Being a lone ranger sounds fun but when you become an investor, there comes a time for you to join other likeminded people and work with them. Keep in mind that two minds are better than one, but multiple sources of investment are better than one too. Why bear all the risk on your shoulders when you could have other people join in with you?
That’s what Lior Babazara thinks is something a lot of new investors completely overlook when they start working as real estate investors. Lior Babazara is of the view that having a group of investors with you is one of the best ways to invest. How? Here is how he explained it.
Distributing Your Risk
That’s what makes sense the most when you are investing your funds. Lior Babazara says, “You will be surprised to know that some of the best real estate investors are people who invest very little of their money. They join hands with other likeminded people and believe in joint efforts. This way, they don’t have to take all the risk.” Do you think you can do the same? Do you have people around you who wish to invest in the same properties as you do? Are they interested in working with you or do you think you can convince them to work with you?
So, if a property costs $300,000, you don’t have to invest all of your money into it. You could have 5 more people with you and each person could invest $50,000 to buy a property of this value. When you make returns on your investments, you can distribute them accordingly.
Specializing in Certain Investments
As a real estate investment group, you will be pooling money to buy properties, but that’s not it. You can also define the vision of your group and make sure you follow it in your approach. For example, you can go with buying vacant pieces of land and selling them in the market. If you are believers of rental income, you can invest in properties that you can buy and then rent out. Do keep in mind that when you pool in your resources, you are not limited to pooling in only money. You have to pool in your skills, knowledge, and specialties as well. In other words, you can deploy different people for different jobs to manager your group efficiently.
You can always become a group that specializes in a particular type of investment. For example, rather than going for buying properties, you could invest in buying real estate debts. This means you could take over the responsibility of a lender and then collect monthly mortgage payments from the homeowner. Again, when you become a group, it means you all have the same vision or at least the same way of working.
Buying Highly Valuable Properties
It does not matter how many types of loans are available to you, they are still a liability. In other words, you have to take risks when buying properties through loans. But what if you didn’t have to borrow loans at all? While REIGs don’t work like crowdfunds, they do allow you to pool in funds and have a huge capital that you can use to buy highly valuable properties. In other words, you don’t have to be limited to residential properties. Commercial real estate properties can generate huge monthly incomes for you depending on the type of property you rent out. Think about renting out a property to a big fast food chain.
You can look at any other field or line of work and you will realize the working as a group makes a lot of sense. Lior Babazara thinks that it makes even more sense when you are working with a limited budget. Working as a group means you can combine your resources, aim for highly valued properties, and distribute your risks so you can make more active investments.