THREE THINGS TO BE A PASSIVE INVESTOR
Know, Like, and Trust
This applies for just about any investment.
It sure helps with your choice of an investment advisor if you have someone invest for you.
I even think it applies to purchasing individual stocks, mutual funds, and even making a deposit in a savings account or money market fund. What do you think?
You have heard of these three before. Take two minutes with me in this blog and look at them again. See how important they are. Especially if you are a passive investor.
As a passive investor, you don’t have much control of the investment, except in choosing to invest. So, get these three right before you make your investment.
Since this blog primarily has to do with multifamily investments, we’ll apply these three to the property and the operator who will manage the property with your invested dollars.
Operator. Do you know the operator? How long have you know them? What do you know about them? What is their track record? How good are they at delivering results? What do other people say about them?
Multifamily properties. Do you have a basic understanding of apartment complexes and how they work? What does it take to get an appropriate return from a property? Do you know how to look at a rent roll, a delinquency report, a vacancy report, an income and expense statement, etc.?
Yourself. What are your investment goals? What is your risk tolerance? How much can you afford to invest in a property?
The Market. What do you know about the market at the time of your investment? What about the specific market in which the property is located?
Other. What else would it be good to know?
This one and the next one are a bit more subjective. Liking something or someone is a very personal, gut-level set of feelings.
Some of the elements I consider are the personality and integrity and honesty of the person with whom I am investing. First impressions are important here as are consistency.
Each of us “like” different things. What would be important to like about an operator or a team that is putting together and managing the investment for you?
Find a way to spend some time with the potential operator. Perhaps a meal to two together. Meet with them several times in different settings. See if you continue to like them as you get to know them better.
Now we are getting personal. This is a foundational piece of making a good investment, though, isn’t it?
Do you trust this person, this operator, this team? Really.
I was talking with an investment team the other day and they talked about walking away from a potential deal, even though they had invested a good amount of money in their due diligence. Something just wasn’t right. They found a few things that were off and wondered if there would be more. This was enough to stop and walk away. It was this thing called trust.
There you have it. As you consider making investments in the year ahead, be sure that you know, like and trust the people recommending the investment. As we did above, ask a lot of questions.
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Through the power of a syndication partnership with other investors like you, working with managing partners who are experienced in managing apartment complexes, you can own multifamily assets.
Or you can choose to loan money, get in with a clear return, and get out earlier.
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Harland leads our Investor Relations. He is a “repurposed” Pastor and Army Chaplain. He is an author, speaker, mastermind facilitator, and coach. Harland lives with his wife, Barbara, in DeLand, Florida.