the risk, the better, right?
Yes, but risk and return become a trade-off. Every investment carries with it some level of risk. On the low end of the risk spectrum, there are bank accounts. The problem with these is that the returns are extremely low, usually not even keeping up with inflation. On the other end of the risk spectrum, there are investments like microcap stocks or digital currencies. It is possible to earn very high returns with these high-risk investments, but you also have a very real chance of losing at least part of your principal.
The challenge is balancing risk and return. This is where passively investing in multifamily real estate becomes very attractive. Multifamily real estate investment firms that have experience and know what they are doing, are able to generate extraordinary risk adjusted returns.
It really is that simple.
Multifamily Property Investing with The Right Team
Investing with the right team has a very distinct “look and feel” to it. Of course, your return on your investments will speak for themselves. But you will also experience a few other very important differences. Senior management of the firm will take time to talk with you. You will get regular narrative updates from the firm. You will understand how the firm’s management is adding value to the underlying properties it owns. Get the idea? In short, you will be treated as an important asset to the firm.
At KRI Partners, we are working with investors just like you to make it easy to passively invest in multifamily real estate deals and to grow your investment portfolio year after year.