Want to invest in real estate but don’t want the hassle of landlords, financing, renovations, tenants, licenses, inspectors, direct mail campaigns, and all the other hassles that come with a real estate investing side hustle?
Me too. I own dozens of single-family rental properties, but today, I just passively invest in real estate.
Passive real estate investing Includes notes, funds, real estate syndication and real estate crowdfunding investments. not any yes essentially better or worse than others, Even more important than active real estate investing. they just go together Different advantages and disadvantages.
But they also have a problem: many people don’t allow non-accredited investor. Paternalistic Uncle Sam does not believe that the average person has enough responsibility to obtain certain information type invest. Therefore, anyone with a net worth of less than $1 million (excluding home equity) or an annual income of less than $200,000 cannot invest in many passive real estate investments, which are classified by the SEC as 506(c) investments.
Some passive investments, classified as 506(b), Do Non-accredited investors are allowed. There is also a problem with theseHowever: The government won’t let them do this advertising public.
So, if passive investing can’t be advertised, how do you find passive investing that gets you into it?
Crowdfunding: An easy place to start
Some Real estate crowdfunding platform Non-accredited investors are allowed. I invest in most of the largest companies myself.
They vary in quality, historical returns and reputation. I’ve had great experiences with Groundfloor, Ark7 and Arrived. Fundrise has had a rough few years, but appears to be recovering. The same goes for Streitwise.
Most of these will set you back $10 to $100 to try. when you first Start investing passively in real estate and this will make it go further Easier— and more comfortably than the $50,000 to $100,000 private equity investments sometimes require.
Interestingly, some real estate syndicates have begun exploring the use of crowdfunding regulatory filings with the SEC as an alternative to traditional 506(b) or 506(c) filings. I invested in a syndicate Goodger Investmentsfiled under Reg-CF and open to non-accredited investors. so far I like them, and found founder Anne Dixon. become Trustworthy and transparent.
Ask other passive investors
Start with people you know in real life, such as friends and family. But if you already have one great Based on world Passive Real Estate Investing You probably won’t be reading this right now.
You have many other options turn up Reputable real estate sponsors (syndicates), note issuers and fund managers. you can start from this forum On real estate websites like BiggerPockets or Facebook groups for passive real estate investors.
There is another platform special purpose Passive real estate investors are called left-wing investorsIncluding an amazing Forum to discuss sponsors.
Join the Passive Real Estate Investing Club
Although the number is not large, have some investment clubs Specialization Passive real estate investing.
Left-wing investors are one of them. My company SparkRental operates another company is called United Investment Club. You can also view alternative investment club as a third option. I don’t mind naming our competitors, Because I know and respect them and their founder. All three clubs operate differentlyThe focus is different.
Our focus at United Investment Club is accessibility: make sure Passive investing is accessible to everyone—even those without huge sums of money. We meet every month Jointly review new transactions from different syndicates or note issuers.
Left Field Investors and the Alternative Investment Club primarily serve accredited investors. all three clubs Emphasize the introduction of large quantities of Speakers and Transparency exist Having a platform where passive investors can share information about sponsors, deals and risk factors.
Listen to the Passive Real Estate Podcast
Some real estate podcasts often host syndication.
BiggerPockets hosts not one, but several podcasts, often featuring real estate sponsors. Hosted by Marco Santarelli Passive Real Estate Investing Podcast, Goodegg hosts The Life & Money Show, and Left Field Investors hosts the Left Field Passive Investing Podcast. At SparkRental, we host the Live Off Rent podcast, which consists of quick 5 to 20 minute episodes.
They are both a great way to find new sponsors and hear them explain their unique investment strategies.
Connect with active investors
You can also invest directly with active investors (i.e. those who actively participate). maybe they house flippingwholesale properties, or buy and hold rental properties. everything can be made for great partner You invest passively.
This may require form Work with them on transactions as an equity partner with partial ownership. Or you can lend them money in the form of a private note.
However, a word to the wise: Only invest with experienced investors World Health Organization You know, like, trust. Your cousin buying her first home or her second home is not A safe people invest. Find investors with dozens or hundreds of deals under their beltthey’re happy to open their books and show you their records—the good, the bad, and the ugly.
What is difficult to find as a non-accredited investor?
Some passive real estate investments allow Unaccredited investors are relatively easy to find. Value Added Multifamily Real Estate Syndicate what i thought of is most common.
There are many others Harder To find. For example, connecting with active mom-and-pop investors takes some effort as far as you are concerned. You can jump on the BiggerPockets forum and ask: “Who is a great person? one-parent family Do investors want my money? and You’ll get a thousand replies. But pick a few really Transparent, trustworthy, experienced investors will demonstrate a lot of Harder.
In a joint organization, It can be difficult to find niche investments that are allowed for non-accredited investors. Off the top of my head I can only think of two reputable self storage sponsors allow Non-accredited investors. The same goes for mobile home park investors. I can only think of one industrial real estate syndicate that allows non-accredited investors. it is literally My job is to connect with sponsors and find the most experienced and trustworthy sponsors.
also hard to find Private equity real estate funds that allow non-accredited investors. I can think of two people off the top of my head that are reputable.
where to start
if you want Dip your toes in the waterconsider investing $100 in Groundfloor, Ark7, or Arrived.
The next level is exploring notes and syndication. Consider joining a passive real estate investing club Benefit from the experience of all other members.
When our joint investment club meets to review deals, our members ask tough questions to explore potential risks. Overall, we analyze risk from dozens of different directions. If members like the deal, they have the option to invest $5,000, and overall we exceeded the minimum investment of $50,000 to $100,000.
As you better analyze risk on your ownstart connecting with mom-and-pop investors who might make good partners. this is what we have More and more we are doing it ourselves: trying to find professional single-family investors who have made every mistake imaginable and who will not lose our money if we work with them on a flip or rental portfolio.
To me, it’s a fun, low-stress way to invest. I have arrived Travel around the world No tenant or property manager hassles. I can invest small amounts in many properties, cities, syndicates, mom and pop investors, and property types. That means I don’t need a crystal ball to spot the next hot trend or booming city—I’m probably already rich there.
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Notes on BiggerPockets: These are the opinions written by the author and do not necessarily represent the views of BiggerPockets.
