Passive Investing
Passive investing in real estate allows accredited and non-accredited investors to generate income with minimal active involvement. Here’s an overview of what you need to know about this investment strategy, including insights into the criteria for accredited and non-accredited investors.
Passive Real Estate Investing
Passive real estate investing involves contributing capital to real estate ventures without taking part in day-to-day management. It’s popular due to its simplicity, potential for retirement income, and accessibility for investors without extensive experience or substantial financial resources. Real estate investment trusts (REITs), crowdfunding platforms, and turnkey rental properties are standard passive real estate investment methods. However, these investments can have downsides like lower control, potential unexpected expenses, and exposure to market changes. The average ROI for real estate property in the U.S. is around 10%, with multifamily homes typically offering higher returns due to more tenants making payments monthly.
Accredited vs. Non-Accredited Investors
The distinction between accredited and non-accredited investors lies primarily in their income and net worth. Accredited investors meet specific SEC income and net worth requirements, allowing them access to a broader range of investment opportunities. Non-accredited investors, on the other hand, have access to fewer options but can still invest in real estate through platforms like Cove Equity.
Real Estate Syndication
Real estate syndication is a collective effort in which investors pool resources to purchase more significant real estate assets than they can afford. Both accredited and non-accredited investors can participate in these syndications, subject to specific SEC regulations. The structure of these deals often includes a mix of capital from the investors and loans from banks or lenders.
Considerations for Non-Accredited Investors
Non-accredited investors should be aware of the limited investment options available to them and the need for due diligence, especially regarding fees and the structure of investment opportunities. Real estate crowdfunding platforms offer various investment types, and selecting ones that align with your financial goals and risk tolerance is crucial. Additionally, understanding the track record of the teams managing the investments is vital for making informed decisions.