passive real estate investing

4 ways to passively invest in real estate

Companies like The Residential Buyer often utilize private money lenders and financial partners to buy up varying amounts of residential and commercial real estate.

 

These lenders tend to be individuals that are either:

  1. IMPATIENT INVESTORS. Frustrated with how slowly their retirement and bank accounts are growing with other investments;
  2. NERVOUS INVESTORS. Distrusting of whether or not the moderate yields they’re getting in those investments are even stable investments!
  3. GET RICH INVESTORS. People who’re investing in get-rich-investments that may not be panning out as they had hoped (like say, Penny Stocks, private startups, etc).
  4. NEW INVESTORS. Or perhaps, they’re beginning the process of wealth planning or retirement investing for tomorrow. Having that first moment where they wrap their headaround today’s implications of things like compounding interest.

We’re not financial advisors nor are we here to guarantee a blanket rule for real estate returns over a 30 year period. But we ARE here to help you understand how WE invest our money and even how people invest their money in our companies.

 

Which type of real estate investor are you?

All that essentially just translates into a variety of investment positions for a range of personality types. We find that investors typically fall into one of a four camps:

  1. Mellow; Moderate yields (7-8%): Shyer investors that perhaps just want to stick with first position notes on 70% loan to value properties. Something ULTRA safe, right?
  2. Vigorous; High yields (8-15%): Others PREFER subordinate positions because it creates a higher return on their money. Either one is totally fine, but they just give off a different yield.
  3. Equity Obsessed; varying yields (~%): Then we have those that only like profits when there’s equity involved. They need an actually OWNERSHIP stake without all the management, right? Well, we’ve got a lot of those as well–in fact, we even acknowledge that a debt position is more secure than equity, so we and our sister companies actually PREFER to take the debt position on the properties we buy. 
  4. Death-to-Glory; Stupid yields (25-75%): Finally, there’s the death-or-glory types: 50% yields on short and long term purchase options. No cashflow, but ALL the upside with fairly little invested. We’ve got a whole other video dedicated to this one so definitely ask if that just caused your ears to perk up.

But back to the boilerplate model for us and other real estate companies: instead of stocks, bonds or something risky like Margin Trading, you’ll take a secured position on single family residential homes, multi-family properties, or even 100+ unit portfolios.

Real Estate Investors work with other Real Estate Investors

Part of the job for real estate companies like The Residential Buyer is ensuring that capital continues to flow as needed in a timely manner. And the only way to ensure the capital flows is by generating reliable and attractive returns for everyone that invests in a property with companies like us.

So, let’s say you’re one of those in our network… the natural question is: who are you and what kind of investment fits into YOUR box?

Just need $20,000 to invest? or are you looking for a property to place $2 Million? Do you want a Moderate Yield or are you the Death-to-Glory type? No one can guarantee WHEN they’ll have each type of deal, but we CAN guarantee that you’ll get the first look at it.

We’re not financial advisors nor are we here to guarantee a blanket rule for real estate returns over a 30 year period. But we ARE here to help you understand how WE invest our money and even how people invest their money in our companies.

 

How to get started in passive real estate investing

If you’re ready to invest in real estate: then start by looking at the hustlers in your own network. If they have a deep grasp on the market and how to structure the transaction, then you’ve just hit the jackpot. Transactional engineers like us, provide consistent and high returns for our private money lenders.

Next, make sure you find something you’re comfortable with. If you’re not ready to dive-in on the higher yield positions, maybe just wait until there’s a chance to get in small, lower yield property. 

Next, see how that company operates: how are your interests secured? How does the company process payments, and are they experienced in foreclosing to protect your position if ever necessary? After you wrap you’re head around it and make your first investment, then just watch those yields start pouring in to see if it’s actually meeting your needs.

Finally, ……. regardless if you’re the shyer type or the one looking for stupid yields on high leveraged positions, every investment with companies like us are secured with a deed of trust on a property. We work with a handful of investors to finance our mortgage wraps, flips, short/long term purchase options, rentals, exchanges, Novations and other real estate transactions.

What to look for

But for you, none of that should matter as much as (1) which lien position you want, (2) how much you’re looking to invest, and (3) whether that investment return is going to reach your future retirement goals.

The best place to start is the place you’re comfortable, even if that’s not in real estate. So reach out to folks in your network or a financial advisor to ask about where to begin.