Picture this: the work week is finally over, your bags are packed, and you’re headed to your favorite weekend spot for a little R&R. Your phone rings – no it’s not your Uber to the airport – it’s your tenant. This can’t be good.
Fast forward 24 hours – instead of wading in the hotel pool, you’re wading in water flooding your investment property while your insurance adjuster and plumber are nowhere to be found.
Investment properties aren’t all rainbows and sunshine like the home flipping shows make them out to be. Sure they can be lucrative, but they’re not for the faint of heart. A successful investment property requires an extraordinary amount of time, expertise, and capital.
With that in mind you may want to consider these gating questions before you take the plunge on an investment property:
- Am I willing to expose all or a significant portion of my savings to a single investment?
- Am I willing to dedicate the time and attention needed if the property requires renovation?
- Am I willing to endure the hassles of finding/dealing with tenants and upkeeping the property?
- If something goes wrong, insurance claim or otherwise, can I handle it as well as an experienced real estate investor?
Even if you answered “yes” to all the above, here’s one final question: is it worth all the time that’s required? If the answer is “yes” again – have at it. We wish you the best of luck.
But if you’re looking to buy an investment property and looking to maximize the return on your investment and your time, passive real estate investing through an online real estate platform could be for you.
What is Passive Real Estate Investing?
Passive real estate investing is where investors commit their money to professionals who are well-versed in the nuances of real estate ownership and management to invest on their behalf. Historically, there have been only two general passive real estate investment types:
- Private Equity Funds – Private equity funds are where investors pool their money together into a single fund to make investments. But everyday investors don’t have the wherewithal to meet the investment minimums, which can start at $100,000 and grow exponentially. Further, private equity funds lack any sort of liquidity for as long as 10 years.
- Traded REITs – Traded Real Estate Investment Trusts, or “REITs,” have been the historic avenue for passive real estate investment unable to meet the minimum investment requirements of private equity funds. However, since they’re publicly traded on major stock exchanges, their performance can be impacted by broader market volatility. Traded REITs also command a “liquidity premium” for being freely tradable, resulting in lower average dividends.
Online Real Estate Platforms – Passive Real Estate Investing for the Digital Age
Thankfully, passive real estate investing has joined the digital revolution. Online platforms such as stREITwise have made passive investing less expensive and more accessible to everyday investors. But unlike a lot of its peers with high investment minimums, excessive and hidden fees, and limited real estate operating expertise, stREITwise was formed by real estate veterans to provide everyday investors exposure to a diverse portfolio of institutional quality real estate through a fair and transparent online platform.
So if you’re having second thoughts about buying an investment property – maybe it’s time to put down your hammer, pick up your smartphone, and join the digital real estate revolution.
Eliot Bencuya is the co-founder and CEO of stREITwise. Eliot has extensive experience identifying, underwriting, and executing value-add real estate investments.
Prior to forming stREITwise, he was a Vice President of Acquisitions for Canyon Capital Realty Advisors and the Canyon-Johnson Urban Funds, where he was responsible for originating, underwriting, structuring and executing transactions in the Pacific Northwest, Northern California and Midwest regions. Mr. Bencuya also held positions at Sovereign Investment Company (a subsidiary of the Marcus and Millichap Company) and the investment banking division of Merrill Lynch & Co. He holds a Bachelor of Arts degree in Economics and International Studies from Yale University, and a Masters of Business Administration degree from the Haas School of Business at the University of California, Berkeley. Mr. Bencuya is a member of ULI.