5 Types of People Who Should NOT Invest in Passive Real Estate
Is this the worst marketing ever? No.
One of Regency Investment Group’s core values is:
Investors Come First
In practice, this means getting to know our investors unique situations, their goals, and ensuring they understand all of the critical aspects of passive investing before they invest with us.
Now let’s have a little fun with the five types of people who should NOT invest in a real estate syndication:
Tommy has $50K parked in a savings account yielding 3% APY and wants higher returns but has plans to use this money for a down-payment on a new home in the next 24 months. Due to his shorter-term need for these funds, Tommy should hold off on investing in a real estate syndication. It’s important to only invest money in a syndication that isn’t needed for the next 5+ years.
Emily has a $50K emergency fund and just learned about passive real estate investing. Due to this money being earmarked for emergencies, Emily should hold off on investing in a real estate syndication until she has enough money outside of her emergency fund. Avoid investing money earmarked for emergencies as you may not have access to it again for the next 5+ years.
Fred is a used to making every decision in his life, has $50K+ saved and wants to invest in real estate. He struggles to delegate or trust others with important decisions, especially those related to his money. Fred should look to invest in a single property that he can self-manage, making all decisions along the way. Investing in real estate syndications requires the ability to let the general partners execute the business plan based on their experience and expertise.
Hilary can fix anything around the house, has $50K+ saved, and wants to invest in real estate. She loves getting her hands dirty and would never pay for a contractor, plumber, electrician, etc. Hilary should look to invest in a flip or fixer-upper that she can directly drive value in. Over time, Hilary might transition and be ready to put the wrench down and relax a little more, which will be the perfect time to start trading out those hand-on investments for some hands-off real estate syndications.
Real-estate crash Curt
Curt has $50K+ saved that he would like to invest and heard that syndications would be a great opportunity to diversify into real estate. The problem is that he is certain real-estate will have a major crash in the next 24 months. Curt should look to invest in assets that he believes in. We don’t want him constantly stressed, waiting for the next shoe to drop. All investing comes with risk and there are many options of asset classes. There are enough options of asset classes that you can be well diversified while avoiding those that don’t fit your personal investment philosophy.
To wrap up, investing in real estate syndications can be amazing for the right type of investor:
- Do you have adequate liquidity to be able to invest $50K or more?
- Are you comfortable having that investment tied up for roughly five years?
- Do you want to let experienced real estate professionals run everything?
- Do you want to be completely hands-off?
- Do you believe in the long-term stability of real estate as an asset class?
If you answered yes to these questions, then investing in syndications can be great!
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