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From Struggling Small-Time Landlord to Sophisticated Investor – Part 3 of 3

Welcome to part three of this three-part series exploring why and how I went from being a small-time landlord to investing in apartment buildings and the lessons I’ve learned along the way.
Check out Part 1 here where I discus my motivations to invest in real estate and how I got started. Check out Part 2 here about my experiences as a small-time landlord.

How am I investing now?
While my first real estate investment was a house I rented out, my most recent real estate investment is a professionally sponsored and managed apartment building.
I like this method of investing way more than being a small-time landlord. I bring money to the table and get to make a truly passive investment. The best part is that I get peace of mind knowing things are being taken care of for me.

Why did you search for an alternative?
#1 Risk – I got tired of having my personal credit tied up, as well as being personally liable for potential lawsuits that could happen at the property e.g. slip and fall. Additionally, the cash flows of a small-time landlord are inconsistent because of the constant feast or famine cycles due to having all the risk tied up with just a few units/tenants. I discussed this in more detail in Part 2 of this series. What I wanted to do was to spread my investment over a greater number of rental units so that I wasn’t exposed to only a handful of tenants.
#2 Lifestyle – The personal sacrifices and lack of adequate compensation for my time as a small-time landlord aren’t worth the hassles. Yes, the numbers look good in a spreadsheet but getting to those numbers takes a huge personal and physical toll.

What was the solution?
Private equity real estate.

What is private equity real estate?
Its when a professional manager called a General Partner (GP) collects investments from a group of passive investors called Limited Partners (LPs) and puts those funds together to go out and purchase private direct real estate (investing in direct ownership of real estate). The LPs get access to bigger deals than they would otherwise be able to access on their own and everything gets professionally managed by the GP.

Why do you like apartment buildings?
I like them because they’re predictable, stable, and run like clockwork. Are apartment buildings sexy? No! But that’s exactly why I like them.

Lessons Learned
·        Buying a house or condo to rent out isn’t the only way to invest in private direct real estate.
·        Investing in private equity real estate is a better option for most people than becoming a small-time landlord.
·        Apartment buildings aren’t sexy but can be great investments.

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