Looking for a lucrative and low-stress way to invest in real estate? If so, you might be a great candidate for passively investing in one or more multifamily properties.
Let’s look at how passive investors can start making investments in these types of projects. When you handle passive investment correctly, it can put money in your pocket with very little work on your part.
The Basics of Passive Real Estate Investment
The definition of passive investing is making an investment to gain returns with low to no hands-on involvement. It’s an income stream with minimal work for you as the investor.
A multifamily property is any property that includes more than one housing unit. It can accommodate dozens or hundreds of individual tenants and each unit has one or more bedrooms, a kitchen, a living room, a bathroom, and so on.
Examples of multifamily properties include apartment buildings, townhouses, condos, duplex/triplex/quadruplex buildings, and mobile home communities. Although the properties might be newly built from the ground up, it’s more common for passive investors to target older properties that just need some remodeling and rebranding in order to generate value.
These investments often involve multifamily real estate syndication, which puts a sponsor in charge of managing the project and places a minimal burden upon the individual investors. Next, let’s look at the benefits of becoming a passive vs. active property investor.
It’s a Truly Passive vs. Active Investment
Take a moment to think about other types of investments that are very hands-on. For example, putting your money in the stock market is the opposite of passive. It takes time to investigate investments, make your picks, read the news, and know when to buy or sell.
If you’ve ever seen a house-flipping show on HGTV, you know it’s labor-intensive. Restoring a property requires time, money, real estate knowledge, financial savvy, and a huge amount of patience. Plus, it’s easy to lose a lot of money.
What about being a landlord? Sure, you get to collect everyone’s rent checks at the beginning of the month, but you also deal with their requests and complaints. Is all that worth it?
If real estate piques your interest but you don’t want the hassles of a hands-on investment, multifamily investing through real estate syndication is your best bet. Your sponsor does all the heavy lifting, using their intellectual resources to thrust the investment toward success.
Financial Stability Despite Economic Variation
Compared to other types, this class of investment is more protected against economic downturns. Forbes economists say multifamily real estate investing is smart even during periods of economic struggle.
It could also be one of the best investments in the post-COVID-19 world. Multifamily investment has extra appeal after a major public health disaster due to its long-term stability, flexibility, and diversity. As an investor, you’re helping people find affordable housing during a nationwide rental crisis.
It Offers Long-Term Value and Low Barriers to Entry
This is a long-term investment strategy that builds value for years to come. Generally speaking, a passive investment in multifamily real estate is less prone to long-term value loss than many other types of investment and remains safer as the lifecycle of the investment matures.
While any investment carries risk and there is never a guarantee that any investment will pan out, multifamily real estate is one of the types of investment that tend to hold value. Plus, the barriers to entering the multifamily real estate market through syndication are fairly low:
- You don’t have to be a millionaire to do it.
- You don’t need extensive real estate knowledge if you rely on an experienced sponsor.
- There is a minimum financial investment with basic financial criteria.
Free Resources to Learn More
Does multifamily real estate investment sound right for you? If you are ready to grow your portfolio passively, Life Bridge Capital is here to help.
Take a look at our free whitepaper, A Guide to Passively Investing in Commercial Real Estate, and feel free to contact us about starting your investment journey.
