1) Do It Yourself

2) REIT (Real Estate Investment Trust)

3) Partnership

Today I’m going to talk about Partnerships…

PARTNERSHIP

This is where you either create a partnership or become an investing partner with other professional real estate investors who are investing in real estate.

A) Create your own partnership and do all the work

You find the deal, negotiate and manage it, and raise funds from friends and family. This is a lot of work for you and is a full-time job. Now, you aren’t just buying deals and managing them, you also have to do fundraising. Typically, you will pay them 6% to 10% on their investment, unless you have to get hard money loans that can cost 12% to 20% and then do some kind of split on the profits above those payouts.

B) Syndicator 

You invest money with a professional real estate investor who is basically doing (A) above and he raises money from others to buy and manage deals. The syndicator makes most of his money from fees. While the syndicator will also benefit from selling at a profit, the person investing in this model is typically less interested in the upside profit. The downside of this model is, the syndicator has to sell out of the property at a certain date in the future. While this is sold as a benefit to the investors it is actually a detriment in bad markets.

C) Partner on a Profit Sharing / Cash Flow Formula

This is what we do at Cardone Capital. This model is different from other investment models as it makes extraordinary deals available to ordinary investors. Investors partner with me on real estate deals experiencing all the benefits of real estate and ride as passive investors, experiencing all the upside of investing and none of the headaches.

Regardless of the ways you elect to get involved, if you learn the investing game, avoid the mistakes, do what I say, and never find yourself forced to sell in bad markets: you will make money.

Remember, there is a shortage of larger, affordable apartment complexes in America and this will continue to reveal itself over the next 30 years. Look around your city and count the number of 300 unit complexes that offer affordable rents.

This shortage will make the large, affordable, quality apartment complexes more and more valuable over time. As we move into the future, rents will rise in markets where there is job growth. Also, as we move into the future, inflation increases the cost to build, thus making it more difficult to build affordable apartments.

What you should know by now from reading this is: you must figure out how to get yourself in bigger deals. Small deals don’t work.

I have a buddy who owns 1,000 units on his own. I showed him some of the deals we are buying at Cardone Capital and he wrote me a check for $1.5 million on the spot. He said, “I can’t get these bigger deals, and the bigger deals are where the big returns are.” 

I will show you how, and more importantly, I will show you why you don’t want to do anything other than the bigger deals.

For more information on the three ways to invest in apartments pick up my book, “How To Create Wealth Investing In Real Estate.”

Interested in investing with Cardone Capital? Click here.

1) Do It Yourself

2) REIT (Real Estate Investment Trust)

3) Partnership

Today I’m going to talk about a REIT…

REIT

REIT (Real Estate Investment Trust). This is like buying stock or paper and is not investing directly into real estate. This is great for those who want the cash flow yield but don’t kid yourself this is not a real estate investment. And in fact, the IRS does not allow owners in a REIT any of the great tax advantages offered to owners of real estate.

A REIT is a company that owns, and in most cases, operates income-producing real estate. These companies own many different types of commercial real estate ranging from office and apartment buildings to warehouses, hospitals, shopping centers, hotels and timberlands.

There are equity REITs, mortgage REITs, Public Non-listed REITs and Private REITS. The two most popular are the equity and mortgage kind.

REITs were created in the United States in 1960 by President Dwight D. Eisenhower to give all investors the opportunity to invest in large-scale diversified portfolios of income-producing real estate in the same way they typically invest in stocks.

During the economic recession that started in 2008, REITS faced huge challenges from the downturn in the economy which depressed share values by 40 to 70 percent.

Most REITs operate along a straightforward and easily understandable business model: By leasing space and collecting rent on its real estate, the company generates income which is then paid out to shareholders in the form of dividends. REITs must pay out at least 90 percent of their taxable income to shareholders.

More than 80 million Americans invest in REIT stocks through their 401(k) and other investment funds.

Again, don’t be confused, this is not a real estate investment. You are speculating just like when you purchase stocks. In fact, that’s what you are doing, you are buying a stock. You are entrusting someone else with your investment and have no say in how it’s invested or have control over it.

For more information on the three ways to invest in apartments pick up my book, “How To Create Wealth Investing In Real Estate.”