Matt Picheny is MJP Property Group’s Managing Partner. 15 years of experience as an investor, union, operator and author in real estate.
My first major move was to move to New York City to play and to be inspired by the rent of music. Ironically, it led to a digital advertising career and ultimately to property investment. However, I refused to leave behind me the rental idealism of the 1990s until I had one thing promised myself. I wanted to be a better educated owner whose investments enhanced the life of the people living in my property.
As both a passive immobilizer investor and a trade unionist today, this is the driving force behind all my deals. My real estate company purchases and operates apartment buildings in multifamily applications. This means that I am the general partner for all aspects of each investment, while a group of limited partners supply most of the capital to buy the property. I carefully pick my investors and invest only in properties that are win-win for all involved. Every deal must improve the lives of my investors, but also of each community ‘s residents.
The right consultant makes all the difference
Trade unionists all have their individual market approaches so it is important to choose someone whose investment philosophy and priorities conform to your own. Some trade unions have higher risk and higher returns, some are more conservative and moderate. All my deals are signed up to make a substantial profit, but I think the bottom line is more than just money. I plan another course for property investment as an activism, by using my investment dollars, structure my transactions and manage my properties to improve the quality of life for all involved.
If you are interested in passive property investment and everybody should because it’s a great and fruitful trip, here are some basic information that will make your road to success a little smoother, as you define it.
101 Passive Immobilien Investment
According to data from a Gallup survey carried out in April of 2020, real estate is the long-term most favored investment among Americans compared with stocks (21 percent), savings accounts or CDs (17 percent) and gold (16 percent).
If you consider investment in real estate for the first time, you will probably be imagining an active investment, i.e. buying a building directly, making a profit or leasing it out for cash flow. If you are an experienced real estate investor, this approach can be satisfactory and profitable, but it needs a lot more risk and work in a word.
On the other hand, passive real estate investment practically involves no involvement other than your initial research and financial contribution. You have passive investments through trusts, real estate trusts, real estate exchange-traded funds (ETF) and crowdfunding deals, access to low-risk and responsible high earning potential and zero workforce.
Investing in real estate unions opens up greater opportunities
When you invest in an immovable union, you pool your resources with other limited partners so that you can purchase bigger buildings than you can afford individually. It’s passive because the general partner manages everything from the purchase to the daily tasks to the eventual sale. You just have to invest and collect.
I have personally invested in over 5,000 apartment units across the country, and I am a passive investor in 75 percent of those deals. I have developed a diversified real estate portfolio and I receive regular incomes from several passive income streams on a monthly or quarterly basis.
First critical steps
You will need some research at the front end before you become a passive real estate investor to evaluate 3 main pillars: the operator, the market and the deal.
The operator should be someone to appreciate your goals and share documents with market details, deal and expected returns in a transparent fashion. Vet your syndicator thoroughly so that it is a person you love and trust. How did you meet them? How did you meet them? What’s your record on past investments? Who can bid them? Who can bid for them? And then, obviously, do they share your values and appreciate your value and success definition?
Does the market constantly grow, stagnate or shrink? Factors like job growth, rent growth and capitalization rates for the area should be examined. But you want to invest in markets which are at least steady or slightly growing, but booming markets are more competitive.
What is the deal’s business plan? Will the operator hold the property until sale, or will they add value and strength?
When you take care to evaluate these three pillars, research and understand your values and objectives, passive investment can contribute to your financial freedom while improving the quality of life for others.