How to Passively Invest in Geotargeted Texas Real Estate
Geotargeting provides vast marketing opportunities. Find out how passive real estate investors in Texas can take advantage of this tool.
Many investors aren’t aware of the capability to passively invest in specific regions. Normally, a passive investor would either choose between a publicly-traded fund (that they have little to no control over, with a miniscule percentage of ownership), or take a very active role with a handful of properties.
However, investing through a trusted real estate lender takes away the heavy burdens of vetting borrowers and monitoring project progress. The lender you invest through takes care of that research and you are still able to invest only in specific areas and/or projects you personally believe in.
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What is passive investing?
In the most general terms, passive investing includes any type of investment that does not require the investor’s regular involvement. Bonds, for example, pay returns without any input or work from the investors who purchase them.
The differences between active and passive investments are an important consideration when deciding how to invest in real estate in Texas. Real estate investing can be highly active, such as investor-managed fix-and-flip projects. Rental property is often also an active real estate investment because of landlord/tenant laws and contractual obligations in lease agreements. An investor can either hire a property manager or handle management duties themselves.
Passive real estate investing requires minimal direct participation by an investor. Some passive real estate investments closely resemble investments in securities. For example, investing in a real estate investment trust (REIT) is similar to buying shares in a corporation. The investor may vote on major issues, but they are not involved in the day-to-day management of the entity.
Investing in real estate through a lender, such as with a private debt fund or fractional shares are more passive. An investor provides funding for a real estate project through a lender and then collects returns as the borrower repays the loan.
Other important differences between active and passive real estate investments might include the following:
Active investors tend to have more control over their investments since they have a hands-on role. Passive investors might only have input on major decisions, or they might be silent partners.
Passive investors often have greater liquidity than active investors. An investor in a REIT, for example, can sell their shares to another investor. An active investor in a fix-and-flip project, on the other hand, will probably have a hard time divesting themselves before the project is complete.
The tax benefits can be different for active and passive investments. Long-term capital gains have a lower tax rate, for example, which is likely to benefit passive investors. On the other hand, more tax deductions might be available to active investors.
What is geotargeting in Texas real estate investing?
Geotargeting is a form of location-based marketing that uses demographic and behavioral data to identify an audience. It focuses marketing efforts on potential customers who are located within a defined geographic area and meet certain other specific criteria. Digital technology has made massive strides in geotargeting possible.
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Geotargeting in general
Businesses use geotargeting to build brand awareness and attract customers. A sporting goods store, for example, might target people who:
Are in the general vicinity of the store location;
Are interested in a certain sport; and
Have purchased clothing or equipment for that sport in the past.
The store might run ads on social media and other platforms where targeted consumers can see them, or they might even send push notifications directly to their mobile devices.
People provide vast amounts of data about their daily activities, hobbies, and tastes through their web browsing and social media activities. That information, commonly known as metadata, is a gold mine for digital marketers.
Geofencing is a related form of marketing that places a greater focus on geographic location. A marketing campaign that uses geofencing might target a wide range of consumers located within a neighborhood or other small area. A geotargeted campaign might cover a larger area, such as an entire city, while looking for a smaller and more select group of consumers.
Photo by Ben Freedman on Flickr [Creative Commons]
Geotargeting for real estate investors
In real estate investing, geotargeting is most directly useful to active investors. They can use geotargeting to identify the best potential buyers and tenants.
A fix-and-flip investor can work with a real estate agent who uses geotargeting to market their properties. They can pinpoint consumers who are looking for the type of property the investor is offering.
A passive investor may believe in the future growth of a specific city. Many investors aren’t aware that a passive approach is possible while geotargeting small regions. Large, publicly-traded funds generally don’t allow this possibility. But providing your capital through a private firm in the form of fractional lending can.
A passive investor may believe in a specific type of real estate or project. For example, they may only want to invest in small multifamily properties in one state. Again, large funds don’t typically allow this kind of specificity, but working through a private lender can.
Explore customizable passive real estate options with a trusted hard money lender
Investments in real estate financing aims to provide dependable returns. Real estate is a “hard” asset you can see and feel. When borrowers seek hard money loans, the property itself provides security for the loans.
Our investors appreciate the level of understanding they’re afforded. We put their investments under a microscope so they feel confident in their selections. Get started with our experienced investment team today!
