Ep 22 - How to Choose Which Investment Vehicle is Best For You

Hey everybody, Flippin Annie here, founders of the Freedom Real Estate Group family of companies. And welcome to another episode of our podcast which is entitled Freedom through Passive Income. That's right. And today's episode is how to choose which investment vehicle is right for you.

That's right. So we just got through talking through each type of investment that we like to invest in.

Right.

Turnkey private money funds, syndications, etc. And so we wanted to say what we probably would be experiencing right now, which one do we do? Because we do this full time and we've done every single one of these. We kind of know the pros and cons of each and the benefits of each. So we thought that this episode would be perfect. Perfect to follow all of the rest of it. So the first thing we're going to talk about is liquidity. A lot of times when we jump on the phone with somebody, we're asking them what their goals are and we specifically say, do you need these funds liquid? Because that would be part of your goals. Private money lending is perfect for that. It's usually a max 12 month term, but many times you're going to be in and out within four months.

Right.

So liquidity is perfect for that.

So that's in and out. And just in case somebody's like, I'll give you my money but I need it back.

Yes, yes, exactly right. So you're going to get it back in your hands in case you needed those funds for something else. So you don't want it sitting in the bank for four months. Right, right. But we can't always guarantee four months. So ask the right questions when you're on that phone call. But liquidity is there. And then trust. We talk about trust a lot and that you shouldn't trust everybody.

Don't trust anyway.

You should ask important questions. You should ask what happens if you default? Have you ever defaulted? Can I talk to other people that you know, have worked with you? Can I talk to the title company who actually does all of this stuff? And trust is really, really, really important in everything that you do and finding the right person. Usually when you do, you start. That's what we've experienced. They just start funneling all of their money to us and then they diversify within the offerings that we have. So trust, I'm going to say private money lending kind of wins that award because it's the piece where you can kind of dip your toe in the water.

That's right.

Right. And then figure out, do I trust these people? Was this a good Experience. And if it was, you increase your funds, you start diversifying among other investments. Now some people do just jump into the water because they knew they know somebody else who has had experience with us. So they have some borrowed trust there or they talk to us and just have a very good feel, right? Some savvy investors will jump on the phone with me and we'll be talking, talking. They're like, you know your stuff, okay? I'm like, I'm not worried. It's not like you're trying to fake me out or anything like that. Number three is cash flow. Cash flow, the perfect vehicles for that is turnkey funds and syndications. Every single fund in syndication is going to be a little bit different. So you're going to want to ask questions, right? Because some people don't want the cash flow and they want to be, you know, set it and forget it, here's my money, don't. And so some of our syndications and funds we're setting up for those types of. So you're going to want to ask the right questions. But all three of those are great.

For cash flow and sometimes these. Cash flow, it's either a cash flow of monthly cash flow or quarterly cash flow or yearly cash flow.

Yes, very, very good point. I'm glad that you said that because even our debt fund is like biannual.

Cash flow, that's six months.

Yes, yes, yes, yes. So number four is tax benefits. You don't always need this piece. So some people who have been investing this way for a very long time have a lot of carry forward losses, meaning that they've gotten some tax deductions and they weren't able to use all of the deductions that year. So there's some that there's kind of in this little bucket and it's carrying forward to the following year. So if you need that piece though, you, you're going to find that typically in turnkey funds and syndications. Again, private money, on the other hand, is treated as ordinary income. So it's not going to have that tax gotcha. But it's got different benefits, liquidity, trust, ease of entry, things like that. All right, Number five is growth. So all of them have the potential of growth and really great growth, especially the larger, the investment that you're able to put in. Because typically, at least the way we work it, we incentivize people with larger investments. We do different things with people for larger investments because it's easier for us to work with, you know, a few people than hundreds, right? Of people. So diversification is really, really important when it comes to growth. Just in case one of the deals go belly up. We say all the time we do volume for a reason. It was to mitigate the risk for us personally is also to mitigate the risk for our partners that come in with us. We know we're going to lose money on deals, so why not do 10amonth so that if you lose money on two, well, eight others would, you know, we're fine. So we're all good. We're good, our investor partners are good and we can, we personally take those losses and our investors get paid exactly what they are promised. That's just how we've always run our business because we're in this for the long haul. If you are somebody who likes control, then doing something that's just one and done, you know, you're just doing a lone rider type JV partnership or you're just going to buy one property, there's a lot more risk in that. Is there growth? Yeah, as long as the investment goes good and it's not one of the bad eggs. So just keep that in mind. Number six is maintenance. So we always talk about two skills of money. Learning how to make money and then learning how to keep the money.

That's the hard part.

Yes, exactly. And we've heard that from more wealthy people than anything else that the harder skill is keeping the money.

Where's the spend money?

You're really good at that. It's not something we talk about though. Actually we do, we say don't do it, balance it out. That's what we really teach. But maintenance, you just want to be more conservative. Right. Because that is the harder skill is making sure that now that you've, you've grown your bucket to where you want it to be, you want to keep it there and still growing and earning interest. But maybe not in the high risk, high interest places where you have, you know, a chance to lose it. So maintenance is very, very important. And again, that goes back to people you trust. And then number seven is control. I actually didn't have this piece in here because we don't really serve people who want to have control.

Right.

We serve passive investors, people who say, I am busy, I do not have the time to learn everything that you guys know. I would like to trust you and give you my funds and you can invest it. But for those of you who do like control, I wanted to add this in here, turnkey investing. But really maybe the other models that we have, like the instant Cash Flow and the Equity Advantage series. Because you get to choose. Yeah, you get to choose what you want in the rehab. You can choose the paint, the color, the. I want to do the roof. I want to wait on the roof, whatever. So. And private money lending. You get to see a packet, you get to see the deal, you get to say yes or no. So you've got some control over what we're doing. So if you feel like you're educated and you're savvy enough to be able to make your own decision, then you may want to stick with those types of investments. So that's it.

Well, that was awesome. Again, we like to try to keep these episodes nice, short and sweet.

Yes.

But thank you very much. Those are. That. That was a great.

I love it.

I love it. That's awesome. Especially to wrap things up. But again, make sure you join us in our groups. Again, we have our group on Facebook, which is facebook.comgroups forward/freedom through Passive Income. Sorry, catch up.

Put me on the spot.

I know. And then we also have a group inside of LinkedIn as well, but that one doesn't have a fancy schmancy little URL. So that would just go to the search bar and type in Freedom through Passive Income to find the group in there. But again, we've got lots of conversations going on in there. We've got lots of interaction. So make sure you jump in there. But make sure you also head over to YouTube. If you're not on YouTube now, subscribe to our channel. Comment like love, do whatever you need to do. But let us know how we're doing. Let us. If you have any suggestions, let us know or let us know any questions you may have. Hey, I saw that episode. Hey, what about this? You know, so make sure. Yeah, make sure you interact with us. But again, we hope that you enjoyed all of our episodes. And we always like to end with invest smart, live happy. Bye. Hi, everybody. Nothing on the show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions and information on the show are not guaranteed. All investment strategies have the potential for profit or loss.