3 Must-Have Factors I Look For In Every Investment
Many individual investors find investing in real estate a fascinating venture. Most new investors start by “fixing and flipping” dilapidated homes. Finding old homes to fix up and flip for a profit is fun, but can really be a lot of work, and there is sizable risk involved.
Early on as a new real estate investor, you may find it exciting to fix up old homes and flip them. I did it for many years, and it was actually rewarding, but it did come with quite a bit of risk. These types of projects are a great way to earn a lot of money in the short term and your return on investment can be quite good, but for risk-averse investors, they may not be a good choice.
What Are Your Financial Goals?
Financial goals for most people don’t entail that much work either. Most investment strategies will include investments that have a good rate of return without much risk. Although investment goals can include different types of investments such as individual stocks, corporate bonds, traditional IRAs, low-cost index funds, and all things Wall Street. You likely have any one of those types of investments as part of your retirement plan in your investment portfolio, but for our purposes today we’re going to focus on investment vehicles that include real estate.
The truth is, the hustle and bustle of real estate is fun, and it can be a thrill to make a pretty good amount of money fairly quickly when you’re flipping houses, but after a while, you will likely find that the higher risk, higher returns play over the long haul just isn’t jiving with your risk tolerance anymore and you may want to seek safe investments more for the long term.
As we get older, life gets more complicated and so we seek investments that will give us good results without all of the risk factors we were willing to accept when we were younger.
In our investing world, we look for different ways to find the best investment while making as much money as possible that can meet our long-term goals. So, we look for low-risk investments that provide us with passive income so that we can live our life by design.
Let’s take a look at the factors we personally look for as part of our investment goals:
#1 – Low Effort
The first step we take is finding an investment that requires little to no effort on our part. Time is a non-renewable resource and we want to make sure we’re not having to put out a lot of energy into the investment.
So, a good investment for us is a passive commercial real estate syndication because we can have a team of experts – the general partners, or sponsor team – take care of all of the day to day work on the property, and we just place our capital and receive quarterly cash flow deposits. This type of investment would qualify in our definition as a low-effort investment.
#2 – Low Risk
What you don’t want with your investments is a house of cards. Market volatility and higher interest rates can wreak havoc on some investments in the short term, but if you have solid asset allocation over the total assets you own, then you should be in good shape in the long run.
A good place to start with a low-risk investment that long-term investors can explore is commercial real estate syndications. It’s no surprise that we particularly like investing in commercial real estate syndications because our hold term can be anywhere from 5-7 years, so there can be enough time horizon to ride out some ebbs and flows in the economy.
Although there are speculators and financial experts, who will predict when we will have our next downturn, we never really know when that will be. We just have to make the best investment decisions we can with the information that we have today.
I have been through many market cycles, and I want to position my investment portfolio so that I can account for the inevitable ups and downs of the economy and the stock market.
#3- Cash Flow
Some people who gamble will spend hours or days even at a casino hoping to hit it big, but most often they leave empty-handed and more broke than when they started. That’s why I’ve never been a gambler when it comes to investing, thankfully.
We don’t like speculating, that’s why we want our investments to start earning returns from day one. We look for cash flow, and we want the cash flow distributions before any improvements or value add renovations are made to the investment.
Appreciation is great, but I want to be able to have the security of knowing that I can count on the cash flow from my investment on day one.
After investing in real estate since 2003, I learned that passive investing in commercial real estate syndications can meet my requirements of being a low effort, low-risk investment strategy that can help me to increase my net worth while helping me reach my investment goals of receiving passive cash flow. This is a good option for me for all of those reasons.
Additionally, I love that there is an experienced sponsor team and property management company at the helm initiating and managing the renovations and strategically following the business plan on my behalf. They handle all of the day-to-day operations while I receive regular passive cash flow distribution checks, tax benefits, and continuous progress reports. Meanwhile, I can live my best life because I have the time.
The important thing to remember is that at this stage of life, investing passively in real estate syndications that are low risk, low effort, and provide cash flow, allows me to have time freedom while simultaneously building wealth. It’s not a get-rich-quick strategy, it takes time like any good investment that has a low risk and good investment returns, but the good thing is that these investment vehicles are available to almost everyone.
So, it’s time to do your due diligence on real estate syndication investments and talk with your financial advisor to see if commercial real estate syndications are a good fit for your investment goals.
Note: we are not financial advisors and are not offering financial advice of any kind. Please consult with your advisors before making any investment or financial decisions.
Ready to Learn More?
The best way for you to learn more about commercial real estate syndications is to join the PCRP Passive Investor Club.
Through the PCRP Passive Investor Club, you’ll get a priority review of all the deals we offer. We’ll work with you to determine your investing goals and then present you with the best deals to meet those goals. We’ll then guide you every step of the way as you invest in those deals.
So if you’re ready to start investing passively in institutional-grade, commercial real estate in fast-growing, climate-resilient markets in the U.S., join the PCRP Passive Investor Club – IT’S FREE! – and get started on your path to EARN PASSIVELY and LIVE ABUNDANTLY!
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