About the Episode: Passive Real Estate Investing & Real Estate Syndication
In Episode 15 of Creek Side Chats, Spencer opened up about his personal life and discussed in length about passive real estate syndication and real estate investments.
In his personal life, Spencer faced challenges as a young child and he says it affected his perception of the world and how he wants to live.
He had to watch his dad become successful and then downsize after the passing of his younger brother, followed by his parent's divorce. He says with the midst of everything he did not notice that he was soaking up all that knowledge about real estate and entrepreneurship. He mentions and even today while doing business and negotiation he can hear his father's voice inside his head.
The downfall of his family's livelihood has left a profound mark on him about what it means to have a stable and predictable income, leading him to think about his life. After becoming a father he started thinking about how he can avoid a financial disaster. He mentions having worked in the tech business in Silicon Valley for 13 years. During this time, it did not feel very stable and predictable to him.
Spencer says he now appreciates the difficulties he had when he was younger because it helped him develop a financial defense. He mentions he and his wife, Jennifer, also his cofounder hold 2 principles very close to their hearts: financial offense and financial defense.
When he was working in Silicon Valley he thought to himself that having this lucrative income from tech companies was not sustainable. He asked himself, "What if I can't provide for my family one day?"
It wasn't until 2015 when he was at his software company and he had his first son that he realized he was working really hard, 80-100 hours per week. He was stressed and burnt out, all for an income that was not sustainable.
Spencer mentions his goal was financial freedom and he was able to achieve it through multifamily investments!
Find the full podcast episode of Creek Side Chats with Successful Real Estate Investors here.
Passive Real Estate Investing is ideal for busy professionals who want to invest in real estate without the hassles that come with it. Listed here are a few ways to get passive income from real estate:
Real Estate Syndication
Syndications like Spencer’s are essentially a group of people pooling their money to buy a piece of real estate. The syndicators, operators, or sponsors (the company or persons conducting the syndication) identify a deal, put together a business strategy, and obtain money from investors to support the venture. They then oversee the transaction and distribute funds to investors in accordance with the conditions of the agreement. These opportunities typically pay out distribution fees on a monthly or quarterly basis which is essentially generated by the cash flow of the project.
Real estate funds
Real estate funds are mutual funds that specialize in investing in real estate. REITs (Real Estate Investment Trusts) are popular among real estate funds. They also have some advantages that may be appealing to passive investors. They provide more diversification, which is supposed to lower risk and increase return potential.
Commercial buildings, such as residential units, offices, retail, and land, typically make up a large amount of a real estate fund.
Real estate crowdfunding is exactly what it looks like: a collection of investors banding together to buy commercial properties, apartment buildings, and single property assets.
Real estate crowdfunding, which is mostly handled and performed through internet platforms, allows you to own a share of a profitable building or cluster of homes with just a few clicks on the screen.
REITs are similar to mutual funds, but they only invest in real estate.
REITs provide passive investors with ownership holdings in significant real estate transactions without a high barrier to entry, like crowdfunding. But they differ from crowdfunding in that their portfolios feature a diverse choice of properties all at once, rather than individual homes to choose from.
Passive real estate investing includes many options and which one you should invest in depends on your goals and preferences. If you're struggling to decide how and where to begin, Madison Investing can help you figure it out!
The company offers a hassle-free, hands-off approach which is the best version of passive investing! And with their professional help, you can improve and diversify your investment portfolio.
Listen to Spencer’s inspiring story and deep dive into passive real estate investing on this episode of Creek Side Chats.