The fact is, renting has simply become the best option for
many. In fact, recent reports show that rents have skyrocketed in many parts of
the country so much so that the cost of renting has moved out of reach for many
middle-class families. Back to the original subject, I’m amazed at people who are ready to be
passive investors, but refuse to be smart about their investments. They will
sign on for some financial deal and not read anything to do with the deal. Over
schooled with a false sense of IQ, they don’t realize that if you don’t pay
attention, you get your pockets picked. Real estate investing can be a passive
investment, but the whole idea of “my people are handling it” as an answer to
everything simply does not exist. Not if you want to be a successful real
estate investor. Having interviewed and talked to dozens of real estate investors
and experts, I have learnt that the really good investors are the ones who let others
do the heavy lifting, but they are completely aware of the details of their
portfolio. The marketing for passive investing has taken on a life of its own to
create the idea of you laying in a hammock on a beach all day while blissfully
unaware of the day-to-day happenings of your portfolio. On the other hand, the
perception of the alternative has always been one of late-night phone calls to
fix over-flowing toilets. Passive real estate investing should lie somewhere in
the middle of the two. Choosing the right team to work with as a passive
investor can and should allow you to have a very high comfort level so that all
of the granular details of your property are handled daily. At the same time,
that team should provide ways for you to watch over the very high-level picture
of your portfolio at any given time and be able to get quick answers to any questions
that you may have. Hands-off or passive real estate investing is really about
matching your needs as an investor, with the provider who is going to meet
those needs while giving you a feeling of security and comfort. So, hands-off investing
isn’t a myth, strictly speaking. People defer all of their decisions to a
financial adviser all the time. But is letting “your people” handle all your
investment decisions and details — your money, by the way — really a recipe for
success? Only if you understand that you have been in tune and in touch with
“your people” and become really good at managing that relationship, then they
can manage your money for you successfully. It’s true that having people or
getting in with a real estate investment company or a property management
company is a fantastic idea. Really. You need people you can trust to keep your
investing from turning into your full-time job. You don’t have to take on
property management personally or oversee renovations yourself or even be
completely hands-on. Responsible investing, though, takes some attention on
your part. Make sure you know what’s going on with your property, even if you
have a property management company dealing with much of the day-to-day management.
Have your financial manager and everyone involved in the nitty-gritty details
of the property keep you in the loop. Get updates, know what they’re doing in
detail, even if you trust them (which you should). Take an active interest in
your being careful with what’s important to you. It’s not just investing your money;
it’s your thought and time to a degree, too. There are great property management
companies today in most major real estate markets, but they separate themselves
with a few small, but key factors. They will have 24-hour access to an on-line
portal with all of your vital and up-to-date property information. They will
have dedicated team members who exist for one thing...keeping you informed of
your portfolio. So calls and email inquiries get returned promptly and the best
of the best will have put a customer service team in place that actually calls
you each month rather than waiting for your call. You must monitor your statements
and the best property management companies will have detailed statements and
the latest technology and software to provide those details. As a real estate
investor, you should never be worried about the financial position or the
status of your property and you should never lie awake at night wondering what
is happening with your property. Things will not always go perfect, but you
should never be left wondering what is happening with your properties, whether your
portfolio is two properties or 10 properties. At a minimum, you should expect
to be in the loop. One of the great things that is changing in the real estate
world today is communication. Gone are the days of never answered emails and
constantly busy phone lines and never returned phone calls. Only you really
know what you want and what’s most important to you. Don’t make the mistake of
putting that responsibility into the hands of someone you have no intention of talking
to or collaborating with. Check your investments. Make adjustments based on
your ever-changing personal and financial situations instead of letting the
chips fall where they may. Your inaction has more consequences than you may
think.
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