The following Q&A was completed as part of our conversational Commercial Real Estate FAQ Interview Series, we hope you find it helpful.
For a passive investor getting started in multi-family investing, it’s important to know investing techniques and be aware of the landscape before making your investment. The best thing a passive investor can do is get educated on the market, investment techniques, and what they can do to maximize or optimize their investment. The more you know about the field of real estate investing, the more successful your efforts are like to be.
Richard Wilson: And in case anyone missed it, at the very beginning of this interview series we talked about a book that Brian wrote, and if you haven’t read that yet related to due diligence, just being a passive investor I think it’s a critical resource just to make sure that you don’t run into something or invest with someone and not have a basic lay of the land since we don’t have time to go super deep on due diligence here in the middle of this interview series here. How does a passive investor get started in multi-family investing? What would be your recommendation for putting their toe in the water?
Brian Burke: My first recommendation is to get educated. So, I guess if that’s a shameless plug for the book, read the book because it will tell you how to do your due diligence on sponsors and on their offerings. But really it’s to get educated and the more you know about real estate, then the better position you are to evaluate what the sponsor is showing you to ensure that their assumptions are reasonable, that the business plan makes sense, and that they’re not fluffing the numbers. Those are the big things that really come back to bite you oftentimes in a passive real estate investment. I like to always say that you don’t need to know how to build a house because you’re going to build a house, but you at least need to know how to be a building inspector, right? And this is that same kind of a thing, be the building instructor – you have to know some kind of construction techniques to be a building inspector, same thing here. You have to know some investing techniques and principles even if you’re just going to be a passive investor.