EP 6: How much Money do I need, To Invest In Multi-Million Worth Real Estate! Short Course 4

Are you frustrated watching your hard earned money ride the knee jerking Wall street roller coaster? Are you looking to diversify into alternate investments and set them on autopilot to achieve financial freedom? It's time to learn the ways of the wealthy. It's time to Think Outside the Stocks with your host Madhvi Jain, an immigrant from India and exit professional who will bring you industry experts to illustrate a passive and holistic financial approach to build not just passive income but also your generational wealth. Madvi is on a mission to change the financial trajectory of one family at a time. And a thousand more to go. Are you going to be part of this vision? And now without further ado, here is the host of Think Outside the Stocks, Madhvi Jain.

Hey. Hey, hey. Welcome to Think Outside the Stocks episode number six. I'm your host Madhuri Jain and we are going to continue our journey the active income with passive real estate investments. Remember, if you're a visual person like me and you want to access this module with the presentation behind it, please go to our website Think Outside the Stocks and access in the membership area. In last module we talked about that the rental real estate is not really a passive income stream. It has tremendous risk and disadvantages and we also touch base on commercial real estate investments. So today's module and today's episode is going to be can you invest in millions of dollars of commercial real estate with the money you have? I always talk about changing the perspective when it comes to the single family home and the rental. To change the perspective and make it a passive income, think about multifamily. Multifamily is nothing but the apartments and we have all stayed into apartment complexes. The moment the single family changes and becomes multifamily, which is four units or more, that becomes a part of the commercial real estate category. And that's how you can take an advantage of that. There are two ways of investing in the commercial real estate. There is an active participation and there is a passive participation. And for busy professionals like you who do not have that time and expertise, we are going to focus on how you can invest completely passively in into commercial real estate investments. Why do I say that? You don't need millions of dollars to invest in a multi million worth real estate. The key to unlock this passive income stream is called real estate syndication. Yes, you heard it right. It's called real estate syndication. And when I heard about it and it came to my life, that was my aha moment. This is that key to unlock your complete passive income. And in Commercial real estate. In our last episode, we looked at the risk of the rental real estate in terms of affordability, recession, scalability, asset protection loans and the three T's, the tenant, toilet and trash of the rental property. We will jump into the real estate syndication world and see how you can flip the script of being this risk and use it to your advantages. What is the real estate Syndication. Real estate syndication to simply put, is a group investment. You have at the core the active investor, the syndication team, which possess that core experience and core expertise. And then multiple passive investors can participate with the capital that they have into this huge syndicated investment so they can start creating their passive income stream again. Real estate syndication is a group investment. Now there are active investors and there are passive investors coming together. Syndicator is that active investor. And you, the busy professionals who are coming with the capital, are the passive investors. Now these two type of investors pull their resources together. There is the experience and the expertise, resources bought in by the syndication team, the active investors. And there is a capital which is bought in by the passive investors. The syndication team also participate with their money. This multimillion dollar worth investments are simply not the capacity of even the syndication team or even individually as passive investors. Essentially what are we doing with this commercial property as a syndication, we are joining our hands, going in together into the property as a group, which otherwise we would have not been able to afford or manage. Let's take a look at these roles in the syndication. In order for you to become comfortable and invest into this passive syndicated investments, you have to understand what the syndication is and how these investments are created. Let's start with the rules of syndication. In syndication there is an active partner. We talked about it, it's the Syndicator. It's also called as a general partner or gp. The GP is the center of this Tom. He or she is the role essential to the success of the syndication. He or she is the subject matter expert. And it's the most active partner. And most of the times it's not just one person. It takes a village to create and manage this syndication. So typically it's a group of active partners that are coming together as GPS or co. Gps. Your role is a limited partner, limited in the sense that you come with your limited resources and you have limited expertise and hence limited control over this investment. So you as a passive investor do not have a role in acquiring these properties, managing it, maintaining it and selling it off. You just bring in your capital, your principal to the investment and participate as a limited partner. Let's take it from the GP or the syndicator perspective of what is the path of forming the syndications. There's tremendous amount of work that goes behind creating these successful syndications. And in a way there are various steps. Identifying the property and evaluating its financials is number one step. We have to go through hundreds of property to analyze their financials so we can come down to properties which are really the diamond in the rough. The next step is to start working with the lender in terms of finances and start working with the passive investors so that they can invite them to participate in the syndication. At the same time, the process of acquiring this property, they also have to go through tremendous, tremendous amount of evaluation on this property. The actual physical condition or the financial condition of the property gets evaluated in much more details in order for the syndication team to purchase and acquire this property. Once they have all the investors, the loan from the lender and all the resources to move in, the next step is about managing and maintaining it. Stabilizing the property, the current rent, the current tenant base and creating that consistent cash flow is number one priority. While managing and maintaining this property. The next step is about renovating and implementing that business plan. This is when the massive fix and flip happen in the apartment complexes, for example, they are getting renovated unit by unit so that the syndication team can increase the rents and in turn increase the value of the property. And once that business plan is satisfied or achieved, the syndication team sell this property and distribute the proceeds to passive investors. By the way, during the process of managing this property and selling it, they are also distributing the passive income cash flow coming from the rental income. What are your responsibilities? You as a passive investor, typically you will look at the investment, evaluate it and see if you are ready to move in this investment. As a passive investor, this activity is kind of front heavy. But once you decide that you are going to move in and invest into these investments, it becomes completely passive for you. You simply start creating the passive income from the cash flow that syndication team is providing you through the income that the property is earning. This is simply a mailbox money. You don't even have to lift a finger, I say, but you do have to lift a finger to click and check on your bank balance where you're getting that completely passive income and at the end you are going to get that equity from the sale of the property. Another thing as a passive investor happens for you is that you start getting periodic property updates from the syndication team on how they are doing, how they're managing the property. If there are any issues and how they are handling stuff like that. But you are not actively managing the tenant base, managing the expenses, managing the repairs or the fix and flip. Everything, everything is managed by the syndication team, that is people like us. So we put in the tremendous amount of effort so passive investors like you can sit back, relax and enjoy your completely passive cash flow on autopilot. So with that we are at the end of our episode number six where we talked about yes, you can invest in multimillion dollar commercial real estate investment with the money you have. In our next episode, episode number seven we will talk to Ben Frazier from Aspen Funds and this is a very interesting conversation. What we have seen in 2022 a record high inflation followed by Feds imposing the rate hikes and our economy being pushed into recession. We will talk to Ben Frazier about this market development and very interestingly, Ben will tell us about how you can make inflation your friend. How to be on the good side of this inflation. Episode number seven Inflation. Is it your friend or a fool? Stay tuned and I will see you around the corner.

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