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Two months ago, I spent a little time in Orlando, Florida, at the Toy Storage Nation seminar, taking a deep dive into the characteristics of boat and RV storage. The event was sponsored by Janus International (storage door and tech provider), several developers, and marketing firms. We toured a large facility and spent time with …
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Do you remember how you learned about money? As a public health professional, I spent the early part of my career helping people create healthy and sustainable behavior changes to lift themselves and those around them out of poverty and poor health conditions. In my mind, financial illiteracy is a public health issue. And if …
Continue reading “Five Money Lessons for the Next Generation”
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The Federal Reserve is aggressively trying to fight inflation with the increase in the interest rate by another 75 basis points in the September session adding to the already 150 basis points during the last two sessions. As the Federal Reserve is trying to fight inflation, we are inevitably seeing a rise in the cost …
Continue reading “Should You Be Passively Investing with The Current Market Conditions?”
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Over the last year, the Federal Reserve increased interest rates in the U.S., the S&P 500 is down about 12%, and the DOW is down about 20%. The Fed does not have a meeting scheduled for October, but the September meeting minutes will be released on October 14 and the minutes might shed light on …
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A while back, I wrote in our newsletter about the ability to adapt to the ever-changing real estate and investment landscape. Whether it is changing interest rates, compressing cap rates, population shifts, housing inventory reduction, or a plethora of other factors, we at PassiveInvesting.com are always paying attention to what is happening and adapting to …
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As we have continued to acquire existing, cash flowing express car wash assets, our interests have also turned to ground-up development. For the last 6 months our car wash acquisitions team has been vetting dozens and dozens of potential land development sites in various markets to launch our new development side of the car wash …
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In today’s economic environment, it can be overwhelming to find high-quality seasoned operators to invest your hard-earned money with. And if you are just starting out as a passive investor, the issue is compounded since you are also learning how to set your investing goals, vet operators, vet markets and underwrite deals. At PassiveInvesting.com, we …
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At the risk of “phoning it in” this month, I felt this Costar article published on August 24th of this year was necessary to share. We’ve talked at length about why we continue to be bullish on high-quality multifamily assets in strong markets, and the data in the article truly drives that point home. Unfortunately, …
Continue reading “Housing Affordability: Going, Going, Gone!”
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Warren Buffett is widely known for saying the single most powerful factor behind his investment success is compound interest. That’s usually his quickest response when asked; “What’s made him successful?” He’s been focused on compound interest investments (purchasing large amounts of dividend paying stocks and always reinvesting dividends) for over six decades, and it’s made …
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On my numerous initial calls with our passive investors, I get asked, “how do I make sure that I am investing with a “good” operator when placing capital into passive real estate investing.” My wife and I are currently invested in 64 different passive real estate syndications which comprises over 10,000+ doors located in the …
Continue reading “The 7 Red Flags for Passive Real Estate Investing”
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Real estate investors are always on the hunt for more information and education. They love to network and grow their mindset to achieve big goals. If that sounds like you, then you’re in luck! I’ve compiled my list of the top four books for real estate investors to help you on your journey. These books …
Continue reading “My Top Four Books for Real Estate Investors”
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In today’s world, it is hard to escape the headlines. Inflation has surged to a 40-year high. Recession signs are looming. And everyone is wondering what the next few months will look like for the United States. But recessions are not new, and we should not expect them to never happen. Looking at the stats, …
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When I first started investing in single-family real estate, there were two rules of thumb that I used to determine whether a deal was worth further evaluation. The first is the 2% Rule: For a rental property to cash flow well, the monthly gross rents should equal 2% of the purchase price. So, if you …
Continue reading “The Experts Agree. This is not an Option…”
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What are equity waterfalls? An equity waterfall is the breakdown in a private equity real estate transaction that outlines how the distributions will be handled between the operator and, you, as the passive investor. In private equity real estate transactions there are typically 3 different waterfalls to consider: Cash Flow Waterfall: how the cash flows …
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Last month, I participated in a conference where ex-NBA great Shaquille O’Neal spoke. Beyond being, literally, larger than life in his physical presence and personality, he has an incredibly refreshing perspective on life, wealth, and what matters. While the event and conversation were geared around real estate investing, it was clear from the outset that …
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Many steps go into closing every deal we acquire. I’ll break down the phases below so you can better understand what happens once we have a deal under contract, and we are working to close on it. Throughout the closing process, coordination across several parties is crucial to ensure all aspects of the deal are …
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Three years ago, I sold four of my single-family properties to take advantage of what I thought was the top of the Indianapolis real estate market. However, the sale would trigger a significant capital gains tax (fortunately I was making money on them), and I would also have to pay the depreciation recapture since I …
Continue reading “The Lazy 1031 – A Viable Alternative to a 1031 Exchange”
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What to do when the markets are in a free-fall Over the past few months, there have been several threats to the health of the U.S. economy, and signs indicate a recession is on the horizon. Investors are worried about their portfolios and how to protect their capital if the worst happens. I’m going to …
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Almost a year ago, I wrote an article titled “Emerging Markets” for this newsletter. I spoke a little about Savannah Georgia, and what was attractive about that market. Here is some of what I wrote in that article: “Savannah, Georgia, is located along the Savannah River, about 20 minutes from the Atlantic Ocean and three …
Continue reading “What Makes Mariner Grove and Savannah a Solid Investment?”
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One of my favorite books of all time is “The Snowball.” I consider it to be one of the best biographies ever written. I’ve read it at least three times. It brilliantly recounts Warren Buffett’s life. One thing that strikes me (and millions of others) is when you see interviews, documentaries, and specials on the …
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One of the most important activities to ensure our business plan is being met and ideally exceeded is asset management. While we hire a third-party management company to oversee the onsite day-to-day operations, it’s still our responsibility as the general partner (GP) to ensure success. Our asset management approach involves people, process, and technology to …
Continue reading “The Importance of Asset Management and Communication”
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“Compound interest is the eighth wonder of the world. He who understands it, earns it… he who doesn’t… pays it.” – Albert Einstein. This little wealth-building gem was brought to my attention by Chris Larsen of Next-Level Income. It’s a tool of the wealthy (or soon-to-be wealthy) that hasn’t received the press it deserves over …
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I’m a recovering single-family residence investor. Don’t get me wrong, I still love the hustle of finding a property, the game of negotiation, and the thrill of closing a deal. But, for me, that is where the fun ends. As a real estate investor, I often wrestle internally with the question… “I should LOVE real …
Continue reading “How to Create a Rich Life Through Passive Real Estate”
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What is the Internal Rate of Return and How is it Calculated? The internal rate of return (IRR) is the most used calculation in private equity real estate investments. The IRR is a discount rate that causes the net present value (NPV) of all the cash flows throughout the investment to become equal to …
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What is a Capital Stack? A capital stack consists of the total capital invested in the project. For multifamily real estate, the capital stacks will be comprised of a combination of senior debt, mezzanine debt (optional), common equity, and preferred equity (optional). Having a clear understanding of the capital stack in each investment offering is …
Continue reading “The Importance of Understanding the Capital Stack”
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Since launching our self-storage fund, we’ve built a track record of closing self-storage deals, and often get phone calls about off-market deals from brokers who trust us. How did we go from zero self-storage to $80 million in acquisitions in 10 months? Here are the five keys that help us win deals… Respect This is …
Continue reading “The Five Keys to Winning Self-Storage Deals”
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One of my mentors annually shares his approach to the goals he plans to achieve. He creates an overarching theme for each year, such as “peak fitness,” and “family first.” My theme for this year is “think better”… pretty vague right? I want to share why I landed on that, how I’m approaching it, and …
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I am asked a lot about how we are making deals work in this environment. It’s a question people ask in any market condition. When interest rates are low, people wonder if we are overpaying for deals and ask, “How can you buy at those cap rates?” When interest rates go up, people ask, “How …
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“Your monthly rent will be $145 per month, plus the tenant insurance brings your monthly total to $155 per month.” That’s what the manager of a local self-storage facility quoted me as I was secret-shopping his location. Their rents were at the top of the market, and they included the tenant insurance as part of …
Continue reading “Five Ways to Maximize the Value of a Self-Storage Facility”
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As you know, our group focuses primarily on acquiring multifamily, self-storage, and car wash assets in the Southeast US as well as running our lending business, which provides loans regularly in the Southeast US. We live and work in these markets on a daily basis, so we have firsthand knowledge of what’s going on in …
Continue reading “Did You Know? Southeast US Largest Employers”
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I recently had the opportunity to join some of our team members on-site at our first car wash acquisition, the Hurricane Express purchase of two sites in Fayetteville and Lumberton, NC. I love being on-site at acquisitions, and it is my aim to join the team at every single asset we acquire. This time was …
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Twenty years ago, my realtor gave me a copy of Rich Dad Poor Dad (often called the “little purple bible” in the real estate world) before I closed on my first property. Like many people, that book launched me down the path of real estate investing. While I understood the power of putting my …
Continue reading “How To Use Passive Investing To Rapidly Scale Your Investing Portfolio”
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At the start of 2022, the U.S. national apartment occupancy average is just over 96% with an average monthly rental rate of about $1,650. The apartment market today is in a strong position for continued growth and stability for the year ahead. In 2021, the apartment market had record-breaking leasing activity that was supported by …
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(Adapted from an article by Marc Rapport published April 26, 2021, in Millionacres) In the city where I live, it seems when a smallish piece of vacant land along main drags of commercial real estate gets developed these days, it will most likely be one of two things: self-storage or a car wash. If you’ve …
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When I started self-directing my retirement funds in 2016 to invest in real estate, I had many questions. I wish I had had a “go-to resource” to get my basic questions answered. That said, I’m pleased to provide you with a synopsis of my Passive Investing Masterclass episode with Scott Maurer of Advanta IRA to …
Continue reading “Self-Directed IRA FAQ’s for Passive Investors”
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I’m writing this on my return flight from a conference in Denver, where we spent three days learning from and engaging with some thoughtful people. Key themes of the weekend were where we are in the market cycle, what 2022 will hold, and the impact of projected interest rate increases on the real estate market …
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Over the past 18 months, our team has been heavily researching and investigating a new, exciting passive real estate investment asset class: Express Car Washes. Behind the scenes, our goal is to be continuously searching for new real estate assets for our passive investors to continue to enjoy capital preservation, consistent cash flow, and significant …
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You must have heard by now what may be the most overused and completely unverifiable statistic around: 90% of people fail at their New Year’s resolutions within one month. Or 70%. Or 83%. No one really knows, but the truth remains, New Year’s resolutions are largely ineffective. If you’ve made them, you’ve probably broken them. …
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I knew something was wrong when my husband walked in the door. The strong winds that started that morning were wreaking utter havoc. At 75+ mph winds with 100+ mph gusts, our 11-foot trailer was lifted off its chocks and sent smashing into our neighbor’s car. It whizzed branches past our heads, impaling them into …
Continue reading “Disaster Preparedness: Five Simple Steps to Protect Your Assets”
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As humans, we are constantly analyzing and assessing our circumstances and the reality that surrounds us. We have all formed a belief system that we use to interpret circumstances and helps to form our reality. No matter your age, gender, culture, generation, location, occupation, or education, you have a belief system. From the billionaire to …
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Have you ever looked at an offering memorandum and become confused by the industry jargon around cap rates, cash-on-cash returns, and price-per-foot comparisons? Sometimes, the more you try to understand, the more confused you become. In this two-part article, I’m going to cover the primary ways real estate investors value deals and compare returns. In …
Continue reading “Valuation Metrics for Self-Storage Investors: Part Two of Two”
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I was at the gas station a couple of weeks ago, and this sign caught my eye: “Work 500 Hours, Get $500.” You may be thinking exactly what I thought. “That’s one dollar per hour! Why would anyone get excited about working for one dollar per hour?” I’m big on time. I HATE wasting it. …
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“…in this world, nothing is certain except death and taxes…” – Benjamin Franklin For most Americans, taxes are their largest annual expense. Therefore, it is no wonder that many are seeking ways to make additional income and lessen the impact of their tax bill. In December, we brought in Ted Lanzaro, certified public accountant, real …
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I’m sure most of you reading this are like me and have trouble slowing or shutting down your brain from thinking. One of my methods to relax my thinking is to focus on reading a story. Reading is one of my favorite activities that I try to do on a daily basis. At a minimum, …
Continue reading “Ten Thought-Provoking Books for Your 2022 Reading List”
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As you know, 2021 was the year after the pandemic started and it certainly had its ups and downs in a variety of industries. The two major areas that were disrupted the most were the supply chain and the labor force which has caused a huge increase in inflation. Many sectors just couldn’t maintain any …
Continue reading “2021 in Review and What to Expect in 2022”
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I’m writing this article on a Friday morning on our way to Portland, which is stop seven of eight of a whirlwind investor meal tour. Dan and I have been to Denver, Las Vegas, Phoenix, San Diego, Los Angeles, San Jose, and we’re wrapping up today in Portland—then on to Seattle. These gatherings are a …
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Have you ever looked at an offering memorandum and become confused by the industry jargon around cap rates, cash-on-cash returns, and price-per-foot comparisons? Sometimes, the more you try to understand, the more confused you become. In this two-part article, I’m going to cover the primary ways real estate investors value deals and compare returns. Replacement …
Continue reading “Valuation Metrics for Self-Storage Investors: Part One of Two”
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One of the more common questions that I have been receiving lately from investors, is about how we are managing the growth that we have seen over the last several years. I don’t fault them for asking the question as it totally makes sense. It is a question that should arise when you are investing …
Continue reading “Growth Minded: How We Protect Your Investment As We Expand”
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I always enjoy a good read about how other companies overcome challenges or find new ways to improve their business or bottom line. A lot of industries, businesses, and people are having supply chain or shipping issues based on global trade challenges. I found an interesting article on how Home Depot and Lowe’s home improvement …
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As we reflect on the Holidays this year, we are constantly reminded of the desire of humanity to have peace. We can see it reflected in many Christmas songs we hear repeated over and over again this time of year. Songs such as Silent Night, O Holy Night, It Came Upon a Midnight Clear, I …
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The year was 2016, and I was a newly minted Director of Acquisitions tasked with acquiring multifamily properties. It was a rough year. I underwrote deal after deal, but I couldn’t make the numbers work to match our investment strategy. After some internal discussion, we decided to focus our attention on a different asset class: …
Continue reading “Three Reasons Why Now is the Time for Self-Storage Investing”
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By the end of 2021, our team will have gone full cycle and sold 6 different assets. All these assets will have outperformed the original projections from when we acquired the assets. All of them are also being sold earlier than the original projected hold period. This is always great to hear when we outperform …
Continue reading “Dispositions: How We Determine When It’s Right To Sell”
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In life, there are things you simply cannot control. Uncontrollable factors create risk. If we could control everything, then we would never allow a negative. If we never encountered a negative, then we would never grow. Resistance equals strength. Strength is growth, and growth causes movement, and movement causes you to encounter even more uncontrollable …
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I recently read an article with the above title. It contained some interesting information and validated a part of our strategy, but more importantly, it underscored the absolute necessity of critical thinking… and reading. This article laid out the top four commercial real estate asset classes (Can you guess what they are? In order?) and …
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In my opinion, every individual should be responsible for overseeing their investment portfolio. Each person needs to determine their goals and figure out what investments are best for them to achieve their goals. All of us are in different phases of life, so figuring out if you need more cash flow today or less cash …
Continue reading “Portfolio Balance Through Diversification”
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Almost every real estate investor I know has read ‘Rich Dad Poor Dad’ at some point in their life. It’s a classic, and for many of us, it helped us think about wealth, assets/liabilities, and investing in a completely different light. Another well-known, but maybe not as widely read book, is ‘The Richest Man in …
Continue reading “Why You Shouldn’t Trust Your Financial Advisor”
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Our team has been researching the hospitality investment arena for several years now. We have made the decision that as we close out 2021 and move into the new year, one of the asset classes that we will be adding to the PassiveInvesting.com real estate portfolio are hotel assets. So, let’s take some time to …
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“A Pandemic Space Race: Self-Storage Roars Back” That is the headline of a recent New York Times article describing the investor demand for self-storage properties. Here’s another newsflash: Investor demand for self-storage is here to stay. What is driving this demand? How has the pandemic affected customers, rents, and occupancy? Will future development soften rents? …
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As a real estate investor, I get a lot of questions about what we do and how we do it. Probably the most common question I get is why do we invest in Class A apartments? Behind that question are the questions of “where is the upside?” and “isn’t it risky to charge so much …
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Over the past decade, North Carolina has experienced rapid population and job growth. This growth has made a tremendous impact on real estate pricing in all markets across the state for commercial and residential properties (which includes apartment communities). In particular, Raleigh and Charlotte have been impacted greatly. The economic fundamentals remain solid, and it’s …
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In 2021 we have already had over 2,000 new investors visit our PassiveInvesting.com website and enter their information to join the Passive Investor Club. This means that our Passive Investor Club has grown over 195% in just 8 short months. This surge in the number of investors has certainly allowed us to raise a significant …
Continue reading “Our Growth in 2021 – Deciding to Invest for the First Time”
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Due diligence. We’ve all heard the term, but what does it mean, and what happens behind the scenes during the due diligence period? How do we know if a property is worth buying? Does self-storage due diligence differ from other real estate due diligence? We answer those questions and more below. As a passive investor, …
Continue reading “Self-Storage Due Diligence: Four Critical Aspects”
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A few months ago, I wrote about the ability to adapt to the ever-changing real estate and investment landscape. Whether it is changing interest rates, compressing cap rates, population shifts, housing inventory reduction, or a plethora of other factors, we at PassiveInvesting.com are always paying attention to what is happening and adapting to bring the …
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As our group at PassiveInvesting.com looks ahead, it’s our ongoing goal and commitment to you to deliver risk-adjusted investment opportunities. To continue to deliver consistent cash-on-cash returns and attractive internal rates of return, we are constantly looking at economic and demographic trends, and aligning our strategy with the markets, asset types, and asset classes that …
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Target Focus Back in 2019, our team looked for assets that were built in 2000 or after. In the apartment industry, the year a property was built typically drives what type of class assignment it gets. For example, a property built from 1980 to 2000 would most likely be a Class B asset. A property …
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You’re an international investor and you want to add US-based real estate to your investment portfolio. Smart move! PassiveInvesting.com and the internet are replete with great content about why investing in US real estate is a smart move. Here are a few great articles from our team and others that lay out exactly why this …
Continue reading “International Investors: How to Passively Invest in US Real Estate”
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What is your “why”? I know that question has become a cliché in the current culture, but that does not make it any less relevant. No matter what it is you did to get where you are now, and no matter what your future goals are, there has to be a reason you do it. …
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You’ve heard the above expression when something significant is accomplished. Well… it’s true. When we at PassiveInvesting.com announce a new opportunity to partner with us, there’s a tremendous amount of work that has gone into that opportunity. It starts with acquisitions… By the time you see a deal, Brandon, Eric, and Chris have analyzed and …
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My wife, Caitlin, who grew up in Charleston, always reminds me how much things have changed since she was a kid. Today, it’s totally different with a lot of growth and development. We will be walking or driving around town and she will tell me stories about what used to be here or there. It’s …
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The available resources for passive self-storage investors are limited and it’s difficult to know who to trust. In this article, I share my top recommendations to help you become an expert in the self-storage industry. Recommended Data If you want to understand how self-storage compares to other real estate, you’ll want to check Nareit (Reit.com). …
Continue reading “Self-Storage Resources for the Passive Investor”
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Last year due to the pandemic, we had to put a halt on our investor dinners that we used to do on a regular basis. We have recently started them back up and it has been great to meet each one of you that have attended these lunch or dinner events. Most of you don’t …
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The self-storage market is full of opportunities to acquire deals in major cities, growing suburbs, and rural towns. However, market data for self-storage lags other asset classes like multifamily, office, and industrial properties. What criteria do we use to determine if a market makes sense? How do we avoid markets in decline or where oversupply …
Continue reading “Evaluating Markets for Self-Storage Deals”
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“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained, you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” – Sun Tzu, The Art …
Continue reading “Negotiating the Most Lucrative Deals for our Investors”
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History of the 1031 Exchange Tax Code A 1031 exchange is a powerful tax deferral strategy that was originally started in 1921 a short 3 years after the first income tax code was enacted by Congress. Since then, it has had a complicated history and has gone through several iterations. When it was first enacted, …
Continue reading “1031 Exchange into an Apartment Syndication”
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As I have the opportunity to talk to many of you (as well as many new investors) each week, I have started to see themes in the questions you ask and the topics we discuss. One of the key themes of late has been diversification and the sustainability of multifamily asset values. Next month I’ll …
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About a year ago I shared an article regarding how the IRS tracks the migration pattern of household income across the U.S. Specifically, the IRS tracks where people move and how their adjusted gross income (AGI) impacts the new state they call home. This information has been insightful for our group as we monitor the …
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Understanding the role of the loan guarantor will help you better understand how strong our group is financially when it comes to acquiring large, institutional level assets. Between our three managing partners we sign the loans on all our acquisitions and do not use any outside person or group to help us meet the stringent …
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I read an interesting Costar article recently, which affirms what we’ve been seeing in the marketplace and confirms our strategy at PassiveInvesting.com. Rental demand is higher than ever, and the proportion of renters is continuing to increase. Why? If you’re trying to buy a home right now, or know someone who is, you’re experiencing this …
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It’s common for new self-storage investors to look for deals close to home. But what are the pros and cons of this strategy? What path has PassiveInvesting.com taken, and why? In this article, I will answer these questions and more. Pros of staying close to home Market Expertise: If an investor buys self-storage deals located …
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Essentialism – written by Greg McKeown Essentialism is a systematic discipline for discerning what is essential, then eliminating everything that is not. When we do so, we can make the highest possible contribution toward the things that really matter. Here are three key takeaways from McKeown’s book… 1. You Have a Choice. McKeown stresses the …
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In my previous article, I talked about the two community initiatives I’m involved with. One of them is the First Tee. This month I want to highlight what they do in more detail. About the First Tee “First Tee is an international youth development organization introducing the game of golf and its inherent values to …
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Years ago, I started working for a consumer products company in the lawn and garden business. When they promoted me to a management role, one of the perks I was most excited about was the company car. I was in my early 20s, so I was elated that someone would give me a brand-new car …
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“Don’t wait for your ship to come in, swim out to it.” -English author Cathy Hopkins. Taking the initiative. It can mean the difference between success and failure. And, as PassiveInvesting.com’s new Directors of Acquisitions, Eric Fitzgerald knows, it can mean the difference between landing a great job and toiling with the status quo. In …
Continue reading “Eric Fitzgerald is committed to exceeding your expectations”
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You may have received an email from us with an offering announcement and had questions about the process for submitting your first soft reserve. After reading this article, you should have a better understanding of our internal processes including the three strikes and you’re out rule. What is a Soft Reserve? Our offerings are released …
Continue reading “Ready to Submit Your First ‘Soft Reserve’?”
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In December 2020, Blackstone Real Estate Investment Trust (BREIT) closed on the $1.2 billion Simply Self Storage portfolio owned by Brookfield Asset Management. The acquisition makes BREIT the third-largest non-traded REIT in the U.S. In October 2020, Bill Gates, co-founder of Microsoft, purchased an ownership stake in StorageMart, the eighth largest storage operator in the …
Continue reading “Self-Storage Forecast: Big Money, Big Deals”
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Before Dan, Brandon, and I started PassiveInvesting.com I was working as a financial consultant and traveling a lot. My typical week required me to fly to a city on Monday morning and return home Thursday evening. I spent a lot of time in airports, hotels, planes, and taxis. The biggest issue I had with all …
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The investment horizon for every property or deal is different. Having a business plan with a five-, seven-, or ten-year hold duration is required, but the plan needs to be reviewed and evaluated several times a year. Given the unique micro plus macro-economic factors that influence rents, property values, interest rates, and cap rates, we …
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Improvise, adapt, and overcome is a well-known saying most commonly associated with the Marine Corps. This slogan embodies the idea that you can overcome anything if you are able and willing to adapt to new conditions and unexpected circumstances. Another well-known saying is “Survival of the Fittest.” While I don’t agree with how far Darwin …
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If you would have asked me in early 2020, “what type of returns does PassiveInvesting.com typically try to achieve on your multifamily investment offerings?”, I would have told you that we are typically projecting 14-15-16% IRR (see online article explaining the IRR calculation in our knowledge center on our website) for a 5-year hold time …
Continue reading “Return Metrics for Multifamily Offerings Moving Into Q2 2021”
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“Why am I spending two hours driving to and from work each day to enrich somebody else?” That was the question Jon Allen asked himself on June 17, 2019. He was working for a commercial real estate company as their Chief Financial Officer (CFO). He also played a big role in the real estate development …
Continue reading “Self-Storage Expert Jon Allen Loves What He Does… and You Will Too”
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This is one of the most common questions I get asked, and while it may seem straightforward on the surface, it’s important to dig into “the question behind the question.” So – what markets are we focused on? North Carolina – Raleigh/Durham/Chapel Hill – “The Triangle”, Charlotte South Carolina – Greenville, Charleston Georgia – Atlanta …
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This is one of my favorite questions, and it rarely gets asked in that pure form. It often takes the form of something more technical or logical, but often I sense that this is the underlying question. One of my many goals in my role as Investor Relations Consultant is to discern what the question …
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This time of year, we start to receive many requests from investors about when they can expect to receive their tax documents in order to file their personal returns. Before we go into the answer for this let’s discuss a few deadlines that the IRS sets for various tax documents. If you work for an …
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There’s no doubt we are emerging from one of the most unique and trying years our modern civilization has ever confronted. Hopefully, we will never again have to endure a pandemic of this scale. In the face of this unexpected challenge, Austin, Texas, continues to flourish (on a relative basis), and its real estate industry …
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Our group is focused on acquiring deals in 2021 in select Southeast US markets. To ensure we are constantly monitoring current market information we utilize several data and media sources. One of the ways we stay up to date with relevant market information is by subscribing to Costar. Costar is a world leader in real …
Continue reading “Why the Jacksonville, FL Multifamily Market is on our 2021 Radar Screen”
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The year was 1997. Kris Bennett, 18, was out smoking marijuana with friends. While driving home, he got pulled over by the police. Kris thought his life was over. He had just enlisted in the Air Force which he felt was his only option, and he assumed it would no longer happen. Kris envisioned himself …
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PassiveInvesting.com would like to introduce you to the newest member of our team, Andrew Davis. For the past four years, Andrew worked in a sales leadership role for a lawn and garden consumer products company. Andrew sold things such as fertilizer and insect control products to corporate accounts that included Home Depot and Lowes. And …
Continue reading “Introducing a new friend who is committed to your success.”
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Control is a funny thing, isn’t it? While I technically bear the title of “millennial,” I’d like to think I’m wise beyond my years (the fact that I think that may indicate that indeed, I am not—I’ll check with my wife and get back to you). One thing I’ve realized as I’ve matured is that …
Continue reading “Single-Family vs. Multifamily – Is more “control” really better?”
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In August 2020, the SEC proposed a new, expanded amendment to the definition to be qualified as an accredited investor. The proposed amendment updated and improved the definition to better identify institutional and individual investors that have the prior knowledge and expertise to invest in private placements such as our real estate syndication investments. The …
Continue reading “Are You an Accredited Investor? SEC Expanded Definition”
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You may have heard that PassiveInvesting.com has added Self-Storage as an asset class in our investment portfolio. Since this space as an investment may be new to you, I thought I would take some time in this article to explain some pros and cons related to self-storage and how it compares to multifamily as an …
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As I go through life, I am constantly looking for ways to make myself a better human being. Whether physically or mentally, personal or business, we must always be moving forward, improving, strengthening. To gain physical strength, I work out with a trainer at the gym three times a week. I also run three days …
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In a recent Reuters article, they provided excellent information regarding the Federal Reserve’s planning and outlook for 2021 and beyond. In 2020, the Federal Reserve (also known as “the Fed”) revised its strategy for supporting the U.S. economy based on new challenges we faced throughout COVID-19. Based on the new strategy of keeping interest rates …
Continue reading “How The Federal Reserve is Planning Ahead”
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Moving into the new year, our team always reviews market dynamics to determine where we will be spending most of our time acquiring new multifamily assets. We also take some time to consider adding alternative investments to our investment offerings. In June 2020, we added an alternative investment vehicle through our real estate debt fund …
Continue reading “2021 Multifamily Market Outlook And Trends”
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In my spare time, I enjoy reading books about various topics and disciplines. It’s a great way for me to relax, learn something new, and enjoy a great story. Biographies, non-fiction, and business books are typically my go-to reads. One of my favorite books that I read this year is called The Outsiders: Eight Unconventional …
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Well, here we are, December 2020. Any adjective used to describe this past year would be inadequate considering the multiple events that we have seen unfold before our eyes. I can still remember the first time I heard the term “coronavirus.” I clearly remember the different stages of disbelief as the impact of the virus …
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The COVID-19 pandemic has certainly caused a major economic shift in many industries including the multifamily market. In April 2020 there was much uncertainty as to how the multifamily market would weather the storm of the effects of the pandemic. Surprisingly, the impact to multifamily around the country has been minimal except for some of …
Continue reading “Multifamily Demand Increases in the Carolinas”
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At PassiveInvesting.com, we love to bring our investors new and exciting properties to invest in. By the time you receive your beautiful Investment Summary in the mail we have already been hard at work for weeks and sometimes months to put that one deal together. As head of acquisitions, I thought it would be helpful …
Continue reading “The First 10 Steps to Buying a Great Deal”
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If you have reviewed any of our most recent offerings you will have noticed that one of the ways we are adding value to our properties is by implementing a service called, Gigafy. Essentially the Gigafy service allows us to resell super-fast internet to our residents instead of them needing to go through the local …
Continue reading “Utilizing Gigafy for Increasing Cash Flows”
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Capital expenditures (CapEx) are funds used to acquire, upgrade, and maintain physical assets such as property, buildings, technology, and equipment. One of the pros of using lender CapEx is, when you have a large CapEx budget, lender capital typically has a lower interest rate. When you raise all the CapEx dollars with equity, interest rates …
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The national apartment market has shown itself to be exceptionally durable in the face of COVID-19. When we first began experiencing shutdowns, there were talks of being able to find deals easily due to highly discounted properties. Because the multifamily market is so strong and because the interest rates have been pushed so low, we …
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If you have ever invested in one of our projects or another private equity real estate offering, then you have likely encountered the term “unreturned capital contribution.” This is another term that is sometimes understood but many investors do not have a full grasp as to why this term is so important for your overall …
Continue reading “Tracking Your Unreturned Capital Contributions”
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The accounting world and specifically multifamily accounting tend to use words or phrases that can be tricky to remember. One way to make sense of the terms is to think about them as if you are a resident renting an apartment and how a specific term can apply to one resident or one lease. This …
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“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. The only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t Settle.” – Steve Jobs …
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The $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act) signed into law on March 27th of this year made changes to current net operating losses, allowing current losses to be applied to previous year’s taxes. For example, if in 2019 you had more losses than gains you may be able to apply …
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Specific Property Criteria When looking to purchase anything in life, you must first decide on a few factors before you begin your search. Take clothing, for example. Before you go shopping, you typically have some idea of what you are looking for—a shirt, pants, hat, purse, skirt, or a new pair of shoes. Let’s say …
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What is a cap rate and how is it calculated? The cap rate is short for capitalization rate. The cap rate is the total return you would make off the property if you were to pay for the entire property in full with no debt. For example, if you purchase a $1,000,000 property with a …
Continue reading “Using The Cap Rate to Determine The Strength Of A Market”
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What are equity waterfalls? An equity waterfall is the breakdown in a private equity real estate transaction that outlines how the distributions will be handled between the operator and, you, as the passive investor. In private equity real estate transactions there are typically 3 different waterfalls to consider: Cash Flow Waterfall: how the cash flows …
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A Shared Vision As operators of large multifamily assets, we rely on third-party property managers to execute our vision. It is important that the property management company shares our vision. If they have their own vision for how things should operate, then the two parties will constantly be at odds with one another—which is not …
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Short-term or Long-term Investments right now… What’s Best for You? A few investors recently reached out to discuss various investment strategies as we continue going through impacts from COVID-19. The main topics of discussion were centered around timing (invest now or wait) and should the investment be short or long term. From a Single Room …
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An accredited investor has either a net worth of $1mil, not including their primary residence, OR an annual income of $200,000 (or $300,000 if married) for the last two years and you have a reasonable expectation that it will continue. Feel free to contact us if you have further questions regarding whether or not you …
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PassiveInvesting.com continually looks for ways to deliver a better return for our investors (and a better experience for our residents) by doing things smarter and more efficiently. You’ll be happy to know we took a gigantic step in that direction on March 3rd when Brian Bornhorst became the Director of Asset Management. We are extremely …
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In an article published in May, I outlined what due diligence comprises. Today I will update you with some changes that have taken place since the arrival of COVID-19. As a refresher, the most common usage of the term “due diligence” refers to the verification of an asset before it is purchased. This is broken …
Continue reading “What Due Diligence Looks Like Post-COVID-19”
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What is a Preferred Return? A preferred return is a minimum return that you would receive before the operator would receive any of their share of the cash flow or sale proceeds. It is typically expressed as a percentage of return on an annual basis. For example, if you invested $100,000 and the preferred return …
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What is a Capital Stack? A capital stack consists of the total capital invested in the project. For multifamily real estate, the capital stacks will be comprised of a combination of senior debt, mezzanine debt (optional), common equity, and preferred equity (optional). Having a clear understanding of the capital stack in each investment offering is …
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In the multifamily industry, the term “due diligence” is common. The term is perfectly descriptive when you stop and think about it. The word “DUE” infers that something is owed. And that whatever is due must be given or paid. In other words, it is a debt! A debt of what? Well, of DILIGENCE. The …
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Did you know the IRS tracks the migration pattern of money? Specially, the IRS tracks where people move and how their adjusted gross income (AGI) impacts the new state they call home. This information has been pretty insightful for our group as we think about the job growth and population growth that is occurring in …
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There are two main reasons why multifamily deals right now are falling out of contract. The first is due to the lender backing out at the last minute and the second is because it is hard to underwrite for projected rents right now with renovations. Let us discuss both in detail in this article to …
Continue reading “Why Multifamily Deals Are Falling Out of Contract Due to the Coronavirus”
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What is a Soft Reserve? Our offerings are released to you via email and included in the offering email with the option to submit a soft reserve. You will click on the soft reserve button (or link) to submit your information in order to reserve your spot in the offering. The soft reserve is simply …
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If you would have asked me in 2019, “what type of returns does PassiveInvesting.com typically try to achieve on your multifamily investment offerings?”, I would have told you that we are typically projecting 16-17-18% IRR (see page 6 for article explaining the IRR calculation) for a 5 year hold time period. This is not the …
Continue reading “Expecting Lower Returns on Future Offerings”
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It was coined by former Navy Seal Officer Jocko Willink (made popular in his recent book, Extreme Ownership). It means that if anything goes wrong on a property, it’s the general partner’s fault. As the general partner, the PassiveInvesting.com team believes in an “extreme ownership mentality” when it comes to asset management. If something goes …
Continue reading “Are You Familiar With The Term “Extreme Ownership””
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What is the Internal Rate of Return and How is it Calculated? The internal rate of return (IRR) is the most used calculation in private equity real estate investments. The IRR is a discount rate that causes the net present value (NPV) of all the cash flows throughout the investment to become equal to zero. …
Continue reading “Understanding the Internal Rate of Return (IRR)”
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“A good name is more desirable than great riches; to be esteemed is better than silver or gold” – Proverbs 22:1 When trying to purchase multifamily assets, you quickly realize that you have some stiff competition. There are many groups who understand the value of a multifamily asset. They understand the value of cash flow …
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It is in challenging times like this that true leaders emerge and the weak falter. Therefore, we believe it is vitally important to invest with a group that has extensive, successful experience managing and leading businesses. Our team has been taking daily decisive actions as we progress through this pandemic that has hit the entire …
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Last month our managing partners, including myself, took a trip to Orlando, FL, to attend a conference called the National Multifamily Housing Council (NMHC). This annual event is the largest multifamily conference to network with all of the major players in the industry. There are thousands of people that attend this event each year. One …
Continue reading “Talking With The Former Owner Of Carrington at Brier Creek”
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History of the 1031 Exchange Tax Code A 1031 exchange is a powerful tax deferral strategy that was originally started in 1921 a short 3 years after the first income tax code was enacted by congress. Since then it has had a complicated history and has gone through several iterations. When it was first enacted, …
Continue reading “Can You 1031 Into An Apartment Syndication?”
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An interesting piece of information was brought to our attention when we recently toured a potential deal. The seller had over $4.4M in a prepayment penalty for the remaining years of their 10-year fixed note. The reason for the large prepayment fee is yield maintenance. Yield maintenance means the borrower pays the lender for any …
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We recently had a property that checked all the boxes. It was the right vintage… the right value-add scope… the right market… the right price. Everything appeared to be good to go. But we ended up passing on the deal. Why? There was one more box that needed checking. We needed to have a conversation …
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What We Are Doing To Limit Your Exposure During This Challenging Time… We’ve been listening and attending conference calls and reading a lot of information to keep a pulse on the market and local economies surrounding our assets. The information seems to change hour by hour as we progress through the unknowns related to the …
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In December 2019, our team reviewed 37 investment opportunities through the various stages of due diligence. It’s important to have strict criteria to ensure we invest in the best assets to achieve our goals. It’s critical to rely on criteria when we are competing to get an asset under contract. For example, of the 37 …
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1031 Exchange and a Syndication On my calls with investors, I often get asked, “Can you do a 1031 Exchange (commonly referred to as just “1031”) with an apartment syndication with a group of investors?” The apartment syndication structure does make it more challenging to do a 1031 exchange but it can certainly be done. …
Continue reading “Swap Until You Drop – The Power of the 1031 Exchange”
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One thing I have learned over my years in the construction industry is that you must learn to adapt and overcome challenges as they come up, and they will come up. We recently ran into such an issue while working at the Pines on Wendover project in Charlotte, NC. On this project we had planned …
Continue reading “The Accidental Smurf-colored Apartment Building”
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Each stage in the real estate market cycle presents a variety of opportunities to shift the acquisitions thought process and the ability to various asset classes to our portfolio. Our team is constantly monitoring the ever-changing stages of the market cycles. As we move into the 2020 year, we have decided to continue looking for …
Continue reading “Are Class-A Assets a Smart Choice in the 2020 Multifamily Market?”
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A while back, I wrote in our newsletter about the ability to adapt to the ever-changing real estate and investment landscape. Whether it is changing interest rates, compressing cap rates, population shifts, housing inventory reduction, or a plethora of other factors, we at PassiveInvesting.com are always paying attention to what is happening and adapting to …
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As you know, our group focuses primarily on acquiring multifamily, self-storage, and car wash assets in the Southeast US as well as running our lending business, which provides loans regularly in the Southeast US. We live and work in these markets on a daily basis, so we have firsthand knowledge of what’s going on in …
Continue reading “Did You Know? Southeast US Largest Employers”
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At the start of 2022, the U.S. national apartment occupancy average is just over 96% with an average monthly rental rate of about $1,650. The apartment market today is in a strong position for continued growth and stability for the year ahead. In 2021, the apartment market had record-breaking leasing activity that was supported by …
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I always enjoy a good read about how other companies overcome challenges or find new ways to improve their business or bottom line. A lot of industries, businesses, and people are having supply chain or shipping issues based on global trade challenges. I found an interesting article on how Home Depot and Lowe’s home improvement …
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Over the past decade, North Carolina has experienced rapid population and job growth. This growth has made a tremendous impact on real estate pricing in all markets across the state for commercial and residential properties (which includes apartment communities). In particular, Raleigh and Charlotte have been impacted greatly. The economic fundamentals remain solid, and it’s …
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About a year ago I shared an article regarding how the IRS tracks the migration pattern of household income across the U.S. Specifically, the IRS tracks where people move and how their adjusted gross income (AGI) impacts the new state they call home. This information has been insightful for our group as we monitor the …
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I read an interesting Costar article recently, which affirms what we’ve been seeing in the marketplace and confirms our strategy at PassiveInvesting.com. Rental demand is higher than ever, and the proportion of renters is continuing to increase. Why? If you’re trying to buy a home right now, or know someone who is, you’re experiencing this …
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This is one of the most common questions I get asked, and while it may seem straightforward on the surface, it’s important to dig into “the question behind the question.” So – what markets are we focused on? North Carolina – Raleigh/Durham/Chapel Hill – “The Triangle”, Charlotte South Carolina – Greenville, Charleston Georgia – Atlanta …
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Moving into the new year, our team always reviews market dynamics to determine where we will be spending most of our time acquiring new multifamily assets. We also take some time to consider adding alternative investments to our investment offerings. In June 2020, we added an alternative investment vehicle through our real estate debt fund …
Continue reading “2021 Multifamily Market Outlook And Trends”
ARTICLE
The COVID-19 pandemic has certainly caused a major economic shift in many industries including the multifamily market. In April 2020 there was much uncertainty as to how the multifamily market would weather the storm of the effects of the pandemic. Surprisingly, the impact to multifamily around the country has been minimal except for some of …
Continue reading “Multifamily Demand Increases in the Carolinas”
ARTICLE
Did you know the IRS tracks the migration pattern of money? Specially, the IRS tracks where people move and how their adjusted gross income (AGI) impacts the new state they call home. This information has been pretty insightful for our group as we think about the job growth and population growth that is occurring in …
POPULAR QUESTIONS
Investing in multifamily assets allows for better returns than any other real estate asset class. The National Multifamily Housing Council (NMHC) presented the research on why multifamily investing returns can’t be beat.
One of the major benefits of investing in stabilized (above 90% occupancy) multifamily assets, is the ability to use permanent, low risk agency financing. Looking back at the crash in 2008, the single family market had a 4.0% default rate versus the multifamily market only have a 0.4% default rate.
The PassiveInvesting.com Team only acquires stabilized (above 90% occupancy) and cash flow positive apartment building investments. This allows our investors to make healthy returns while showing a loss at the end of every year.
Since its peak in the mid-2000s (see graph below), home ownership has been significantly dropping and it will continue to drop as millennials and the aging baby boomers want to stay mobile in the 21st century.