Passively Investing with the Right Partner During COVID-19

So, you’ve decided to passively invest in real estate. The first thing you need to do to start on the right foot is find the best Operator Partner. You need to have confidence and trust that your money will be properly invested and that the property you’ve invested in, including the tenants and the daily activities, will all be properly dealt with to maximize your investment. After all, you are a passive investor. It should not be your concern how things are being run on a day-to-day basis. Trust is HUGE! You’ve chosen your Operator Partner and you are confident in their ability to invest and manage your investment. Suddenly, a global pandemic hits and certainty is out the window! Here’s where all your due diligence prior to your investment is put to the test. Is your Operator Partner living up to your expectation? Are they making strategic decisions for your property, anticipating and planning ahead, managing tenants and staff members? This is unprecedented! What is being done to ensure safety as well as ensure your investment? Health and safety of residents needs to be priority #1.

• Are public areas, such as pools and gyms being monitored to follow local and state guidelines to reduce overcrowding?
• Are maintenance workers being given the proper protective gear to keep themselves and the residents safe?
• Are community events being shut down, reduced in occupancy, or moved to a virtual platform?
• Are tenants being given information about unemployment and assistance programs?
• Are tenants being reached out to regarding possibilities if there are struggles paying rent due to COVID-19?

Hopefully the answer the above questions are all YES. You can pat yourself on the back, you’ve chosen an excellent, prepared and efficient Operator Partner. Priority #2, Is your Operator Partner communicating to you? Are they protecting your investment in a time of crisis?

• Are they responding to your questions and concerns?
• Are they actively avoiding risk by avoiding unnecessary renovations, etc.?
• Are they proactively updating the Passive Investors of the affairs of the property?
• Are they reducing investor distribution until the situation stabilizes to maintain cash reserves?

If the answer to these questions are also YES, you can be confident your Operator Partner is a capable and competent partner. Passive Investors are that…Passive. However, it is an investors responsibility and right to actively know what the state of their investment is in. Taking responsibility for your investment and its tenants and making sure you are cash flow positive are the two most important aspects of your investment. Making sure you have the best Operator Partner is the first step. Actively making sure they are doing their job is the second.