What is the best way to make a passive income in real estate?

Good Question!

The best is to be a limited partner in a large multifamily apartment complex where the general partner is an experienced apartment complex investor that has a decade or more of experience buying apartment complexes.

The best is apartment complexes by far. They generate far more cash flow. However, since you are new to apartment complex investing it is critical that you invest only in large apartment complexes and don’t make the mistake of buying a small multifamily apartment complex and getting a property manager to manage it for you.

The best deals in multifamily are on larger multifamily units with more than 100 units. These have on site management teams and perform better. Also the general partners putting these deals together are some of the sharpest and best investors in the business. They often have many years experience in apartment complex investing.

You need to find an experienced apartment complex investor that has a long history of buying apartment complexes. Ideally this investor already owns hundreds if not thousands of units.

Let’s say the apartment complex investor is going to buy a 30 million dollar apartment complex and he has already gone to the bank and secured a loan for 20 million but he still has to raise 10 million for the down payment and capex budget. The general partner will raise some or all of this 10 million by letting multiple limited partners invest in his deal. Each limited partner might invest 100,000 to 1,000,000 to raise the 10 million needed.

The beauty of this is once you invest you don’t have to do anything and typically in 3 to 7 years you get your money doubled. During the holding period you also typically get distributions depending on how the deal is structured.

It is much easier than getting on the front line with tenants and toilets or trying to have a property manager interface with you and the tenants. Most people are not aware this option exists.

You do have to know an apartment complex investor that is buying a large multifamily. These sorts of investors already have a base of investors they work with so you want to find them and approach them in the right way where you let them know you like what they are doing with investing in these other apartment complexes and you hope on their next deal they will let you invest.

I hope that helps and good luck with your investing!

Benjamin Z Miller
www.benjaminzmiller.com