My journey to become a passive investor

1June, 2018

In spring of 2017 I started my search for opportunity in commercial real estate investment, especially Apartment buildings. By then, I had worked as a residential real estate investor for almost 15 years. I had bought, lease and flipped many properties over the years. My day were filled with chaos, tenants, contractors, employees. Among circle of my friends, I was successful in what I was doing. As I am getting older, I often asked myself Do I want to deal with tenant, toilets for rest of my life? I had tried and failed miserably to give all my properties to two local property management companies. Scattered single houses just don’t work well with property management firm.

As I traveled the county and attended many seminars and mastermind groups, paid my dues. I watched how top performers work and and looked over many projects. I immersed myself in learn all aspects of apartment building, how to find deal, evaluate the deal and closed the deal. That’s active part of the business. In one of the mastermind group, I noticed a couple Mark and Barb, Mark is an active physician and runs his private clinic, his wife Barb, helps him managing his business and investment. They comes to those quartly meeting to just meet top performer (syndicator/who find, operate and manage the deal) and vet projects and then decided to invest which projects. Once they picked the project, they invest their money and sit back collecting their checks. They have been doing this for some years. Its called passive investment. Upon further research, I realized Mark/Barbara are not the only one. There are many smart investors are passive investors. I soon found next opportunity – a 104 unit apartment building in Ohio and joined as limited partner. I can tell you that I am collecting payment quarterly like a clock and I do absolutely nothing. My take away are :

1) Partner with Experts (Credibility) – Partnering with someone that has a track record helps a ton. The sponsor is well respected in the industrial and has extensive track record and good reputation, this two traits are essential.

2) My Learning and Development – I became an expert on the market, project and team by talking with investors, sponsors, reviewing everything on the deal, going to the property to do research. Of course, spent a lot of money to learn from experts.

3) Great project is key – A great project plus a great operator, you have a winning team. A great project must offer good return with limited downsides. You will ask how an ordinary people can find those opportunity? The general answer is by networking, knowing people…..

I am not totally passive yet. I am still managing properties, I am still buying and selling. I am building up the money to invest in the projects that will produce cash flow and wealth for the long run. I want to help more people to the same.

My journey to become a passive investor

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