I am excited to share that I will am participating in my first multi-family real estate investment as a Limited Partner in a Real Estate Fund. Investing as a passive investor is a great way to learn the apartment syndication business and grow wealth at the same time. After months of searching for the right opportunity, what led me to commit to this investment decision?
My strong belief is working with people you can trust is fundamental to investing. If you do not have trust, the risks are great when all there is left is hope that you make a return on your investment and that your sponsor team has your best interests in mind. My investment decision started with trust, then alignment of interests and finally the market and the deal criteria itself. I look forward to sharing more insight for passive investors who are looking to take their next steps in apartment investing.
Trust is the foundation of any relationship with a sponsor. This is why for most syndications the SEC requires for sponsors to already have “preexisting and substantive” relationships with potential passive investors prior to any passive investing relationship. Without trust, even with an attractive opportunity, you as a passive investor cannot have peace knowing your hard-earned investment funds are with someone else and hoping that they are operating ethically, wisely and against the business plan.
I like to say that trust is the prerequisite to vetting the deal. It always starts with vetting the sponsor. Check out this article for ways to vet the sponsor. Apartment investing is certainly a team sport, so you will have to do work to build relationships and get to know others. This aspect of passive investing in multi-family is what separates it from stock investing. However, the rewards of relationship building are great. By trust and networking, passive investors in apartments will learn of opportunities that those who invest primarily in stocks will never know of.
If passive investing in apartments sounds like a good fit for you, what are your next steps? Begin networking and getting to know others in the industry. Download our free Passive Investor Startup Guide and continue to learn and grow!
