Individuals Play the Game, but Teams Beat the Odds.
Imagine owning 20 homes as rentals. You have twenty front doors, twenty AC units to make sure get serviced, 20 roofs that will need to be replaced at some point. That is also potentially twenty mortgages to pay each month as well! That is a lot of moving parts! As a single family real estate investor, you are often going it alone. You might cash flow $100 a month per house, but the bills add up quickly with that much real estate to be responsible for each month.
Now imagine you are a part owner to a property that has 50 front doors, maybe 50 units for AC, and only 10 roofs to worry about. As a part owner, you may not have to deal with all aspects of running a property of that size. You might have a partner that deals with tenant screening, another that handles the ongoing maintenance issues because they live close to the property, and you handle the paperwork side with book keeping and monthly statements for bills. Still a lot less work than going it alone, and potentially getting the same if not more cash flow each month. As a part owner you are also still responsible for the mortgage, taxes, insurance, and any unexpected large repairs that come up, but as a member of a team you aren’t shouldering that alone.
Let’s take that one step further! What if you could be involved in 500 front doors? Now instead of being a part owner, you are a passive investor. You are investing with thousands of other people in a few properties, maybe in different markets. As a passive investor, you get the benefits of ownership on your taxes, but you won’t ever get a phone call from a tenant. You will never have to worry about a major repair popping up at 2am. You won’t be screening tenants or worrying about tracking move out dates and scheduling showings of vacant units. That is the power of having a team behind you. As an individual, the only person there to do the heavy lifting (literally and figuratively) is you!
Many service members think real estate investing only has two options. They buy a home with their VA loan and then rent it out when they move on, or they sell it. They cross their fingers they can sell it for more than it is worth further down the road or hope nothing major breaks before it sells. Most of the time, if a service member buys a home for their family, they didn’t analyze if the property would even cash flow as a rental. They were looking at the large bedrooms or closets, the nice school district, or the fantastic, remodeled kitchen. Only when they go to move do they realize that having a property manager, mortgage, and maintenance costs end up costing them a few hundred dollars a month! That isn’t an asset at that point, that is a liability. It is pulling money out of your pocket every single month. That isn’t investing, that is losing money.
Most people don’t even know the option to be a passive investor exists for real estate! That is why Mission First Capital was created! To allow service members the option of investing in real estate without having to go through the process of direct ownership as a single person, and all the headaches that come with it. If you had a rental, replacing the AC unit alone could easily be $5000, which is the minimum investment in our Growth Fund. That $5000 new AC didn’t make your home worth $5000 more instantly. That is a sunk cost of owning a home, where as investing $5000 into the Growth Fund earns you projected returns of 25%, 50% or 100% depending on the hold time you choose. You might view owning single family rentals as investing in real estate, but does that method of investing suit your goals and strengths? Does it suit the capital you have available much less the time you have available to deal with that investment? Imagine what one late payment on a mortgage could do to your credit. That could jeopardize qualifying for a home in the future for your family at your next duty station. Owning single family homes as rentals can be a great strategy for investing, but realize the commitment in time and money that strategy takes. It isn’t for every investor. Passive investing in real estate, like investing in the Growth Fund, allows you to have that time freedom to let your money grow without the headaches of direct ownership. As you save more, you can invest more, and since you won’t have those unexpected surprises from a rental house, you can put that cash to work for yourself instead of sinking it into a home you don’t live in!If you would like to learn more about real estate investing, military life, family life, and all the ways the being an investor can help you. Join us on our Facebook group at https://www.facebook.com/groups/missionfirstcapital.