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If you’ve been at it a while you end up running through most scenarios in real estate investing.
And the alternative methods to acquire the asset
I am sure there are strong arguments for each camp as investors have been successful in each and many have done all three.
But which is the easiest, has the least risk, and still makes a strong return?
For someone starting out, a single-family seems easiest, its only one tenant. Right? That to me is a trap. Most people with a bad experience in real estate is due to only having one unit and a very bad tenant. Your occupancy is very digital either 0 or 100%.
So maybe its fix and flip because there are no tenants. Buy low, add value, sell for more and keep the profits. But the market needs to be right for that and unless you are Jim Dandy Handy you will be paying someone to handle it. You’ll need the down payment and the funds to improve the asset. And you will pay on the note while holding the asset.
Then there’s multifamily. All tenants at the same location. Mechanicals and repairs are generally cookie cutter as the units are very similar. One bad tenant has less overall impact as the number of units goes up. But as the number of units goes up so does the barrier to entry. Large multifamily buildings are not only expensive but may require a property management group to oversee the asset and the tenants.
Maybe its not a particular asset type. Perhaps its how you invest.
Hands-on investing requires you to learn the market, find the right asset, and build a business plan to manage the asset and have at least one exit strategy. And done right will provide an excellent return.
The easiest, least risk investing might include a REIT or now an ETF but they do not really offer any tax advantage. Passive investing through a syndication allows you to participate financially with no active involvement. Investors pool their funds to leverage into a large asset alongside the operator/ sponsor. As an owner, you will benefit from the returns and have tax advantages. You will want to review the due diligence, understand the scope of the project and vet the operator. But they handle all aspects of the project. Working with a group like ours, we will Vet the sponsor, provide a 3rd party independent analysis of the business plan and the financials. We will also do a physical site visit and share the details with our investors.
Check all three boxes- Easy, Low risk, strong returns.
To see investment opportunities that we are investing in and sharing with our investor community link here.