Last week we talked about Why You Should Diversify Your Investment Portfolio into different asset classes and geographic markets. This week, before we talk about how to be an active investor, I want to say that being an active investor is not always the best strategy.

If you want to be an active investor, that’s great. Keep reading.

But, you may want to remain a passive investor, and find people you know, like and trust, to work on opportunities and give the time and attention they need. Honestly, that’s probably a smart thing to do.

Once you become active and are finding opportunities, you truly have to commit, and that’s not something you can do with a full-time job or business. Real estate is a competitive market, and you have to compete.

When you’re becoming proficient at one particular investment, you also have to have a team surrounding you who are equally proficient in that area. Not to say you couldn’t have a lawyer or broker who is proficient in other areas, but it sure does help to have those people and others like property managers, real estate agents and accountants who are experts.


Seven Aspects of Being An Active Investor

1. Have a business plan.

Will your business plan span various asset classes? Or, will it be focused in on one area?

If your aim is to be totally proficient (or at least close) in one area, you have to have a business plan in that area. This means being able to do the research and due diligence, and to set goals and accountability metrics.

This doesn’t mean you can not invest in different areas, but you’d be better off to do so with the experts in those areas — don’t try to be a jack or jill of all trades. This advice is for someone who wants to be the promoter or syndicator of opportunities.

If this describes you, consider what a lender may be looking for when you approach them. Think of the Four C’s:

  • Character: Have you paid your bills? Defaulted or filed bankruptcy?
  • Do you have the Capacity of expertise? This is impacted if you’re spread across multiple markets as a promoter.
  • Collateral: How much money and liquidity do you have? You can use other people’s collateral and liquidity.
  • What is your Credit Worthiness? Again, this is where you can partner with someone else who has the credit worthiness.


2. Find a lawyer who is proficient in your area of expertise.

For our self-storage project, we work with Leslie Gieger from Church Church Hittle & Antrim (CCHA) for contract work. Leslie is truly an expert in that area and knows the specifics of self-storage industry that an average attorney would not know. Leslie could absolutely set up a contract for a different asset class. I have no doubt about that. But, she is an absolute expert in self-storage and that is what makes her so invaluable to our team.

We also work with crowdfunding lawyers, Jillian Sidoti, Gene Trowbridge and Nancee Tegeder from Trowbridge Sidoti LLP who assure our syndications are properly structured.


3. Get a mortgage broker who understands your area of expertise and ideal lenders.

Someone who can find lenders for you is so helpful. We worked with a company out of Birmingham who helped us vet lenders who were specifically interested in self-storage. Being able to work with a broker who understands your market and can narrow in on potential lenders, is also invaluable.

We work with Gil Ferguson with InterFirst Capital out of Birmingham.


4. Find insurance providers specific to your asset class.

There are specific providers who will offer better insurance policies for your specific asset class.

For example, I am a pilot and need aviation insurance. Not every insurance company sells aviation insurance, just like not everyone sells insurance for multi-family or across state lines.

It is in your best interest to find insurance providers who can offer insurance in your particular asset, market, state or even country.


5. Make property management a priority!

It’s important that you work with a management company that is specific to your asset class. They might be local, regional or national, but it is great to have a property manager who understands your area of expertise and knows how to navigate your asset class.

The point is, you don’t want an apartment manager managing your storage facility.


6. Consider joining a mastermind/mentor group.

Again, look for a mastermind that is specific to your asset class.

There are plenty of masterminds geared towards very specific asset classes. It doesn’t make sense for me to be a part of multiple mastermind groups and spend all that time and money for an asset class or region I am not even operating in.


7. Consider finding a partner or someone to joint venture with.

Partnering can also mean a joint venture. A joint venture can be a one-off opportunity, and doesn’t have to be as committed and legally bound as a formal partnership.

I don’t technically have a partner, but I do joint ventures with others who are still working in the industry of medicine or dentistry. They have existing income and liquidity that I can tap into while they’re working. It is an excellent trade-off and opportunity for giving them a part of the project, rather than having nothing. It’s a win-win where everyone benefits.


Thinking about joining the world of real estate investing, either as a passive investor or an active one? Find out more by contacting us to gain wealth through education.

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How to Be An Active Investor
Considering alternative investing with real estate, you might have heard about passive investors vs active investors. Which is a better fit for you?