5 Questions Every Passive Real Estate Investor Should Ask

Investing passively allows you to leverage your capital with an experts time and energy. But with this being said you are putting a lot of trust into a real estate operator. These investments almost always solely rely on the operator, so its important to do your due diligence on making sure that this operator or even this specific deal is the right one for you. Whether you are an experienced investor or a new investor, these are questions you should be asking a real estate operator or "sponsor" prior to making an investment with them. 1. What is your background or current state of business? The objective behind this question is to evaluate whether the company has a running track record of success. You also want to determine if this company has stumbled across favorable market conditions and have been lucky in choosing what deals to go after, or have been able to weather poor market conditions and still have shown success.

2. Can you provide professional referrals to verify your claims? Contacting previous investors is super beneficial in understanding how operators and sponsor treat their investors. It also helps you understand the companies overall reputation and if they have had success in syndicating deals.

3. Do you have the bandwidth for this project? Do they have systems and infrastructure in place that can handle not only the deal your thinking of investing in, but deals that they will work on while still efficiently running the most recent deal. The way real estate operators work is often times in volume. They want to do as many deals as they can. Great for them, but is the deal your investing in going to get neglected?

4. Do you actually own the properties you claim to own? Anyone can simple state that they own X amount of real estate, but are they telling the truth. Try pulling a report on a few of the properties in the operators track record. You can then verify whether they are actually showing you real results when they are pitching you case studies or talking about their previous deals.

5. What's your Gut telling you? At the end of the day you can only be as satisfied with what your instincts are telling you. Try understand what the morals and mission of the operator is, or to simply just like and trust the company or people you are investing with. This can go a long way. You will have a hard time feeling comfortable investing in a deal if you don't like who you are investing with. In the end, do your general due diligence. Some of these questions can open up to a broader line of questions or answers that will make you feel confident when investing. When it comes to investing your hard earned money there's no such thing as a stupid question. So if you want to gain a better understanding of something, just ask. Most sponsors are happy to answer any questions you might have. If you are looking to invest or want to learn more about how you can invest in Multi-Family Real Estate please click the link below and fill out your email. We will reach out to you shortly after!