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Buying real estate for short-term or long-term rentals is buying yourself a second job. If you want something more passive, consider investing in several diffe

Buying real estate for short-term or long-term rentals is buying yourself a second job. If you want something more passive, consider investing in several different real estate syndications. You can find them on CrowdStreet or FundRise although I believe you will get into better deals if you join a local investor group and learn from the experienced members. If there isn't a group near you, I'm enjoying participating in www.506investorgroup.com This style is probably only practical if you already have a net worth of at least $1m. The best book I've found is Investing in Real Estate Private Equity by Sean Cook. I think it is reasonable to expect a diversified portfolio of real estate syndications to return 10-15% annually although it will be bumpy and your money will be locked up for years.

dangus 5y ago
Sincere question: why is this better than going with the vast array of mutual funds and ETFs available? Is it the return rate? Something else? It seems like your typical ETF or mutual fund is easier to get into and get out of, just a few clicks on your brokerage of choice. Your answer brought up the obvious general answer: the only way to make passive income from investments is to already have a lot of money. To me there's a point where the method of investment almost seems like an irrelevant detail.
- chillacy 5y ago
  I looked into syndication and commercial real estate earlier this year. My primary motivation was to diversify my holdings. I ultimately bought a house where I could rent rooms out on airbnb or to renters instead of going with a syndication. The main factor was getting leverage: a 30 year mortgage at 2.8% APY is basically free money. Airbnb is not passive, but I look at it this way: I'm going to live in a house anyways, I might as well get into the business of living.
  - reasonabl_human 5y ago
    This is what a lot of folks are missing- real estate investment returns aren’t necessarily higher than other vehicles but the leverage is awesome.
  - dangus 5y ago
    The leverage makes a lot of sense. I do assume you can’t just take out a loan to join a syndication, but lots of people rent duplex units and vacation homes as you describe. Thanks for the answer!
- HockeyPlayer 5y ago
  You are correct that an ETF can provide similar exposure with much better liquidity (ease of getting in and out). A few possible reasons to go private: a) smaller and more entrepreneurial operators can produce better returns b) capturing the illiquidity premium.
mattmanser 5y ago
I knew a person running one of these in the UK. It was basically a massive con, where the investors took all the risk and he took all the profit. So buyer beware.

dangus 5y ago

Sincere question: why is this better than going with the vast array of mutual funds and ETFs available? Is it the return rate? Something else? It seems like your typical ETF or mutual fund is easier to get into and get out of, just a few clicks on your brokerage of choice. Your answer brought up the obvious general answer: the only way to make passive income from investments is to already have a lot of money. To me there's a point where the method of investment almost seems like an irrelevant detail.

chillacy 5y ago
I looked into syndication and commercial real estate earlier this year. My primary motivation was to diversify my holdings. I ultimately bought a house where I could rent rooms out on airbnb or to renters instead of going with a syndication. The main factor was getting leverage: a 30 year mortgage at 2.8% APY is basically free money. Airbnb is not passive, but I look at it this way: I'm going to live in a house anyways, I might as well get into the business of living.
- reasonabl_human 5y ago
  This is what a lot of folks are missing- real estate investment returns aren’t necessarily higher than other vehicles but the leverage is awesome.
- dangus 5y ago
  The leverage makes a lot of sense. I do assume you can’t just take out a loan to join a syndication, but lots of people rent duplex units and vacation homes as you describe. Thanks for the answer!
HockeyPlayer 5y ago
You are correct that an ETF can provide similar exposure with much better liquidity (ease of getting in and out). A few possible reasons to go private: a) smaller and more entrepreneurial operators can produce better returns b) capturing the illiquidity premium.

mattmanser 5y ago

I knew a person running one of these in the UK. It was basically a massive con, where the investors took all the risk and he took all the profit. So buyer beware.