#1 You Have More Than $50K of “Play” Money
While there are some real estate investment platforms that will accept smaller investment amounts, most private real estate transactions begin at a minimum investment of $50,000. Ensure you have the minimum investment of $50,000, plus your standard emergency fund, plus any other savings for your life’s aspirations. Think about it – a new car, fluffy retirement savings, this year’s vacation to Cabo, and college education funds, to list a few. Of course, there are lots of contingencies in place in our transactions, but if you aren’t prepared to lose your investment in its entirety and be okay financially, then this may not be your jam…yet. You might want to head back to the drawing board with some serious savings plans and re-visit real estate transactions in a year or two. On the other hand, if you have all the potential cash-needing scenarios covered with stacked savings, by all means, invest with confidence!#2 You’re Okay Having Someone Else Take the Reins
If you’re short on time, but heavy on cash, and want someone else (a professional team) to manage the property while you reap the rewards, you’ve found the right investment. Passive investing in real estate is much less hands-on than your typical residential real estate rental property, in fact, you’ll probably never see the property in person and won’t be involved in any day-to-day decisions. You don’t have to be in contact with the broker, monitor the property manager, or receive and decipher between contractors’ bids. Instead, you get a few emails, sign a legal doc or two, and carry on with your life while the checks show up. As a passive investor, you’re a passenger on a plane ride. So, sit back and have a cocktail.#3 You’re Looking for a Long-Term Investment
Maybe you’ve done your research and know not to look for some get-rich-quick scheme, but rather, are interested in a steady long-term approach to wealth. Unlike stocks or something you can flip in the two-year range, real estate typically has a hold period for five or more years. If you’re more of a set it and forget type investor, and can plan for your investment capital to be unavailable for long periods of time, passively investing in real estate may be your new obsession.#4 Sharing Returns In Exchange for Less Work is Attractive to You
Fix-and-flips and standard rental property approaches to investing allow 100% of the profits in your pocket. Mostly because they are smaller deals, require plenty of sweat-equity, and often have only one party (you) financing and managing the deal. Commercial real estate is completely different as there could be hundreds of individuals involved, thus some profit sharing. Usually, the passive investors get the larger portion of a 70/30 or 80/20 split, with the general partners getting the smaller percentage. Group investments like this take a “team” or collaboration mentality versus a competitive mindset. The general partners are actively managing the property, making decisions toward renovations, and handling marketing and financial reporting. So, it only makes sense that they are rewarded for their efforts. If profit sharing and the concept of “a rising tide lifts all boats” makes sense to you, you’re in the right place.#5 You Don’t Need the Money for a While
It’s possible you’re in a season of life where your kids’ vehicle purchases or college decisions are either several years in front of or behind you, that you’re in a home that doesn’t need a massive kitchen renovation, or just that you have spent some time planning well, establishing savings accounts, and minding your expenses. If this is the case, you also likely met the criteria in #1, and you are going to be okay having your money “locked up” for a bit. You’ve worked hard to save, budget, and build a little nest egg, and you’re just looking for somewhere to park it for a few years with the possibility of earning some interest. Not needing your savings for the foreseeable future is a fantastic feeling, and if this describes you well, investing passively in real estate might pique your interest even more after realizing how well-positioned you are for this type of investment opportunity.Recapping Real Estate Investment Opportunities
You’ll love being able to invest your money in real estate without the hassles of being a landlord all while having the chance to invest with different sponsors in different markets and different asset classes. Plus, the tax benefits (and sometimes even the returns) from passive investing can surpass those from personal rental properties. But, being a passive investor isn’t for everyone. So, if you…- Have more than $50k of “play” money
- Are okay NOT having an active role
- Are looking for a longer-term investment
- Find collaboration and sharing returns attractive
- Want to park your cash for 5+ years
FAQs – Are Prevail’s Real Estate Opportunities Right For You?
Prevail’s opportunities are designed for investors who want passive exposure to commercial real estate, have sufficient investable capital, and are comfortable with long-term, illiquid investments managed by a professional team.
No. Passive real estate investing is not suitable for everyone. Each investor has different financial goals, risk tolerance, timelines, and life circumstances that must be considered before investing.
Most private real estate transactions typically require a minimum investment of $50,000, in addition to maintaining emergency funds and other personal savings.
Because private real estate investments are illiquid and carry risk, investors should ensure they have sufficient cash reserves beyond the minimum investment to cover emergencies, major life expenses, and potential losses.
Yes. Although transactions include contingencies, investors should be financially prepared for the possibility of losing their entire investment and still remain financially stable.
Passive investing means investors are not involved in day-to-day property operations. Professional teams manage acquisitions, renovations, operations, and reporting while investors participate financially.
No. Passive investors do not manage properties, interact with brokers or contractors, or oversee property managers. Their role is limited to reviewing communications and executing required documents.
Passive real estate investments are generally long-term, often with holding periods of five years or more, during which investor capital is not easily accessible.
Typically, no. Passive real estate investments are illiquid, meaning funds are generally locked up for the duration of the investment.
Returns are shared among participants. Passive investors usually receive the majority of profits, often structured as a 70/30 or 80/20 split, with general partners receiving a smaller share for managing the investment.
General partners actively manage the investment, oversee renovations, handle operations, marketing, and financial reporting. Their compensation reflects their ongoing responsibilities and risk.
Yes. Commercial real estate investments involve multiple participants and require a collaborative, team-oriented approach rather than individual control.
Investors who have surplus capital, do not need immediate liquidity, prefer a hands-off approach, and are focused on long-term wealth strategies tend to be best suited.
Yes. Passive real estate investing can provide tax advantages, and in some cases, tax benefits and returns may exceed those of personally managed rental properties.
That’s okay. Real estate investing is diverse, and other approaches—such as more active investing or more liquid assets—may be more appropriate depending on personal goals and timelines.
“All investments involve risk, including loss of principal, and returns are not guaranteed.”
