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Trust and Passive Investing in Commercial Real Estate: A Case Study

These Two Narratives Will Teach You What to Look for and What to Avoid

In recent articles, we’ve explored trust as an important factor in deciding whom to invest with. Passive income investments can be very beneficial to you – if you work with the right firm. This is because passive real estate investing companies are not all alike.

While some firms for passive investing in commercial real estate give you a feeling of trust, others may not. You will have to determine this for yourself. However, we believe in the power of educating our accredited investors. This is one of the many characteristics that distinguish us from other multifamily investment firms. In this article, we will share two stories. One is an experience of trust. The other is a story where trust fell short.

Whether you want to try making passive income from a property or invest in a fund, these stories can help. We hope you’ll get a sense of the kind of firm you should be looking for.

Why Does Trust Matter When Considering Passive Investing in Commercial Real Estate

Trust is a key foundation and virtue in business. You trust a business to provide good services or products. They trust you to compensate them. Trust is both a social and a business contract. When trust is broken, the two parties can’t work together. At least one of them won’t get what they were looking for. As a result, business can’t take place, and the repercussions for both parties will extend beyond that instance.

As far as passive investing in commercial real estate is concerned, trust matters. You trust that the firm’s deals and investments will perform well. You trust that investing with them will be beneficial to you. However, some passive real estate investing companies will say one thing and do another. On the other hand, superior multifamily investment firms will back up their claims. They will give you a sense of trust. You will want to move forward with them. You will seek them out for passive income investments. You may even ask for their help in making passive income from a property you own.

Below are two stories that illustrate when trust is established and when it is not. You will see that there are two very different results for these accredited investors.

First Narrative: A Sense of Distrust from an Investor Who Wants to Try Passive Investing in Commercial Real Estate

An accredited investor is approaching retirement. He is thinking about getting a loan from one of the multifamily investment firms in Kansas City. He wants to rehab, manage, and then sell a multifamily property, but he needs help. He goes to a firm known for passive income investments. He talks to them about his plans for making passive income from a property.

During the discussion, the investor starts to feel a sense of excitement. Out of all the passive real estate investing companies he has visited, this one makes great claims. He is promised high returns on investment. He starts to see how he can accumulate generational wealth for his children and grandchildren.

Then, he goes home and starts to do research on the company. As far as passive investing in commercial real estate goes, this company doesn’t have much of a background. They don’t seem to be able to live up to the claims they’ve made. He also looks into whether they have information on private financing, but he doesn’t see much.

The investor decides to call the investor relations team at the firm. He asks about the fact that he couldn’t find much information. The team, however, reiterates their attractive-sounding claims. The sense of trust the investor had is now lost. He now knows that what he thought might offer potential for his future was just hot air. The investor moves on to find a multifamily investment firm he can trust.

Second Narrative: A Sense of Trust from an Investor Interested in Passive Investing in Commercial Real Estate

Another accredited investor is interested in Kansas City real estate. She knows that there is high upside in the multifamily sector. She has heard that passive income investments could benefit her portfolio. She begins talking to investor relations teams at passive real estate investing companies.

The companies make many claims about how they are different from other multifamily investment firms. To some degree, each of these companies seem like they have expertise in passive investing in commercial real estate. Then, she takes a recommendation from a friend she trusts. The friend has been truly successful with making passive income from property.

The investor goes to visit the firm. The firm makes claims that excite her. There is an initial sense of trust. Then, as she continues conversing with the team, this trust grows. The team asks about her goals. They ask about her reasons for investing. Not only does the team make claims, but they start to talk about their history. They start to explain the numbers. The numbers add up. The conversation involves hard evidence behind the team’s claims. The investor asks questions. The team has answers. She also addresses her concerns, which are received generously and with understanding. The trust between the investor and the team grows.

Ultimately, the investor decides to invest with this firm. She is very pleased with the results, as is her family. She is glad she took advice from a friend and then sat down for a thorough conversation. The investor is on the road to a plan for generational wealth, as was her goal.

How to Get in Touch with a Trustworthy Team for Passive Investing in Commercial Real Estate

As you can see, there are two distinct paths that an investor can take. Trust is either established or it is not. Further, trust can be established at first, and then broken. At Worcester Investments, a leader among multifamily investment firms, we have some recommendations about trust. We tell our investors to start with their gut, and then look at the facts. Then, do a gut check again. Then, ask more questions and get more facts.

At any point, you can bow out when talking with passive real estate investing companies. Shop around. See if trust grows, or if it diminishes. At our firm for passive investing in commercial real estate, we think you’ll find a trusting relationship.

You can begin that relationship by reaching out to us here. Or, you can give us a call at (816) 759-0901. If you are interested in making passive income from property, we have private financing available. Our fund is also a way to make passive income investments. Regardless, we look forward to getting to know you and learning how we can help you succeed.