We have some real estate investors who have been asking us lately, ‘When can I expect to see returns from my investment in the Peak Housing REIT? How long does it take before an investor typically sees returns?’ At The Peak Group, we’re excited to announce (among other things) that our investors will be seeing their first distributions beginning at the end of Q3 this year!
Our consistent schedule for distributions is slated to be quarterly, with dividend yields released to investors the month following the quarter’s end. We’ve been overjoyed by and pleased with our progress so far as a vehicle for passive real estate investing—even though, as experts, we figured we’d see a tremendous launch of this caliber from our portfolio.
Part of the reason we were so confident we’d have such incredible initial results as an UPREIT is that we are operated by investors for investors with some of the industry’s best names in construction, development, property management, and asset acquisition. When you have a team of this skill level, your growth should never be in question.
However, the speed of returns we are seeing for investors in the Peak Housing REIT brought an interesting question to the forefront of our mind worth answering: How long does it take before a real estate investor typically sees returns outside of passive investing?
Given that the income from real estate in our portfolio of properties within the Peak Housing REIT is a strictly passive payout, it thoroughly circumvents the kind of effort typically required of rental properties that have decent cash flow. Essentially, our investors see better returns, faster, and with less work—what’s not to love?
Let’s compare the speed of return from other forms of investment properties so that you can see why that ‘real estate deal’ might not be such a bargain for your long-term financial freedom!
‘Traditional’ (Non-Passive) Real Estate Investing
Unfortunately, many first-time and early-stage forays into the real estate markets fail to create a new class of passive investors. Instead, you have a property-owning class that’s tied to collecting rent and managing maintenance for their investments 24/7. What does this actually mean for the speed of your return on investment? First, it helps to break down the workload involved.
The First Stage: Research
If you choose not to invest in an Umbrella Partnership Real Estate Investment Trust (UPREIT) from the outset, that means the research for your future investment portfolio (and your first property) rests squarely on your shoulders as an investor.
Too often, when investors first begin to invest in real estate, they forget to include the time cost associated with their efforts into the mix. Even with an excellent real estate agent, researching and then adding the right properties to a growing portfolio is a serious—and costly—investment of your time.
How much is an hour of your time worth if you had to guess? Tally up all of the hours spent simply researching, securing funding for, purchasing, and pricing your first investment property, and you’re already in the red on your return rate. If you’re an elite investor, you know your time is better spent elsewhere in truly passive real estate investing.
The Second Stage: Property Prep and Finding a Renter
Even with all of the above work managed and out of the way, you still won’t see any returns from your property business until you secure the right renter. This is going to cost you additional hours and income in the form of marketing spend, screening services, property upgrades, and turn costs.
Investors who have been around the block of a property or two before their first purchase know that they can skip the work involved with this step by jumping straight to a turnkey investment. However, finding the right turnkey property requires you to return to stage one with additional research into the right property management company to manage your investment.
The Third Stage: You’ve Got a Paying Renter—for Now
Once you finally get a renter placed and paying rent, you’ll start to recoup some of the above expenses we listed across both stages. However, that won’t leave any room for profit for a considerable length of time if you’re paying down a mortgage.
The reality of building a portfolio property by property is that it leaves investors’ profit potential flatlining for years. Plus, all of this assumes you can keep that renter long enough for your finances to regroup.
Why Settle for an Inferior Investing Experience?
If you want to see returns sooner, why settle for the ‘traditional’ investing ‘rat race?’ If you want true financial freedom, then you need a truly passive real estate investing experience. Your time is worth far more than building a ‘someday’ plan for retirement when you’ve finally burned out on real estate markets.
