Published by
March 25, 2024

How To Know You’re Ready To Become A Passive Investor

You’ve been devouring all the information possible and have become enamored with the power of passively investing in real estate. How could you not be?

The ability to invest in real, physical assets without being a landlord, getting a share of the profits, and reaping tax benefits is a sweet deal. Plus, diversification opportunities with minimal legwork are pretty attractive.

Even though these traits seem impossible to pass up, apartment syndications (group investments) aren’t for everyone. Each investor is in a different stage of life, has a different level of risk tolerance and maintains different goals.

Before investing in an apartment syndication, see if all of the following describes you and your current financial situation.

1. You Have More Than $50K of Funds to Invest

Most private real estate syndications begin at a minimum investment of $50,000 or $75,000.

Ensure you have the minimum investment of $50,000, plus your standard emergency fund, and any other savings for your life’s aspirations. If you have all the potential cash-needing situations in your life covered, you can invest with confidence!

2. You’re Okay Having Someone Else Take the Reins

If you’re short on time, but heavy on cash, and want someone else (a professional team) to manage the property while you reap the rewards, you’ve found the right investment.

Passive investing in real estate syndications is much less hands-on than residential real estate rental property, in fact, you’ll probably never see the property in person and will never have to worry about the day-to-day operations.

You just sign the investment documents, send the funds and carry on with your life while the cash flow rolls-in. As a passive investor, it is a set it and forget it investment.

3. You’re Looking for a Long-Term Investment

You’ve done your research and know that crazy get-rich-quick schemes almost never work out. So, you are looking for a steady long-term approach to wealth. Unlike stocks or other investments that you can flip quickly, real estate syndications typically have a hold period for five or more years.

You understand that your investment capital will be unavailable for longer periods of time, passively investing in apartment syndications may be your new obsession. Excellent returns with minimal time investment on your part.

4.  Sharing Returns In Exchange for Less Work is Attractive to You

Fix-and-flips and standard rental property approaches to investing allow 100% of the profits to flow into your pocket. Mostly because they are smaller deals, require plenty of sweat-equity, and have only one party (you) financing and managing the deal.

Apartment syndications are completely different as there are many other individuals involved, thus some profit sharing. Usually, the passive investors get the larger portion of a 70/30 percent split by simply providing some capital.

So if you meet the four criteria listed above then have found the investment vehicle that you have been searching for. You’ll enjoy being able to invest your money in apartments without the hassles of being a landlord, while diversifying your portfolio and hedging inflation.

Disclaimer: The information provided in this post is for educational purposes only and should not be considered as advice. Always consult with a qualified professional before making any financial decisions.

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