“I’d like to make some passive investments. Maybe I should invest in real estate?”

If you are like me, I’m sure friends have told you that real estate is a passive investment. Robert Kiyosaki and others on the real estate investment seminar cycle have worked hard to market this myth.

Yes, it’s true that you can treat real estate as a passive investment. That is, if you do not care about the level of return you will be able to generate. We believe that the best real estate investment managers are active, not passive. Actively managing a real estate investment and performing the right actions will dramatically increase your return.

As a real estate investor, you are providing a product. The product is housing and you have customers that you call tenants. As a business person, the first thing you must consider is (1) who, specifically should be your customer. Should they be college student’s, senior citizens, or new families? There are pros and cons to providing housing to each customer-type, but if you invest in real estate without being mindful of who your tenants will be you’ll likely experience greater turnover, greater vacancy, more costly property management, and an overall lower investment return.

Once you know exactly who your tenant will be, you should (2) develop a specific profile for them… what do they buy?, what do they do in their free time?, where do they spend their time?, where do they work and what is their salary range?, how much education do they have?, how much do they spend on rent?, and most importantly, what type of housing do they most prefer?

Real estate investing is a business and your tenants/residents are your customers.
If you treat your tenants like customers and focus on providing a high quality of service to them, you’ll likely outperform most other investors who do not maintain their properties and treat their tenants as if they are a nuisance.

At Alegria Capital Management, we have been able to generate above-market returns that surpass other investment managers in part because we are extremely active, hands-on investment managers. We are extremely focused and have developed many unique processes and methods to add value consistently by conducting proprietary research, selecting markets with the highest growth potential, achieving attractive entry prices, effectively managing properties while maximizing cash flow, and selling at or near mark peaks. In addition, we focus on a very particular customer and serve their needs exclusively.

Alegria Capital Management is a real estate investment management company that manages funds invested in quality residential real estate in high-growth markets nationwide.