So you’re thinking about investing in real estate, and you don’t really know which options are available to you? Well, in this video I’m going to talk to you about the different types of real estate investors that exist so that you can be more informed. Coming up!

Hey there. It’s Billy with KeePon Cashflow, helping you to grow your money and your mindset so that you can get to the lifestyle that you really want to lead and do that faster. Now on this channel, I’m going to be sharing weekly tips and strategy videos just like this. So, if it’s your first time here, why don’t you do yourself a favor and go ahead and subscribe to the channel, and you’ll also want to make sure that you leave your comments and anything that you’re thinking in the section below. This is a great place for me to be able to respond to you so that I can start to help you get clarity on whatever questions or comments that you may have.

But as for today, I want to get back to this whole thing of what are the different types of real estate investors that exist? Because if you’re here, you’ve looked it up, you probably want to know because it also means you’re probably at that point in looking for more information. As it relates to real estate, there are really kind of … I know that I’ve talked about it in previous videos, there’s kind of two different ways to look at it in terms of real estate investing. Number one, you have your passive investors, and you have your active investors. So if you look at it at the highest level, it’s like someone like me is a very active investor in that I’m going out and building teams, buying properties, underwriting the properties, doing due diligence on the properties. And then there are also people that are more passive investors.

And so, the passive investors are really looking to place your capital into a specific deal and just have your capital work for itself. And so in today’s video, I really want to talk to the specifics around passive investors. And as it relates to passive investors, I want to really make this simple for you. So, I really think about it, and I want to break it down for you in the two different types of passive investors. The first is a debt investor, and the second one is an equity investor, and what I want to be able to do by the end is help you to be crystal clear on which of the two types might be best for you or help to give you more clarity around these two different types.

But I would say, at the end of the day, really it comes down to mindset and what it is that you’re trying to achieve as a passive investor.

Now, let me start out with the first type of passive investor, which is a debt investor. And now, with the debt investor, what does that mean? Basically a debt investor is someone who wants to be able to place capital … You can say it’s maybe like $50,000. They want to use $50,000 and just have that $50,000 work and create a very consistent, steady type of return. So maybe every year, or every quarter, or every month, or whatever, as a passive investor, you are receiving interest payments on the money that you put to work. But basically, you know that on a certain date, that you’re always going to receive the specific interest payment or the money that your money is making for you. So, the whole idea here is for the person who’s really looking for consistent, steady streams of income, being a debt investor may be absolutely the right thing for you. Keeping in mind that there’s always going to be risks that’s involved, and that’s exists for either a debt investor or an equity investor.

And typically, the debt investor also will receive a bit higher returns because the money is making money. And as someone who is borrowing that money, they actually know exactly how much they’re gonna have to pay out into the future. So, it can create a very good win-win for the debt investor as well as the … Typically it’s a syndicator that they’re working with. So, that’s the first type.

The second type of investor is an equity investor. And now with an equity investor, I always like to think of actually the two in terms of what is the risk and return, right? If you want to have less risk, then that means you’re probably gonna get a lesser return, more risk, more return, but risk in the context of real estate investing.

So, if you look at the equity investor, the equity investor is actually someone who is really involved … Their capital is involved up until a certain point, and that certain point is what they call the exit, and the exit, one of two things can usually trigger the exit. The first thing is that the property is actually sold. So, once you sell the property, then you’ve completed your business plan, or you may have a refinancing event that will take place. And so, one of those two things will actually trigger the exit for the equity investor.

And now with the equity investor, there’s also a lot of different terminology, and we can talk about some of it, like preferred returns. Typically, an equity investor will get that and that can be based on percentages. It can be anywhere between like 90 percent to 50 percent in terms of the preferred return, but those are things that we can talk about probably in a later video. I can really break that down, but I think the important thing here for you to remember is the equity investor is really interested in the exit. They’re typically looking for a higher, a bigger win than the debt investor, and they’re really counting on that exit of a particular business plan in order to make their money.

So, like I said, it really comes down to two different mindsets and also different timeframes. So, you know what’s going to be best for you. I just wanted to give you more information to help you think about it, and as always, I like to leave you with a question of the day, and my question this time is, now that you’ve heard about the debt as well as the equity investor, which do you feel is most appropriate for you in your context and why?

I’d really love to know. If you can leave your comments in the section below, we can start a dialogue.. It would be great. Once again, you can also leave me a feedback on the video, what you thought about it, if you thought it was great, not so great. I’m always open for improvement.

So, this is Billy Keels. That’s my two cents for today, and as always, Hasta la Próxima!

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