passive investing differences is the focus of this guide for passive real estate investors. First, it highlights the main idea behind the topic. It also outlines the risks and questions worth reviewing. As a result, you can approach the discussion with a clearer framework.
What to know about passive investing differences
Core ideas for passive investing differences
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. 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 behind the question for our investors is.
While there are three key questions (yes, there is an article series brewing), the title question is crucially important. We intuitively ask and answer this question all the time, and the quality of our answer. In addition, to a great degree, determines how effective we are in business. Because what do you really want to know?
Risks and tradeoffs
Why should you invest your hard-earned money with us versus the guy down the street? In addition, so, let me answer the question you may not have even asked, but really want the answer to…
What makes us different?
Questions to ask
We’re aligned. We’re invested right alongside our investors. We don’t win unless you, our investor, wins. Our managing partners invest in every single asset we present to you, as do many of our team members, and, as you saw last month, I’m in the process of becoming accredited so I can do the same.
We’re cautious. Everyone will say this. “Conservative underwriting” is a favorite claim among syndicators. You have to dig a little deeper to really know what that means. Are they underwriting for a refinance mid-cycle? We don’t. What kind of operating reserves do they carry? Not the lender mandatory holdbacks, or COVID-19 reserves. How much cash is actually in the bank in reserves? Do they stress test? How low can occupancy go and still meet debt service and expense obligations? What’s the demographic makeup of their resident base? Do they even know? Are their residents overrepresented in one industry, sector, or company? We do thorough research for each deal we present to you.
Practical next steps
We’re engaged. You see this in everything we do. I was recently corresponding with an investor, and he was comparing us to one of the largest players in our space, and by far the loudest, he said, “the payouts with ______ have been consistent. BUT I would say I probably would not put money with them again. Low cash on cash return, only like 4%, and that’s two years in. Communication and updates don’t compare to you guys.
Moreover, … To be honest, I would prefer to just continue putting the majority of my investments with PassiveInvesting.com. Your team is incredible, I have a high trust level… I also really like the attempt to do 1031 exchange options in the future. I think is pretty rare for operators to do.”
Core ideas for passive investing differences
We have a full-time team of 12 dedicated to making your passive investing experience as profitable and peaceful as possible. We’re proactive, responsive, and hands-on at each of our assets.
We’re long term. One of my favorite quotes is by a guy named Naval Ravikant who advises in business & investing (and life). It says to “play long term games with long term people.” The goal of each of our managing partners is to build wealth alongside our investors for decades to come. Legacy wealth. We’re not flipping houses or looking to make a quick buck. We’re in this for the long haul, and our strategy and criteria look well out into the future.
Risks and tradeoffs
Investing in peace of mind.
One of my favorite performance indicators for our group is repeat investors. We did a quick study on the investor makeup of our Riverside Flats deal that closed in December. 62% of the investors that invested in that asset were repeat investors. Are invested in at least two, if not more of our assets.
Questions to ask
Moreover, the true benefit to you: peace of mind. There are a lot of places to invest your hard-earned money. When you invest with us, you can trust that hard-earned money is being stewarded well. That 62% figure tells me we are consistently doing the right things.
Key takeaways for passive investing differences
- Start with the goal and timeline that fit your wider financial plan.
- Next, review the assumptions, risks, fees, and possible outcomes.
- Finally, compare the opportunity with other ways to use your capital.
Put passive investing differences in context
Every investment decision depends on the investor, the deal, and the market. Therefore, use the ideas above as a starting point for deeper due diligence. Review source documents, ask direct questions, and seek qualified advice when needed. For more guidance, explore our passive real estate investing education.
A clear review of passive investing differences
passive investing differences deserves a clear and practical review. These short checks can support a more informed decision.
- Start with a clear goal.
- Next, define the time horizon.
- Review each key assumption.
- Compare the likely outcomes.
- Test a less favorable case.
- Ask who controls each decision.
- Confirm the fees and incentives.
- Study the market and the deal.
- Check the supporting documents.
- Look for clear communication.
- Compare other choices.
- Keep the full plan in view.
- Write down the main risks.
- Review the source of returns.
- Check the exit assumptions.
- Understand the tax questions.
- Consider the need for liquidity.
- Match the choice to your goals.
- Ask direct follow-up questions.
- Confirm the reporting process.
- Review the operating plan.
- Check the team’s experience.
- Compare the best and worst cases.
- Keep expectations realistic.
- Use qualified advice when needed.
- Document the final decision.
- Review the decision over time.
- Watch for changing conditions.
- Stay focused on the long term.
- Finally, act with a clear reason.
Related passive investing resources
Continue your research with these related guides:
- For a broader overview, see Should You Still Be in a Real Estate Debt Fund Right Now? Here Is How to Actually Evaluate It..