In this post I will try to make some order regarding investment groups.

#IzmahShavuot Efi Danieli, #Post4

Is this the right investment?
Is this the right investment for me?
What are the benefits?
What are the disadvantages?
If I only have $100K should I invest in a single property or join an investment group?
Who among us does not dream of passive income?
We will sit at home, the money will flow without having to work just because we did the right things and we will sit under the coconut tree in Thailand and make a cocktail out of a green coconut.
So can this thing actually exist?
There are some that this is definitely their reality.
But let's face it,
Most of us have some other mental and other obstacles, for example little things that need to be taken care of or not enough equity to be able to actually do it.
What are we doing anyway by adding passive income to our portfolio?
We change the equation time = money, that is,
Once we start putting in our sources of income
Incomes that do not derive specifically from the amount of hours we invest,
We start generating passive income for ourselves and work to build our financial freedom.
That doesn't mean we don't need to manage those sources of income,
We need to have our hand on the pulse and manage the investment in a regular and constant manner,
Verify the status of the investment, how much money is coming in and how the project is performing.
After investing on my own and together with many other investors
When buying private houses for rent, I noticed more and more cases
in which an investor who has purchased one house and maybe even two,
Encountered problems he did not know how to deal with,
True, I accompanied them all the way,
But the frustration every time a tenant stopped paying, or there was a large and unplanned expense,
Caused too many to be disappointed with the deal
And here I came to the conclusion that I am not interested in introducing people to this kind of investment
An investment in which they have to deal with the management company themselves and they don't have the abilities, the desire and the number of references to do it.
If you are an investor who is in the process of becoming an entrepreneur, planning to purchase more and more properties for yourself,
So it is possible that this is definitely the method for you, that way you will learn the best and you will also have a spread of risk if one asset does not function as it should then other assets can be a backup.
But if you have enough money for one or two deals, investing in a buying group would be much better
Why?
There are probably all kinds of investment groups, each entrepreneur chooses the mix, the area, the method, the distribution of profits, etc.
With your permission, I will refer here to the method in which we work in investment groups so that if it is not what you are familiar with, don't get angry? , this is simply our way.
So let's sort it out and list the advantages of private investment:
We own the property and have full flexibility with it
We are the only beneficiaries of the increase in property value
And on the downside:
We need to have all the money to buy the property
Any problem with the property affects us directly
There is no risk diversification - assuming and we have a limited amount of money of course
As non-US citizens,
It is more difficult for us to get financing on a single property
The second option is investing in a group of investors
In such an investment, there is an entrepreneur who locates the assets for investment,
building a business plan,
unites the group of investors
and takes care of the registration of all investors
As the owner of the properties usually under a joint company.
Such an investment can be in different types of assets
As in apartment complexes - the so-called multi-family,
portfolio of private assets,
buying land,
New construction
Or anything else that has an advantage for this type of investment.
The guiding idea is to have a larger amount of money
to reach a more attractive deal.
In that case, most of the time, we will actually have a percentage in the company
depending on the amount of money we invested.
We will be subject to the decisions of the group managers -
Of course in accordance with the business plan defined for the project
And we won't be able to do what we want with the property.
So what are the benefits of group investing?
Wider spread of risk.
The risk is actually spread among everyone and usually also includes several assets.
High equity is not required -
In most cases there is a relatively low entrance fee
An opportunity to enter into a larger investment than we would have invested alone
Passive investment, the entrepreneur will do all the work
What are the disadvantages?
The property is not exclusively ours
We can't get out of the deal whenever we want
You have to trust someone else to do a good job
So how do we know what is right for us?
I will try to give direction:
If I want to invest but don't want to deal with the current,
I am interested in net passive income -
I would be more suitable a group of investors
If I really connect to the field,
I am motivated to be involved
And I'm ready for frequent dealing with the properties
mine so private investment would be more suitable for me
How do the different transactions work?
What other types of deals with creative financing we do, about this and more in the next post