Benefits of Passive Real Estate Investing
7. Invest today, not next year.
Real estate crowdfunding offers investors “plug & play” investment opportunities. Review a deal, conduct some initial due diligence on the property and the sponsor, sign legal paperwork online and transfer funds…boom, you’re done.
Real estate investing via the crowd sure beats having to scour the market for months or years looking to find a suitable real estate investment. You can get capital working for you in a couple hours through a RE crowdfunding platform.
6. No maintenance required.
No 1:00am “emergency calls” regarding broken toilets or misbehaving tenants. Let the pros deal with those day to day management issues while you collect the distribution checks.
5. Stiff the Tax Man.
Passive equity investing in real estate provides unbelievable tax benefits relative to other asset classes. Unlike interest payments or dividends that can be taxed at your highest bracket, your share of depreciation and mortgage interest expenses work to offset your passive income.
4. Invest with professionals.
The learning curve in real estate is painful and expensive. So if you don’t have time to properly research and conduct due diligence, don’t buy a real estate investment on your own. The pros have spent a lifetime learning their various markets and asset class speciality. Leverage that expertise.
3. Instant Diversification.
Passive real estate investing will let you spread around your capital immediately. You might cap your upside vs. investing in one “home run deal”, but you’ll certainly put a high floor on your downside by allocating your capital over a number of properties. Compare this to investing in real estate directly. You’ll likely need to put an uncomfortable amount of your investment portfolio towards the downpayment of one deal. If that deal goes south, can your portfolio survive a complete loss of that equity?
Whether you are a seasoned real estate investor or a rookie looking to invest a couple thousand bucks, real estate crowdfunding enables you to quickly construct a diversified portfolio that meets your specific goals.
2. Tremendous Access to deal flow.
The key to buying quality real estate investments is deal flow. In most access classes, you need to pass on a lot of frogs before pulling the trigger on the right deal. Do you have the discipline to pass on 99 out of 100 properties, even if it takes you years to find that 1 deal? Probably not.
Furthermore, before real estate crowdfunding, it was extremely difficult to gain consistently access to deal-flow through with experienced sponsors. “Country club” deals through good ol’ boy networks were the most common entry point to passive real estate investing. You may or may not have gotten a call when their next deal became available.
Of course, you can still network, search and gain access to great real estate deals from quality sponsors, but you’ll need a lot money (minimum investments are usually $100K-$250k+) and a lot of time and effort to amass a decent portfolio of sponsors (or deals) to choose from. Alternatively, if you have accounts with a couple of the larger RE crowdfunding platforms, you’ll have 30+ vetted real estate deals to choose from today.
1. Make money 24/7.
When you invest in stabilized properties with existing tenants, you are making money every second of the day. Being a landlord is a little bit like being a utility provider. Provided your real estate is leased, the “rent meter” just keeps on spinning.