How Many Hours Do Real Estate Investors Work?

by | Apr 17, 2024 | Accredited Investor, BAM Blog, Blog, Real Estate Investing | 0 comments

Real Estate Investors, How Many Hours Do They Work

Historically, real estate has been considered a solid investment because of its potential for appreciation and ability to generate rental income. Real estate investments can also provide diversification to an investment portfolio, even acting as a hedge against inflation.

Multifamily properties in particular, such as apartment communities and condominiums, are known for their strong cash flow that creates opportunities for passive income. Investors have many ways to reap these benefits as there are plenty of real estate investing strategies available. You can buy and hold properties, invest in real estate investment trusts (REITs), etc. [1]

But despite its reputation as a source of passive income, the reality is that it is far from “passive”—especially in the early stages of investment. While it certainly offers the potential for significant rewards, it also demands dedication, effort, and time.

In terms of the specific number of hours real estate investors put into their work, it can vary widely depending on their investment strategy, the stage of their investments, and their level of experience.

The Myth of Passive Income

Before we take a look at how much time investors put into their real estate investments, let us first dispel the myth that real estate investing offers complete passivity.

The promise of generating ongoing revenue streams without active involvement can seem like an attractive idea. However, the traditional method of buying a real estate property and becoming a landlord takes a lot of effort. So even though it is a good source of passive income, it is not a true passive investment. [2]

Contrary to popular belief, not many investments in real estate can achieve this level of hands-off involvement. Being a landlord requires significant upfront work and ongoing management. It also requires a deep understanding of market dynamics.

One of the primary misconceptions surrounding passive income in real estate is the extent of initial work required to establish a profitable venture. Acquiring suitable properties, conducting thorough market research, negotiating deals, and arranging financing all demand considerable time, resources, and expertise.

Additionally, the responsibilities do not end once the properties are acquired. Effective property management, maintenance, and tenant relations are all essential ongoing tasks. In fact, most real estate investments require active engagement. [2]

Initial Research and Education

In general, real estate investing demands varying degrees of time commitment depending on the investor’s strategy, portfolio size, and level of involvement.

For aspiring real estate investors, the journey often begins with extensive research and education. Learning about different investment strategies, financing options, legal considerations, and property management techniques is essential to an investor’s long-term success. This is a part of the process that you cannot skip over.

Most investors conduct thorough market analysis before purchasing or selling an investment property. This helps them understand the current market, figure out how much similar properties are worth, and how much to charge for rent, among other considerations. [3]

During the initial research and education phase, investors typically dedicate significant hours learning the ins and outs of real estate investing. They read books, attend seminars, network with professionals, and scour online resources to gain a comprehensive understanding of real estate principles and strategies.

No matter what strategy you pursue, whether it’s in real estate or not, this will be something you need to do. Successful investors recognize the importance of laying a solid foundation of knowledge before diving into transactions. This groundwork ultimately informs all their investment decisions and helps them avoid unnecessary risks.

Property Sourcing and Due Diligence

Once investors have a solid understanding of the market and their investment goals, they can start looking for properties and conducting due diligence.

Investors spend a significant amount of time reviewing property listings, visiting properties, assessing market trends, and evaluating their potential for profitability—all to help them make the right decision. They may also take some time to consult with real estate professionals such as agents, attorneys, and inspectors. [3]

Some even dedicate a full-time schedule to property sourcing and due diligence.

There are several reasons why real estate investors take the time to do all of these tasks. It helps them figure out if they should invest in one city instead of another. They can also identify which factors can help or hinder their investment in certain places. By taking all of these factors into consideration, they can gauge the safety and profitability of a prospective investment. [3]

Acquisition and Financing

During the acquisition phase, investors typically devote numerous hours to securing financing, which involves its own set of tasks. They need to prepare loan applications, meet with lenders, and consider different funding options.

Given the intricacies involved, investors may find themselves investing substantial time in these activities. It’s normal for real estate investors to exceed the traditional nine-to-five schedules.

Successful real estate investors understand the importance of dedication. This is why they are willing to commit significant hours to ensure the success of their acquisitions.

Property Management and Maintenance

Once the properties are acquired, the work doesn’t end there. Investors must actively manage them to ensure that the properties are performing optimally and generating the desired returns.

Being a landlord means having to find and screen tenants, collect rent, handle maintenance requests, and address any issues that arise.

Keep in mind that property management can be outsourced to professionals. Property management is the daily oversight of a real estate property. A property manager handles all of the day to day operations of the apartment community or condominium while maintaining the property’s value. [4]

However, many investors choose to stay actively involved because hiring a property manager is an extra expense that can eat into their profits.

Investing in a multifamily property can justify the decision of hiring a property management company. This is because apartment communities have several units that can generate a strong and consistent cash flow. [4]

Of course, if you choose to become a landlord, the number of hours you have to dedicate to this endeavor will depend on the size of the property, the type of real estate, the number of tenants, etc.

It goes without saying that property management and maintenance tasks demand a considerable time commitment. This can be very challenging if you have no experience being a landlord.

Flexibility and Lifestyle

One of the most appealing qualities of real estate investing is the flexibility it offers. Unlike traditional nine-to-five jobs, real estate investors often have the freedom to set their own schedules and work on their terms.

Some may choose to dedicate full-time hours to their investments, dedicating 40 hours or more per week to scouting properties, conducting market research, negotiating deals, and overseeing property management.

Meanwhile, others may pursue real estate investing as a part-time endeavor alongside other commitments. They balance their investment activities with other professional pursuits. While it is not a passive investment, you can still make it fit with your lifestyle preferences.

And while certain aspects of real estate investing may require intense time commitments, investors often have the autonomy to structure their schedules around their priorities.

Enjoy the Benefits of Real Estate without the Time Commitment Through Multifamily Syndication

While real estate can offer passive income and potentially help you pave the way towards financial freedom, it still takes a lot of work to reap all its rewards. Those who are willing to put in the work can enjoy some substantial rewards. This is what makes it such a fulfilling and lucrative endeavor.

The number of hours real estate investors work can therefore vary widely. It depends on the investor’s strategy and their personal preferences.

If you happen to be an accredited investor, there is another option available to you that is a true passive investment in real estate. You will still have to do your research and conduct your due diligence—but other than that, it is a completely passive approach that still lets you benefit from owning real estate.

This approach is called real estate syndication. It is a real estate investment strategy that involves pooling the financial resources of multiple investors in order to acquire a single real estate property. [5]

This approach can be done with any type of real estate. But because of the strong and predictable cash flow of multifamily properties such as apartment communities, multifamily syndication is the most popular among investors.

This lets you enjoy the benefits of owning an apartment community without having to worry about the responsibilities of being a landlord. It’s the perfect alternative option because unlike traditional real estate investing, it doesn’t require a significant time commitment.

Unlike single family properties, multifamily real estate properties are not heavily impacted by vacancies. The cash flow does not stop even if one or two tenants leave. This is because there are several other units generating a steady stream of income. [5]

Investors love multifamily syndication because it makes these larger properties more accessible to them. Normally, apartment communities are too expensive for lone investors. Purchasing a large multifamily property on your own is also very risky.

But with multifamily syndication, you only have to worry about your share of the capital, rather than the entire thing.

In a real estate syndication, investors serve as limited partners (LPs), and their responsibilities and liabilities are also limited. They only have to provide a portion of the capital needed to purchase the property and pay certain fees to get the syndication going. After that, they can just sit back, relax, and enjoy the cash flow. [5]

It is the syndicator or sponsor who puts the deal together and takes on most of the responsibilities in the syndication. Serving as the general partner (GP), they handle everything from locating the investment property to finding accredited investors who will participate. The syndicator creates and executes the business plan.

The best part is that the syndicator also takes care of property management. They will either handle it themselves or hire a third party property management company. Either way, the investors do not have to worry about being a landlord. [5]

For their investment, the investors earn a share of the property’s cash flow. Every deal is different. Investors may also earn a share of the equity upon resale depending on the deal structure.

As an investor, you still need to do your due diligence and review the syndication agreement before joining a syndication deal. This will help you understand the syndicator’s plan for the investment property.

Just remember that no investment is without risk—and that also applies to multifamily syndication deals.

This is why syndication deals are typically exclusive to accredited investors. Even though there are multiple investors involved, it still requires a significant amount of capital. These deals also tend to last for several years, so real estate investors should be comfortable with a bit of illiquidity.

Work With BAM Capital for the Best Multifamily Real Estate Syndication Deals

If you are an accredited investor and you are interested in adding multifamily real estate to your investment portfolio, it is important to work with a trustworthy syndicator.

Because this is a passive investment, investors should be comfortable with taking the backseat when it comes to investment decisions. It is the syndicator who makes all the decisions in the investment, so you need to do your due diligence and find a syndicator with a track record for excellence, such as BAM Capital.

BAM Capital is an Indianapolis-based syndicator that is trusted by accredited investors because of their award-winning investment strategy. BAM Capital prioritizes high quality multifamily real estate properties that are Class A, A-, and B++, with proven upside potential and in-place cash flow. They then use their strategy to mitigate investor risk while creating forced appreciation. [6]

With over $700 million AUM and 5,000+ units, BAM Capital is considered a leader in their industry. As a vertically-integrated company, they can handle every step of the syndication process. They can guide you through the whole thing: from acquiring the property to managing it. [6]

No investment is without risk. Make sure to consult your investment advisor or speak to a BAM Capital investment team member before making any financial decisions.

For accredited investors who want to enjoy the passive income and all the other benefits of being in a multifamily syndication, schedule a call with BAM Capital and invest today.

 

Sources:

[1]: https://www.rocketmortgage.com/learn/benefits-of-real-estate-investing

[2]: https://www.kiplinger.com/real-estate/real-estate-investing/604767/the-myth-of-passive-real-estate-investing

[3]: https://www.questionpro.com/blog/real-estate-market-analysis/

[4]: https://www.investopedia.com/terms/p/property-management.asp

[5]: https://multifamilyrefinance.com/apartment-investing-blog/multifamily-syndication#important

[6]: https://capital.thebamcompanies.com/