In this informative video, the speakers will be exploring the differences between active and passive real estate investing and which one may be a better fit for you.
Real estate investing can be a great way to build wealth, but it’s important to understand the different types of investment strategies available to you.
Active real estate investing involves hands-on management of properties, such as purchasing, renovating, and renting out properties, while passive investing involves more indirect methods, such as investing in real estate investment trusts (REITs) or real estate crowdfunding.
Whether you’re a seasoned real estate investor or just starting out, this video will provide valuable insights to help you make more informed investment decisions.
So, sit back, relax, and join us as we delve into the world of real estate investing!
Transcript:
Chris Bounds 00:00
You mentioned a couple of different ways that you’re investing in real estate both actively. You’re actually buying properties, but also passively, which is through notes. Maybe even I don’t know if I can recall if you mentioned equity, as well.
Evan Compean 00:18
Yeah, that’s true.
Chris Bounds 00:20
Do you have a preference, especially in this market? Would you, if you had to choose one of those options, because of maybe limited resources. Would you prefer to actually be the active owner? Or would you prefer to be more of a passive equity partner, a limited partner or a hard money lender or like a private money lender?
Evan Compean 00:43
I think it depends on just your overall capacity. Like me, personally. I don’t mind jumping into like equity participation agreements, being the hard money lender directly, being the second lien holder on something and not the first lien holder, because I’m comfortable assessing the deal overall. But if there’s more limited resources, if you have 50,000-100,000, then that’s when you want to look maybe at buying notes instead, or you want to look at maybe just buying a rental property and maximizing that 100,000 and putting 20% down on maybe two properties, or three properties.
Depending on what it is that you can get. I think you definitely want to spread it across a few different things. But if you don’t have the bandwidth to really manage the tenants, then maybe just buying notes, buying a 50,000 or buying into a $50,000 note, or $100,000 note that maybe pays you 8%-9% and 10%. That can work out pretty well, because that’s going to possibly beat or very likely beat the appreciation rate in real estate for the next 12 months, 18 months, maybe even 24 months. You have that there to kind of gain from.
I would do that if there was more limited resources, but I would definitely also consider real estate if there was the right opportunity, and now there’s even fractionalized investing that you can do in real estate, if you only have 100 bucks. But let’s say you have 1,000, 10,000, you don’t necessarily have to buy a note or real estate, you can get into fractionalized investing.
Chris Bounds 02:26
Yeah, Amazon’s moving into the hot and heavy too. We’ll see where they go with it. It’s definitely interesting. How do you see over the next, say 12 months. You mentioned, a lot of people are holding cash from the real estate investor circle. We’ve heard this doomsday scenario for I’ve heard it for years, probably the last four years. It’s gonna crash, gonna crash. And then COVID happened to like, oh, it’s gonna crash and it did the exact opposite.
Now we’re we’ve got the interest rates of more than doubled over the past few months. For 30 year mortgage. It’s kind of crashed. We keep hearing that. That has not happened. We are seeing a slowdown. That’s on paper. But where are you actually seeing, do you see just normalization, are you seeing where there potentially could be crashes, or maybe even certain sub market crashes?
Evan Compean 03:25
I think sub markets, but only because they were extremely inflated to begin with. It wasn’t during COVID, you have certain markets, not necessarily Houston but not even maybe necessarily Austin. Austin is very inflated, but other markets that really just peaked and inflated at a very fast rate at way outside any type of normal person.
Chris Bounds 03:49
Phoenix Home that normally would have been 500,000 that was going for eight to year periods or something like that.
Evan Compean 03:57
Those types of markets, I can definitely see a crash in that, but only because it’s somewhat normalizing because you did. You left the parameters of normal growth for a while. It’s not like 2008, where even the run up there before 2008 wasn’t like the run up during COVID. Now we don’t have any of those dynamics that we had during the great recession with just the underlying mortgages and adjustable rate. All these other issues that really came to play and just really doom the whole housing market. I don’t see a housing crash coming up. I do see normalization.
I do see like you said some sub markets crashing but again, kind of quote unquote crashing. I think most of the markets which is going to come down a bit. I don’t necessarily think most markets are going to see pre COVID levels. I do think we’ll come down from those highs because they were very inflate. It wasn’t a normal market and quite honestly, we never should have ever had 2.5% interest rates. That’s what really threw at us. We should have never had that.
That was just a bad thing that happened to our market. People took rightfully advantage of it because it’s what was out there. What were you going to do, but it just should have never been an option to have those types of rates under 3%. It’s just crazy. It’s free money, basically.
Chris Bounds 05:28
Free money and for those who got it, they’re probably not selling anytime.
Evan Compean 05:33
They’re not.
Chris Bounds 05:34
Why would they exactly.