Episode 8: The Investment Timeline - When to Deploy Capital

Welcome to Building Passive Income, the podcast for professionals, entrepreneurs and investors who want to build wealth, diversify beyond Wall street, and create true financial freedom through passive commercial real estate investing. I'm Wayne Courageous III, founding and managing principal of Crei Partners, a leading commercial real estate company, I created CreiColin, an AI powered resource to serve as your investor education guide. Built on the insights and experience we've developed at Crei Partners, CreiCollen is here to educate you through passive invest tax strategy topics to help your journey in passive investing. Just a quick disclaimer. This podcast and CRA Colin is for educational purposes only and is not legal tax or investment advice. Always consult with your attorney, CPA and financial advisor before making any investment decisions. I've spent nearly two decades helping investors understand the power of commercial real estate. From multifamily to storage to retail. Each episode is under 15 minutes, simple to follow and and packed with insights to help you grow your income and protect your capital without becoming a landlord. If you're ready to learn quickly and invest smarter, you're in the right place. Welcome to Building Passive Income. Let's build wealth together. Here's creicollen.

Timing isn't everything in investing, but it's close. I'm Crei Collin and this is Building Passive Income, where we give you the strategies to build real wealth through passive real estate investing. Today, we're talking about the investment timeline. Not just when to invest, but how to pace your capital deployment. So you're building a resilient, diversified portfolio, not gambling on one or two deals and hoping for the best. Because here's the truth. Most new investors do one of two things. They either sit on the sidelines forever but paralyzed by analysis paralysis, or they rush in and deploy all their capital in the first six months. Both are mistakes, and both can cost you tens of thousands of dollars or more. So let's talk about the right way to build your portfolio over time. Let's talk about pacing, diversification, and why keeping dry powder matters more than you think. Let's dive in. Let's start with the most common mistake I see, the all in approach. An investor finds a sponsor they like, sees a deal that looks good, and writes a check for 100,000, 200,000, $300,000. All their investable capital gone in one deal. Here's the problem. You just put all your eggs in one basket. If that sponsor underperforms, if that market shifts, if that deal hits an unexpected challenge, you have no diversification, no dry powder, and no way to course correct and here's the other. You haven't built any experience yet. You don't know how this sponsor communicates during tough times. You don't know if their projections are conservative or aggressive. You don't know if they're good at executing on their business plan. You just bet your entire portfolio on an unproven relationship. That's not investing. That's gambling. The better approach. Stagger your investments over 18 to 36 months. This gives you time to learn, time to diversify, and time to build relationships with multiple sponsors before you're fully deployed. Here's the framework I recommend. I call it the PACED deployment strategy. It's built on three phases, and it's designed to help you invest intelligently without overcommitting too early. Let me walk you through each phase. The first six months. Your learning phase. In your first six months, your goal isn't to deploy all your capital. Your goal is to learn. Invest in one or two deals with sponsors you've vetted thoroughly. Keep your initial investment smaller. Maybe 25 to 50,000 per deal. Why? Because you're learning how K1s work, how distributions are reported, how sponsors communicate during the hold period. You're building your confidence. And if something goes sideways, you haven't bet the farm. Let me give you an example. Let's say you have 200,000 in investable capital. In phase one, you invest 50,000 into one multifamily syndication with a sponsor you trust. That's 25% of your capital. Enough to be meaningful, but not enough to wreck your portfolio if it underperforms. Over the next six months, you watch how that sponsor operates. Do they send quarterly updates? Are they transparent about challenges? Do distributions come on time? Are they responsive? When you have questions, you're not just investing money. You're building data. And that data will inform your future decisions. Phase 2 months 7 through 18. Your build phase. By now, you've got some experience. You've seen how your first deal is performing. You've gotten your first K1. You understand the process. Now you can start deploying more capital, but still with discipline. In this phase, aim to invest in three to five additional deals. Diversify across sponsors, asset classes and markets. Maybe you do two multifamily deals, one self storage deal and one mobile home park. You're spreading risk while building your portfolio. Using our example, let's say you deploy another 100,000 across four deals, 25,000 each. Now you have five total investments with three different sponsors across three asset classes in four different markets. You're no longer dependent on one deal or one sponsor. If one underperforms, you've got four others carrying the load. That's diversification. That's risk management. Phase 3 months 19 through 36, your optimization phase. You've been investing for over a year. You know which sponsors you trust. You know which asset classes fit your goals. You know which markets you're comfortable with. Now you can start consolidating with your top performing sponsors and scaling up your investment sizes. But here's the Even in this phase, you're not going all in on one deal. You're still diversifying, still learning, still keeping some dry powder in reserve. In our example, maybe you deploy the remaining 50,000 across two more deals with sponsors who've earned your trust. Now you're fully deployed. But you did it over two and a half years with seven total investments across multiple sponsors and asset classes. That's a portfolio, not a gamble. Now let's talk about market timing, because I know someone's thinking, Colin, what if I invest right before a market downturn? What if I'm buying at the peak Fair Question. Here's my answer. You can't time the market. No one can. Not you, not me, not the smartest economists on Wall Street. If someone tells you they can time the market, they're either lying or delusional. But here's the good news. You don't need to time the market if you pace your deployment intelligently. If you're worried about a recession, don't sit on the sidelines for five years waiting for the perfect moment. Instead, adjust your deployment strategy. Maybe you invest smaller amounts over a longer period. Maybe you focus on more conservative deals, Core plus instead of value add. Maybe you keep a bigger cash reserve. But don't let fear paralyze you. The best time to start investing was five years ago. The second best time is today. And here's another thing people forget. Real estate syndications are long term holds, typically five to seven years. Even if you invest at the peak of a market cycle, you're not selling next year. You're holding through the cycle. And if you invested with a good sponsor in a strong market with solid fundamentals, you'll likely be fine. The investors who get hurt are the ones who panic and try to exit early, or who overleveraged and can't weather a downturn. That's why pacing matters. That's why dry powder matters. Here's another critical part of your timeline. Capital calls and reserve planning. Some syndications require all your capital upfront. You wire the full amount at closing and you're done. But other syndications have capital calls. You commit to invest, say 100,000, but you only fund 50,000 at closing, and the rest gets called over the next 12 to 24 months as the sponsor needs it for renovations or operations. Capital calls are common in value add deals and development projects, and they're not a bad thing. They can actually be more tax efficient because you're not deploying all your capital upfront, but you need to plan for them. If you're investing in deals with capital calls, you need to keep that committed capital liquid and available. Don't commit to three deals with capital calls and then invest that money somewhere else, thinking you'll figure it out later. That's how investors get forced to sell other assets at a loss or miss out on opportunities because they're illiquid. Here's my rule. Always keep at least 20 to 30% of your investable capital in reserve. This gives you flexibility. If a great deal comes up with a sponsor you love, you can act. If one of your deals has an unexpected capital call, you're covered. If life throws you a curveball, you're not scrambling. Dry powder isn't wasted capital, it's strategic capital. And it gives you optionality, which is one of the most underrated assets in investing. All right, let's recap your investment timeline. Strategy 1. Don't deploy all your capital in the first six months. Use the first six months as your learning phase. One or two deals smaller amounts 2. From months seven to 18, build your portfolio with three to five additional deals across multiple sponsors, asset classes and markets. 3. From months 19 to 36, optimize by scaling with your best sponsors while continuing to diversify. 4. Always keep 20 to 30% of your capital in reserve for opportunities, capital calls and unexpected needs. 5. Don't try to time the market. Instead, pace your deployment intelligently and adjust based on market conditions and your risk tolerance. Here's your action step. Take your total investable capital, the number you calculated in episode seven, and map out a deployment plan for the next 24 months. How much will you invest in the first six months? The next 12 months? The final six months? Write it down, commit to it, and stick to the plan unless there's a strategic reason to adjust. And as always, consult with your CPA attorney and financial advisor before making any investment or tax decisions. If you're ready to start building your paced investment strategy, let's talk about Check the show notes for a link to Schedule a call with us@creipartners.com, we'll help you create a timeline that fits your goals and your risk tolerance. Next time on Building Passive Income. We're diving into one of the most powerful tools for long term investing success, creating your personal investment policy statement. Until then, remember, financial freedom isn't a dream, it's a decision. And it starts with investing intelligently, not impulsively. I'm Crei Collin. Let's Build wealth together.

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