Interview with a passive investor
Alina Trigub2020-12-26T22:27:39+00:00Interview with a passive investor
You know how the operator always speaks from their perspective. I wanted to share with my audience the other side of the story and hence interviewed one of my investors who happen to live in the same town as me to share their take on investing via syndications. Happy reading!
Q. Please introduce yourself.
A: My name is Maggie Cheung. I was a former auditor and CPA for 12 years. My last job was with a financial firm in NYC. I quit my job about a year ago, since I have two little ones and couldn’t bear the constant thought of choosing my job over my family. Post quitting my corporate job, I started researching ways to invest in real estate since I always had a fascination with the industry (I confess… I’m a recovering HGTV addict). I even got my NJ real estate license, so I can learn about the industry, connect with the right people, and become familiar with the lingo.
Q: When did you start investing?
A: My husband and I started investing when we bought two properties in NJ during the last financial crisis. The properties were paying for themselves, but we were not making any cash flows from them. In addition to the attention and work required to be a landlord, we began to think whether it really made sense in buying and holding properties in NJ. We were faced with a problem; how do we scale our real estate investing portfolio?
Q: What kind of investment types do you have in your portfolio? (e.g., stocks, mutual funds)
A: A year ago, aside from the two rental properties, we only invested in stocks and mutual funds in our company’s 401(k).
Q:How did you first hear about alternative investments?
A: Being in the financial industry in my former life, I have heard and understood alternative investments; however, I didn’t think it would be available for us. I assumed alternative investment was only for the ridiculously uber high net worth individuals.
Q: When did you hear about alternative investing?
A: It wasn’t until I met Alina Trigub from SAMO Financial at a meetup about 10 months ago when I first heard about a type of alternative investment (i.e., real estate syndication) and how it is available to individuals like my husband and me. Ever since then, I was intrigued.
Q:Where did you to read more about it?
A: I started reading more about real estate syndications via BiggerPockets real estate forums and via Google in general. We connected with Alina to determine what type of real estate syndication deals may be best suited for us and we listened to potential offerings webinars to understand how the deal works and read some more on the topic.
Q: How did you decide to start investing in syndications? What is your reasoning behind these choices of investments?
A: Since it was a new space for us, we started by investing the minimum required to join the deal we like. We wanted to test the waters and see how the investment performs. We went in with the mindset that if we lose the money, it will be a sad day, but it won’t sink us. Plus, the fact that these investments are registered with the SEC, it gave us some level of comfort that there is governance and oversight over these securities. In addition, the numbers just made sense. The underwriting seemed conservative; which was important given the downward shift in the market.
We also choose a value-added real estate syndication investment that injects capital and makes improvements to the apartment communities in which we invested. Not only does this increases the value of our investment, but it was important for us to know that we are improving the communities.
But none of these things matter if it’s not run by the right people because at the end of the day, we are investing in people. That’s why it is so important, in addition to doing due diligence on the deal (i.e. fact checking what the deal sponsor presented in their offering) to spend time researching the deal sponsor’s and/or general partners’ history, experience, and reputation. The internet has such a wealth of knowledge that we can easily find most of these answers. We look at the deal sponsor’s and/or general partners’ social media footprint as well; it has provided some idea of how knowledgeable the person is and whether they are consistently known as an expert in their field. Further, we also networked with other individuals who have invested in real estate syndication for some time, and we benchmarked and compared notes.
Since meeting Alina 10 months ago, we have invested in two deals to which she has introduced us, and we have to say we have been very happy with the results. So far both deals have been performing well, and have provided a regular cash flow for us; that is something we haven’t been able to get from our two rental properties that we have owned for a few years now!
Q: What are your long-term investing goals?
A: I’m fascinated with real estate syndications. They create such tremendous value and win-win situation all around, from investors to the residents of the communities. My long-term goal is to get more involved in real estate syndication projects, and eventually to become a general partner. I would really love to create opportunities and educate others to invest in real estate syndication projects.
Q: What helped you make investing in syndications easier?
A: We started with one investment to help us understand the overall process, terminology, and lifecycle of the deal. Once we got a better handle of the process, and we saw how well it performed, we started looking for more deals to invest. We also rolled over my company’s 401(k) to a solo 401(k), whereby I can manage and grow my retirement nest egg by investing real estate syndications, or other alternative investment without using the cash in our checking/savings accounts (a.k.a., our piggy bank).
Q: Are you continuing to educate yourself?
A: Of course, you will constantly see me with a book, listening to a podcast, or attending a REI meetup.
Q: What would you recommend to someone who is looking to start passively investing but is not familiar with syndications?
A: I highly recommend the following books to read:
- Best Ever Apartment Syndication Book by Joe Fairless – This book gives the soup-to-nuts on how syndication works, as well as how to build your own syndication company/team.
- Tax-Free Wealth by Tom Wheelwright – This book doesn’t really talk about real estate syndication directly, but it does touch upon how real estate investment can provide tax saving strategies (via depreciation). Plus, it provides valuable knowledge in wealth planning. I believe once you understand how you can grow your wealth by leveraging tax savings, you are more prepared for your financial future.
Additionally, go to real estate meet up groups near you and network with people who have experience with real estate syndication. Or just reach out to Alina Trigub from SAMO Financial.
