Ready to jump into real estate investment but are not sure what is right for you? In this episode, Steven highlights the differences between investing in multifamily and single-family real estate to help you to determine which one is right for you and your investment portfolio.
Ready to jump into real estate investment but are not sure what is right for you? In this episode, Steven highlights the differences between investing in multifamily and single-family real estate to help you to determine which one is right for you and your investment portfolio.
Key Takeaways
Resources Mentioned
Investing to Hedge Against Inflation - Free online training at https://investormindset.com/start
Steven Pesavento 00:05
This is the Investor Mindset podcast and I'm Steven Pesavento. For as long as I can remember, I've been obsessed with understanding how we can think better, how we can be better, and how we can do better. And each episode we explore lessons on motivation and mindset for the most successful real estate investors and entrepreneurs in the nation.
Attendee 00:26
Just looking around the room as a lot of young people who haven't invested in real estate, I know you said you started buying single families. Looking back on that, would you recommend for people who haven't started to go that route? Or go the syndication route and pull their money and go that route? Maybe buy a multifamily right off the bat and get 10 people? Or whatever? Yeah? And if so, what steps do you recommend they take to get started?
Steven Pesavento 00:55
So I think it goes back to what do I want? And why do I want it? Right? If your want is I want to really understand what it takes to own a property, I want to like manage that process, I want to be in control, I'm that person who needs to be in that position, then great, like go buy a single family. Or maybe you're in a position where you don't have money to invest, maybe you don't have 50, or 100,000, to be able to invest into a syndication, then the direction you're going to take is to do a house hack, or a bur where you're going to go and buy a property, you're going to use your local market knowledge to get into something, you're gonna be able to win because your relationships or be able to get somebody else to stake you or invest into you. Or maybe you have just a little bit of money to put down as a down payment, and then get leverage and be that person wanted to pause from today's conversation to share something that's been heavy on my mind, as I'm talking with investor after investor. And I continuously hear this concern. It's the concern about inflation. We've seen some of the highest inflationary periods in the last 20 years up 7.5%. Some believe inflation is actually closer to 20%. But what does that mean for you what the core means when money is sitting in your bank account, or it's not an assets that are hedging against inflation, that you're actually losing buying power? So what does that mean? It means other things around us are getting more expensive. And the dollars that are sitting in your bank account are becoming less valuable. So what do you do about it? Well, one of the best hedges against inflation is investing in real assets, specifically, real assets like multifamily. And why is multifamily so powerful for hedging against inflation? Well, we've put together a phenomenal 30 minute purely educational webinar to be able to share with you why multifamily is such a powerful opportunity right now, why it makes sense to invest in a very hot market, because inflation is so much hotter, and exactly how you can get involved. Now, if you're interested in learning more and, and educating yourself and potentially having the opportunity to get involved and actually hedge against inflation yourself, then I encourage you head over investor mindset.com/start. That's investor mindset.com/start. And you can register for this 30 minute presentation, that's gonna be able to bring you through all of the reasons that you need to know and understand to avoid some of the biggest common pitfalls when it comes to investing, while also setting you up to invest to hedge against inflation, through and through, enjoy. And let's get back to the episode. Now, if you don't have $100,000, you don't have more than, say three or $400,000 in total net worth, then syndications, not the right route, because you should never invest all of your money into one place. In other words, if you're gonna invest in one of these deals, and you put 50,000 in, I wouldn't want it to be more than 25 or even 10% of your total net worth. Because you'd want to be diversified now. Have we lost my enemy deal? Never, except one time and a flip. And we paid our investors back what we projected. Because when you do 200 deals, you're gonna have stuff that's gonna fall through and things happen. But if you have money, you're earning two $300,000 a year, you're busy in your core business, your core focus, then I think syndication is the best route. Because unless your goal is to be an operator, in other words, to be that person who's finding deals, who's underwriting deals, who is putting together the financing and the investment, like the dollars, unless that's the role you want to be in. Personally, I think you can make a better return, investing in syndications with the right people, because they've got that expertise, that knowledge. They're getting the deals in the markets that you're just not going to find them in. If you're trying to get out of investing in Denver, like you want to diversify into some other markets, then that's the best way because they'll break and all of that expertise. And then the big thing that I didn't mention, because I was moving, I wanted to skip a couple of those slides was that investors usually get the passive investors usually get 60 to 80% of the profit, most of the profit goes to the passive investor, because they're putting up the money. And so the operator gets paid based on success. So there's an alignment of interest. So if you're earner and your money maker, and you're busy, passive investing, best route won't even screw around or go that other route. But if you're in a position where you don't have the money, or you're a person who wants to be in control, or you just find like, it'd be a good hobby till no about, then the other route is a big advantage for sure. That's my take. But I definitely sampled both. And I would I don't want to own any single family homes ever again.
Steven Pesavento 05:48
I don't Yeah, you can't. The problem with single family and with smaller is you can never be in a position where you can truly hire other people to be in charge of everything. Because even if you're owning a single family home, or a duplex, you've got a property manager, when the hot water heater goes out, the property manager is going to call you and be like, hey, this happened, what do you want to do about it, or they've got permission to do whatever on your behalf, but they don't care, the $400 or 500,000, to make something fix to go and take care of something is nothing because they're making $60 a month, you know, for $1,000 a month. Project it's pennies to them. But that'll go directly to your bottom line. So when you're owning those single family homes, you got to be the person who's really going to like, this is my baby, I care about it, or manage the numbers, all that stuff. And that's not me. So I hire smarter people than me to do that in our business and therefore, that's my preference is for sure. The passive route.
Steven Pesavento 06:55
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