There are basically three ways to invest in apartments with the help of professional real estate investors:
1) Do It Yourself
2) REIT (Real Estate Investment Trust)
Today I’m going to talk about Partnerships…
This is where you either create a partnership or become an investing partner with other professional real estate investors who are investing in real estate.
A) Create your own partnership and do all the work
You find the deal, negotiate and manage it, and raise funds from friends and family. This is a lot of work for you and is a full-time job. Now, you aren’t just buying deals and managing them, you also have to do fundraising. Typically, you will pay them 6% to 10% on their investment, unless you have to get hard money loans that can cost 12% to 20% and then do some kind of split on the profits above those payouts.
You invest money with a professional real estate investor who is basically doing (A) above and he raises money from others to buy and manage deals. The syndicator makes most of his money from fees. While the syndicator will also benefit from selling at a profit, the person investing in this model is typically less interested in the upside profit. The downside of this model is, the syndicator has to sell out of the property at a certain date in the future. While this is sold as a benefit to the investors it is actually a detriment in bad markets.
C) Partner on a Profit Sharing / Cash Flow Formula
This is what we do at Cardone Capital. This model is different from other investment models as it makes extraordinary deals available to ordinary investors. Investors partner with me on real estate deals experiencing all the benefits of real estate and ride as passive investors, experiencing all the upside of investing and none of the headaches.
Regardless of the ways you elect to get involved, if you learn the investing game, avoid the mistakes, do what I say, and never find yourself forced to sell in bad markets: you will make money.
Remember, there is a shortage of larger, affordable apartment complexes in America and this will continue to reveal itself over the next 30 years. Look around your city and count the number of 300 unit complexes that offer affordable rents.
This shortage will make the large, affordable, quality apartment complexes more and more valuable over time. As we move into the future, rents will rise in markets where there is job growth. Also, as we move into the future, inflation increases the cost to build, thus making it more difficult to build affordable apartments.
What you should know by now from reading this is: you must figure out how to get yourself in bigger deals. Small deals don’t work.
I have a buddy who owns 1,000 units on his own. I showed him some of the deals we are buying at Cardone Capital and he wrote me a check for $1.5 million on the spot. He said, “I can’t get these bigger deals, and the bigger deals are where the big returns are.”
I will show you how, and more importantly, I will show you why you don’t want to do anything other than the bigger deals.
For more information on the three ways to invest in apartments pick up my book, “How To Create Wealth Investing In Real Estate.”
Interested in investing with Cardone Capital? Click here.