Why You Should Never Go It Alone When Investing In Rental Properties
Rental property investing continues to attract substantial capital and a new generation of investors from tech workers to those worried about their retirement, to billionaires picking up sizable portfolios of rental properties.
There’s a massive industry just focusing on teaching individuals how to become DIY landlords. Yet, this is often the long and expensive detour before they end up investing in a more professional way.
While everything happening in the economy may indicate income real estate is the smartest play right now, why are partnerships, syndications, funds, and similar vehicles a wiser choice than going it alone?
Access To Better Deals
Often the best discounts and returns are only accessible to better capitalized investors, with a strong resume of experience.
Liquidity & Cash Flow
More equity pooled together means optimizing net income and free cash flow. This not only means superior profitability, but also means you can keep more capital in reserves, versus being stretched too thin. Even billionaires and banks go bust because they run out of available cash in critical moments.
Truly Passive Income
The big sales pitch, and one of the most important advantages of real estate is the ability to produce passive income. However, becoming a DIY landlord is anything but passive. It may be more time-consuming than your old job, and there are no vacations. At a minimum you need a professional third-party management firm to handle everything for you.
Diversification
Collaborating with other investors means that you are able to spread your capital across more units and geographically diverse investments. This is vital for minimizing risk, ensuring consistency and predictability in returns, and always having the most optimality.
Professionalism & Discipline
As Warren Buffett famously said, “Investment is best when it is most businesslike.” Investing with others forces you to treat it professionally, rather than investing on emotions or treating it as a hobby you throw money at and make excuses to justify choices that are not financially disciplined.
Privacy & Asset Protection
The strength of having a better funded professional vehicle to invest through helps shield your privacy, and avoids standing out as an appealing victim for opportunities and malicious lawsuits. Contrast having the presence of a well-funded and formidable legal team that acts as a deterrent, versus the poor homeowner who recently went to jail for protesting against a squatter outside his own property.
