Real estate investing can be a tremendous tool for building your wealth. If you’re considering becoming a passive real estate investor, you’re probably looking for examples of passive real estate investing that you can learn from and be inspired by. Here we outline three passive real estate investing examples that present various opportunities to achieve investing success.
These passive real estate investing examples cover:
The Governor's residential community in Lewes, DE is an example of a new residential development passive real estate project. The secrets to success for this project involve a number of factors including careful planning and expert execution. The most important consideration for a project of this type is a complete understanding of the supply and demand dynamics of the local market.
In our early planning process, we look for markets that are experiencing population growth and other socioeconomic tailwinds creating an increased demand for high-quality housing. Often, areas that we invest in have factors contributing to growth including an attractive tax climate for retirees and an attractive regional lifestyle such as coastal areas. We also are careful to vet areas to ensure that the market and specific target segment is underserved with a shortage of supply. In most cases, there aren’t direct competitors offering the type of unique living environments that we deliver and we commonly find that the competitive set of new housing is commoditized and uninspiring.
When we decide to invest, we ensure that we leverage our unique ability to identify and access prime-located land. Our developments are crafted to command a premium by being of a much higher caliber than the alternatives in the market.
A critical element in the development of successful residential real estate projects is to create communities people are proud to live in by including unique physical features and attributes such as:
When you get the supply and demand equation, the market analysis, and the product delivery right, you’re far more likely to achieve the intended returns for your passive real estate investment.
The South Gulph Road Office acquisition is the second passive real estate investing example we’ll discuss here. Again, evaluating supply and demand is an essential part of getting the investment right. Larger trends favor suburban markets and to a degree, there’s lower investor interest in office investments as companies continue to balance on-premise vs work-from-home models. We believe that this creates an opportunity for agile investors to take advantage of localized imbalances by applying a surgical approach to investment selection.
There are areas with limited new construction of office properties due to investor and lender conservatism while there are an increased number of sellers as many investors rotate allocations away from office assets. In our view, this can create unique investment opportunities for office properties. Important in this assessment process is the need to understand the business climate in a specific submarket and assess the underlying business types that function best with on-site collaboration to ensure productivity.
South Gulph is an example of capitalizing on a market imbalance. With this property, we were able to acquire a differentiated and well-designed office property that offers a higher quality working experience than is currently available in the area - and do so at an attractive valuation. The most important factors in a property like this are features that create productive work environments where employees want to be, such as:
This lets us charge an appropriate price for the target audience while maintaining high occupancy to maximize ROI.
Our third passive real estate investing example is Georgetown Oaks, an apartment community development project. With multi-family residential investing, the supply/demand evaluation is a bit different.
Here we focus on social factors that drive rental demand. These include proximity to employment centers, accessibility to transportation networks, and the availability of quality schools nearby. Additionally, we look for areas where home values tend to be out of reach for a middle-class workforce (e.g. hospitality, nurses, police, etc) and where there might be an increased desire for the flexibility of renting, such as areas near military or healthcare operations with larger transient workforces. We do tend to skew toward high quality of life / coastal locations, as we do with our for-sale residential development projects, as these areas provide an additional tailwind for demand.
On the demand side, we confirm that the existing rental supply is constrained - typically with few existing properties that tend to be dated with limited amenities and high barriers to entry exist for new competitive supply.
With limited nearby competition, and the existing options offering a significantly inferior living experience while commanding high rents and full occupancy - our target markets are prime areas for our investment. Our access to capital provides an additional competitive advantage, as these types of projects have large capital requirements. The funding required to execute projects of this scale limits our competition and prevents most local competitors from building at the same scale and quality as we do.
Capitalizing on this market imbalance we created a differentiated and well-designed rental community in Georgetown Oaks that offers a far higher quality living experience than is currently available in the area. We’re able to charge an appropriate price for the target audience and achieved full occupancy shortly after opening.
These passive real estate investing examples highlight the advantages of passive real estate investing over being an active investor - you can build wealth without taking the risks and time associated with investing on your own.
JLAM has the experience and expert team to thoroughly vet opportunities - sourcing, evaluating, and executing differentiated real estate projects that can help you build wealth over the long term. We have the relationships and resources to find and capitalize on opportunities that are of a scale that few competitors can match. We bring a proven delivery model and track record of acquisition, construction, and management to meet investment goals.
If you're interested in getting the returns you’re looking for, achieving diversification, and freeing up your time to enjoy life, schedule an appointment with us now!
All investments involve the risk of potential investment losses as well as the potential for investment gains. Prior performance is no guarantee of future results, and there can be no assurance, and clients should not assume, that future performance will be comparable to past performance. Metrics updated as of June 30, 2023. JLAM does not provide tax, legal, investment, or accounting advice. This website has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, investment, or accounting advice. You should consult your own tax, legal, investment, and accounting advisors before engaging in any transaction. Any third-party information contained herein is from sources believed to be reliable, but which we have not independently verified.
