I paused, mid-bite, during a casual lunch with my friend. His question came out of the blue, and it stumped me.
I asked him what he meant. Did he think I was trying to sign him up to Amway?
“Lennon, you are always so excited — talking about this ‘multifamily’ stuff. I don’t get it. What exactly are you selling?”
At first I wanted to say I’m not selling anything. I’m just giving people the opportunity to invest.
But I could see that he was asking an honest question.
And the more I thought about it, the more I realized this was an essential question to answer for anyone looking to participate in a syndication.
To do that, we should compare multifamily deals with other forms of real estate.
Passive VS Active Real Estate
Let’s use one of my properties in Jacksonville as an example. 138 units, B Class Value-Add (so a lot of the projected returns hinged on upgrades).
It’s not so “passive” for my team.
A few days before this lunch, my partners and I were down there talking to contractors, surveying the interior and exterior renos, taking time away from our families.
But don’t get me wrong. I feel very blessed to have these opportunities and to work with such a great team. Actually, I have to admit, I get pretty jazzed up when we are out taking care of business for our tenants and investors.
So when I thought about that trip, and the progress we made on our business plan, and the fact that we’d have to make several more of these trips over the holding period… I realized the answer to my friend’s question.
We are selling Freedom.
And I don’t mean in a woo-woo, close your eyes and picture success type of way.
You want to find a way to put your money to work. The goal is attractive returns, and mostly from solid conservative investments.
But you can get that from other forms of real estate, too.
For instance, my family got into real estate by owning and personally managing a small apartment building. And as we slowly became aware of the syndication world, we asked other small rental property owners for their opinion.
A lot of these people claimed they wanted to take care of business on their own.
They didn’t like to delegate. They said things like “I have to be able to see the building every day, to touch it, so it feels real.”
Also, historically, the commercial real estate space was only accessible to major institutions or the ultra rich.
In many ways, most landlords had blinders on and just couldn’t imagine dealing with large multifamily properties.
And yet now we can take advantage of the access to the multifamily market, and operate at great economies of scale.
So when I look at what Passivo REI offers to its passive investors, I see:
- freedom from scouring for under-valued properties
- freedom from sweating through emergency repairs
- freedom from having to manage the company that is supposed to be managing your property
- freedom from needing to be there in person at all (since time is your most precious resource)
Real estate may be the vehicle, but Freedom is the asset we are selling.