Are you ready to become a passive real estate investor? It’s an exciting world full of opportunity. But before you dive in, there are some questions you should ask yourself first. Let’s take a look at the 6 most important questions that every passive real estate investor should know the answers to before they make the decision.
What is Your Investment Objective?
Before you start investing in real estate, it is important to have a clear understanding of what your investment objective is. Do you want to build wealth over time, or do you want to generate immediate income? Knowing what your goal is will help guide your decisions as an investor and ensure that you are making smart investments for your future.
Do You Have The Time To Invest In Real Estate?
Active real estate investing can be time consuming, especially if you are taking on properties that require a lot of maintenance and upkeep. You also would need a team to delegate tasks to: Fixing toilets, landscaping, renovating, accounting, and so forth. Do you have enough free time in your schedule to invest in real estate actively? If not, then passive real estate investing is your best bet. In order to passively invest in real estate, it's important to connect with experienced active investors like Ea Capital Partners to help you manage your asset. While being totally hands off, managing partners of your asset will maintain, renovate, and do what ever it takes to increase Net Operating Income to increase the cash flow and over all value of your asset.
How Much Capital Do You Have Available?
Real estate investing requires capital, so it’s important to know how much money you have available before getting started. In active real estate investing, having enough capital will ensure that you can purchase and maintain properties without any financial strain. It’s also important to factor in potential risks when thinking about how much money to allocate towards real estate investments.
However, in passive real estate investing and multifamily syndications (group investing), you can be a part owner of a cash flowing apartment building with only $100,000+ versus needing around $400,000+ to own a single family home rental (depending on the market).
What Is Your Risk Tolerance?
Real estate comes with risk—it’s just part of the game—so it’s important to know how much risk you feel comfortable taking on before making any investments. Take some time to think about what kind of risks make sense for your situation and determine how far outside of your comfort zone are willing go when investing in real estate.
Multifamily assets are more stable than owning a single family homes as a rental. This is largely due to the fact that a multifamily asset like an apartment building's value is heavily tied to the Net Operating Income (NOI) and cash flow it produces. A single family home rental's value is directly tied to the sold comparables (comps) around the neighborhood. If a neighbor a few doors down for you sells $100,000 under market value due to financial trouble, the value of your home may be affected by this. If a neighboring apartment building is sold below market value, the value is not affected at all. With this in mind, it's important that we give you as much information on the value of the property at all times.
How Will You Monitor Your Investment Performance?
It is essential that all investors keep track of their performance over time so they can understand when adjustments need to be made or when things are going well and more investments should be made accordingly. Make sure that you have systems in place for tracking performance so that all of your investment information is organized and easy-to-access whenever needed.
With Ea Capital Partners, we give you quarterly updates to show you how our asset is performing, and how our asset is appreciating. Constant communication with you is important to us and protecting your money is our priority.
Our mission is to grow and protect your money so that you become life-long investors with us. It is in our best interest that we execute perform because when you win, we win. We hope to grow and rise together with the people we work with!
Investing in real estate can be a great way for individuals and families alike to build wealth. In order for this type of investment strategy to work, however, it is important that investors ask themselves these 6 key questions first so they can ensure they are making informed decisions throughout their journey as a passive real estate investor. After all, knowledge is power! So take some time today and ask yourself these 6 questions – they could make all the difference down the line!
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