There's a misconception we want to clear up for you if you're thinking about becoming an investor through passive real estate investing. The truth is: There's no wrong time for you to become an investor. The question of when to invest in DFW real estate is less a question of age, experience, or timing and more a question of 'what' you're investing in and 'why.' Seasoned investors intuitively understand this principle.
Your 'Why' Matters More Than 'When'
In this case, the 'what' is real estate, but the 'why' is as diverse as you and your needs are:
- Are you looking to earn passive income?
- Does that income need to be stable and secure?
- Is the income you're trying to earn in a specific market?
- Do you have a partner you can trust to manage your investments?
The above may not seem like answers to 'why' questions, but if you rephrase them, you'll see that they are:
- 'I'm investing in real estate because I want to earn passive income.'
- 'I'm investing in real estate because I need the income I earn to be stable and secure.'
- 'I'm investing in real estate because I want to maximize my earning options in DFW or abroad.'
- 'I'm investing in real estate because I don't mind being hands-on with my investments (or hands-off).'
The first and last 'why' on this list actually contradict each other. If you're looking for an answer to the question of when to choose passive real estate investing in DFW, for example, you won't be able to earn passive income if you aren't hands-off with your properties. If you have to show up each day to manage the details of your investment, the income isn't passive—it's just another job.
This is partly why nailing down your 'why' can often be more important than your 'when.' There will always be opportunities to invest in DFW real estate—even if the market is in a downturn or prohibitive to buyers—but your 'why' defines how you will invest.
Turning Your 'Why' Into 'How'
If you're already an investor, there's another misconception about investing that's probably already hurt you in the past, and it revolves around how you invest. It's the notion that you have to be the 'boots on the ground' if you want a successful investment portfolio or the idea that you have to directly own the properties you earn from if you expect to see any returns!
This antiquated outlook on investing is actually holding investors back because it:
- Adds complicated moving parts to a portfolio every time you need to work with an additional property manager
- Limits where you can invest depending on how hands-on or hands-off you are with your properties
- Limits the number of properties you have in your portfolio at any given time
- Forces you to manage the hassle of real estate purchases to grow.
Not only should you not have to deal with any of the above to see legitimate returns as an investor, but if you've been going about building your portfolio this way, you've been missing out on an easier option the whole time: DFW UPREIT investing.
How a DFW UPREIT Works for You as an Investor
If passive income is your 'why,' there is no better way to pursue your 'how' than using an UPREIT structure for passive real estate investing! If you want to enter the world of real estate, and don't currently have your own portfolio, you can tap into the diverse, profitable pool of properties managed by the UPREIT structure. Not only does this let you dive into investing hands-free, but you gain all of the benefits of an established portfolio—with higher returns.
A successful individual portfolio can really only offer you returns of 5-6%—and that's as high as your margins will ever reach on your own. Plus, that's assuming you have a successfully managed portfolio! If you're a seasoned investor who already has properties under your wing, you know how difficult it can be to reach those kinds of returns if you've saddled yourself with a bad investment here and there—or with an equally terrible renter. With the best DFW UPREIT offered by The Peak Group, you're looking at returns beyond that point, in the ballpark of 6-9%.
Now, if that doesn't catch your interest, then the option to earn tax-deferred income will! If you've been trying to diversify your investment portfolio as you've grown, you have some properties you're ready to offload, likely through a sale. However, if you do sell these properties and they've appreciated over time (one of the many benefits of real estate), you're likely looking at a hefty capital gains tax. This only grows if you happen to live in a state that levies additional taxes: we're talking pushing 25-30% of what you worked so hard to earn lost to taxation! Frankly, as investors, that's not okay with us: do those kinds of losses really seem acceptable to you?
If you agree that you should be able to keep more of what you've earned—while earning even more—then a DFW UPREIT is for you. If you're ready to learn more about the benefits of an UPREIT structure (we haven't even covered them all in detail here), then it's time to reach out to The Peak Group!
You can also learn more about how to leave the 'landlord' way of life behind using an UPREIT (or how to avoid getting caught in that trap from the start) by downloading our free ebook, Let Freedom Ring!
Posted by The Peak Group on August 13, 2020