When people think about investing in real estate, they often think it’s as easy as Chip and Joanna make it look on HGTV. Right? I’ll just buy a rundown shack, turn it into a house, and make a load of cash… right?
Well, that’s a lot of work… and the same can be said for value-add multifamily real estate. But… there are options out there for those of you looking to get into real estate investing, without all of the work.
In today’s bonus episode, Anthony is going to discuss the multiple ways to invest in real estate, and the work required in each. Some might sound more appealing than others.
Don’t forget to check out this bonus episode on Youtube!
So what is the work of a real estate investor?
Find out, in another bonus episode of Multifamily Investing Made Simple!
Tweetable Quotes:
“The way I see it there are two ways to invest in real estate. You either do it yourself, or you get somebody else to do it for you.” – Anthony Vicino
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** Transcripts
The Work Of Real Estate Investing
[00:00:00] Anthony: All right. So you’re tired of riding the stock market roller coaster. You’ve you’ve had enough of losing 20% of your portfolio. You’re you’re off the crypto train because that crypto train just went into a wall. Now you’re ready to get into real estate.
Because you’ve seen all the appreciation, the cash flow tax benefits, all the things people love about real estate and why it’s made more millionaires than any other vehicle out there right now, the way I see it is that there’s two ways to invest in real estate. Just two, you either do it yourself, or you get somebody else to do it for you.
It’s that simple. Now, when most people think about investing in real estate, they. I gotta go do this myself. And it’s because they probably watched H CTV and they saw chip and that, that Joanna going in there, they buy a shanty, they fix it up to make it beautiful. And then they sell it for a big profit.
Right? I did that. I did that back in college. I did three fix and flips and I hated it. I could swing [00:01:00] the hammer, but I couldn’t hit the nail. I wanted nothing to do with it. So if that is real estate investing, I didn’t want to. Now it took me another decade to figure out like, oh, there’s other ways of making money in real estate that didn’t revolve around me actually going in and doing all the work in there.
So the next thing that I did was I bought a triple. . And then I house hacked that bad boy with an FHA loan, which I only had to put, I think 3.5% down, which was like $7,500. I lived in one unit and then I was the landlord. So I was working with my residents, leasing, doing maintenance repairs. And so it was better than doing the fix and flip, but it wasn’t much better.
It was still a lot of work, time and energy, but that’s what I thought you had to do it wasn’t until a little bit further down the road that I realized, Hey, people will pay. For me to do all the work for them. And that was really interesting because once I understood like the idea of a syndication or a joint venture, which is just understanding that every deal needs three things, it needs somebody who has the time, somebody who has the experience and somebody who has [00:02:00] the money, just don’t all have to come from the same entity.
However, so the way this worked for me was I started with joint ventures where friends and family would come and say, Hey, I see you are doing this thing over here. It looks really successful. Can we get involved? Can we do this with you? I was like, sure. Why. So we created joint ventures, which is just a simple partnership that says, Hey, I’m gonna go find this asset.
I’m gonna do all the work. We’ll arrange the financing. You’re gonna put some money in. We’re gonna split this thing, say 50, 50, right. Maybe 64 to whatever the terms are. And that was really, that was really awesome. Um, that’s a really cool way to get started if you are maybe a little bit later on in life or you’re, you have a great career that you like, and you don’t want to go and do all the management of an asset.
Maybe you have like a younger brother or sibling or a friend, somebody. Who’s willing to put in the time and the energy to go and operate it. Maybe you guys could create a partnership, a joint venture where you bring some of the money, some of the experience, um, and they will go do the. That’s what we did.
And from there we graduated to syndications and we didn’t really graduate. We still do a lot of joint ventures. They’re awesome. But syndications is really just a way of [00:03:00] formalizing this process and saying, you are truly a passive investor. And so in this equation, now we’re a partnership, but we’re, we’re div into two different types of partnerships.
We have a general partnership and a limited partnership. And as an investor, just putting money into the deal, you’re a limited partner. And so you don’t bear any of the risk or the responsibilities and you don’t have to do any work. You just put your money. And then you’re relying on the general partners to operators like us to go and do the work.
And that’s really cool when you realize like, oh my God, I don’t have to do any of the work, but I can still get all the benefits that we talked about before of investing in real estate, get the taxes, you get the cash flow, the appreciation, but you don’t get any of the downside in terms of like risk management.
So you’re not signed on the loan. So the bank can’t come after your personal assets, you have no liability in the eyes of the legal system, so that if somebody slips and falls on your property, they can’t come. So these are really cool things. And now you might hear this and think, okay, why have I never heard of a syndication or a joint venture?
I don’t understand. Like, it seems like if this was such an awesome opportunity. I would’ve heard about this by now. Now I encourage you to think about it through this lens. [00:04:00] Have you ever heard about a re? Okay. So a REIT is a real estate investment trust, and it’s just like a stock. So like when you buy a stock on the stock market in a lot of ways, you’re buying into a syndication.
If you think about it, you’re paying into a business, you’re buying a piece of a business and then the management team is operating it. You don’t have any of the liability. , you’re not doing anything in terms of like making day to day decisions, you just own a piece of that company and you share in the profits, the dividends that are coming off of it, it’s the same with the REIT.
A REIT does the same exact thing. Uh, you’re buying into the property. You’re getting a little bit of value from it, but you don’t barity in the responsibility. So the syndication is really taking that same concept and bringing it down into the private market and what that allows us to do then. Well, there’s a lot of benefits.
One is within a re or a stock. Like you don’t get very advantageous tax treatments at all because it’s taxed as capital gains. Whereas when you own a piece of the property, one of the great things about real estate is that you get depreciation and you don’t get any of that within a re or, you know, just on stocks in general.
So there’s a lot of [00:05:00] reasons to like this syndication or the joint venture model, more than a re and stocks. I’m not here to bash on those. Those can be good as well, but just understand that at its core, if you wanna invest in real estate, like there’s two ways, really you either do it yourself or you find somebody else to do it.
For you now, if you don’t have any interest in doing it yourself, you don’t wanna go start an Airbnb company or buy a single family home. You don’t wanna manage tenants and everything. Then I would strongly encourage you to go out there and look up syndications or joint ventures. We wrote a book on the topic, passive investing made simple.
So go check that out. You can get it at. The, the passive investing book.com. It’s gonna teach you everything that you need to know so that you understand how to vet operators look at deals, underwrite markets, um, and that you can move into syndications really confidently. Cuz it’s one of the biggest issues with investing in just in general is that it’s really scary and overwhelming.
So hopefully it brought you guys some value. If it did hit subscribe, hit, like, and we’ll see in the next video.[00:06:00]
