Would you like to make better investment decisions?
Today, we’re talking with Kent Ritter, full-time real estate investor and operator of Hudson Investing about scaling and diversifying your real estate portfolio.
So if you want to expand your investing perspective… tune in now!
Table of contents* How Kent Ritter Got Started* Moving From Passive to Active Investing* Taxes in Active and Passive Investments* The Pros of Multifamily Real Estate* Why it’s a Good Environment for Multifamily Real Estate* How Long Should You Hold Your Properties?* Where to Invest in Multifamily Real Estate* Connect with Kent Ritter* About Kent Ritter* Book A Strategy Call
How Kent Ritter Got Started
In 2010, Kent started as a partner in a boutique management consulting firm, before exiting in 2015. In that timeframe, he helped build the business to over $30 million in annual revenue, with 95 employees.
After the successful sale of the business, Kent was left with a decision. He had capital, now he had to decide what to do with that capital. He didn’t want to put all his eggs in one basket and certainly didn’t want to ride the stock market roller coaster. In his journey to diversify, he started looking at alternative investments before finally landing on real estate.
As he developed his real estate knowledge, he quickly gravitated toward multifamily properties. This love of multifamily properties helped him to move from passive investing through syndications to a more active role in his investments, and sponsoring his own syndications.
Moving From Passive to Active Investing
Passive investing, in this context, is where you’re investing your own dollars into an existing deal—through a deal sponsor or syndicator. This person is finding and putting the deal together, and you’re joining by adding your dollars to the pool. The syndicator is responsible for the active elements, including finding the property, securing the debt, and determining any renovations.
Even as a passive investor, you’re part owner of that property, so you receive distributions from the profits. You also share in the appreciation at the time of sale. So passive investing in syndications like this really allows you to learn more about the experience, without the responsibility of putting the deal together.
As Kent built up his own base of knowledge, he was able to move into a more active role. In other words, finding the properties, creating a plan for value-add, and securing investors to help make it happen.
Taxes in Active and Passive Investments
As someone who has invested passively and actively, Kent touches on the tax implications of multifamily real estate.
[7:59] “When you think about taxable income, you think about three buckets. There’s your...ordinary income,