Case Study: Condo vs. Multifamily Real Estate Syndication
September 13, 2018
Podcast: How To Be A Successful Passive Investor
October 4, 2018

3 Must-Have Qualities I Look For In Every Investment I Make

Let’s face it, I’m not a spring chicken anymore. I go to bed early, I complain about lower back pain, and I find myself ordering more and more salads (hey, gotta keep things moving down there, if you know what I mean).

When I first started investing in real estate, I was all bright-eyed and bushy-tailed, ready to roll up my sleeves and get my hands dirty. Over the years, I’ve scrubbed moldy cabinets, dealt with lairs of baby spiders, painted and repainted, and held up sheetrock until my arms felt like they would fall off. I’ve had fantastic tenants who have become great friends, and I’ve also had tenants who have caused one headache after another.

At the heart of it, I’ve always been fascinated by the world of real estate investing and completely in love with the hustle and bustle of it all.

Nowadays, with two young kids in the house, moldy cabinets are the last thing I want to deal with. Especially other people’s moldy cabinets. #nothankyou

I still wholeheartedly believe in providing quality housing for good people, but basically, it comes down to this. These days, I want to invest in projects that are low effort, low risk, and come with cash flow.

3 Must-Have Qualities I Look For In Every Investment I Make3 Must-Have Qualities I Look For In Every Investment I Make

#1 – Low Effort

I put this one first because it’s probably the most important to me at this stage of my life, when I’m evaluating different investment opportunities.

Between all the swim classes, after school programs, play dates, and meal prep, I barely have enough time to make sure my socks match, let alone deal with tenant applications and maintenance requests. Sure, having property management in place helps, but there’s still work involved.

For example, earlier this year, a tenant we were about to evict from one of our rental properties for failure to pay for multiple months in a row decided to stop up the sinks in her unit and leave the water running the day before the eviction.

Not one, not two, but THREE units were damaged due to that one incident, and we’re still sorting through all the remediation and repair costs, as well as insurance paperwork.

When my kids are tugging at my sleeve asking me to play with them, I don’t ever want to have to turn them down due to insurance paperwork.

Hence, low effort is top on my list of investing must-haves.

#2 – Low Risk

Being able to invest in low-risk opportunities is especially pertinent given where we are in the market cycle.

The way I see it, it’s like we’re all playing a giant game of Jenga. In a typical game of Jenga, the whole thing topples over in a relatively short amount of time, and then you can re-stack and play again.

With this market cycle, however, the tower is still standing, at least for now. No one knows which block will make it topple, or when the blocks will come crashing down. Some people think the tower is already teetering and about to come down. Others think we still have several more rounds to go.

Listen, I’m no expert. I can’t claim to have been through multiple market cycles and to have the predictive powers to know what’s going on at a macro level.

What I do know, however, is that I want to position my investment portfolio such that I am accounting for the possibility of that potential tumble.

#3 – Cash Flow

My dad was a gambler. Blackjack was his game. He would spend hours, sometimes days, at the casino, for the chance of hitting it big. More often than not, he came home with empty pockets.

Thankfully, I did not inherit the gambler gene. And that’s why I invest for cash flow, first and foremost, because I want the sure thing.

I want my investments to cash-flow as is, before any improvements are added. That way, if that Jenga tower comes crashing down, I know that the investment can stay afloat until the tower gets re-stacked.

As for appreciation, sure. I like appreciation as much as the next investor. But I don’t invest for appreciation. Why? Because I like my sleep. I want to be able to sleep soundly, knowing that I can count on that cash flow. Anything on top of that is gravy.

This Is What I Invest In

I’m not a professional investor. I’ve been bumbling around in the real estate investing world for a little while now, having a ton of fun along the way. I’ve tried a few different things, and I’ve discovered my investing preferences for this stage of my life.

And for me, I’ve found that the best way to invest in assets that meet my requirements of being low effort, low risk, and having good cash flow, is to invest passively in real estate syndications.

As a passive investor in a real estate syndication, I get to leverage the time and expertise of an experienced team on the ground. They do the heavy lifting, and I get regular cash flow checks and progress updates. I get to easily diversify across markets and asset classes without having to build a team from scratch each time. And, I still get really nice tax benefits. All while still having the luxury of time to play with my kids.

Would passive investing have been a good fit for me earlier in my investing career? Heck no. Back then, I was all gung-ho to get my hands on everything. I wanted to learn by doing, which meant I wanted to participate in the renovations. I wanted to review all the tenant applications. I wanted to manage the property manager.

Now? I’d much rather give away part of my returns in exchange for a nap instead. Zzz…

Conclusion

In order for me to build wealth for my family, while still being there for my family, I choose to invest in assets that require low effort, come with low risk, and cash-flow right off the bat.

Investing passively in real estate syndications is definitely not a get-rich-quick strategy, that’s for sure. But years from now, when my kids are all grown up, I’ll know that when they were little, I did what I could to build wealth for their future, while also building memories together as a family.

And at the end of the day, that’s what it’s all about anyway, right?

INVEST