September 3, 2021
Best Ever CRE Team

Making the Move from Active to Passive with James Sumaya

There were several reasons for James Sumaya to head for the blossoming city of Denver, Colorado. Leaving Los Angeles meant an opportunity for him to be closer to family, and to experience a better cost of living and quality of life. But beyond these benefits, moving to Denver also opened a new field of professional opportunities, as well.

Over the last 10 years, James had worked with asset management firms overseeing real estate transactions involving a wide range of asset types including hospitality, office, industrial, multifamily, and retail, ranging from as small as $10 million to more than $100 million. After spending much of his career gaining broad but in-depth professional experience, the time had come for James to narrow his professional focus.

“Now that I’ve moved to Denver, I am working with a group that focuses only on doing multifamily deals directly with a value-add business plan. So I’m narrowing down from a broad focus, doing all types of assets and all manner of business plans, and now I have the opportunity to focus more on one asset type and in one market,” James said.

James had also become increasingly interested in multifamily syndications for his personal investments. Both his personal and professional goals aligned with a renewed passion in passive investing.

“I was really focused on finding reliable and stable cash-flowing investments with some opportunities for appreciation. I do own some investments directly and in the syndications. And I’ve debated where I want to focus my efforts going forward,” James shared. “Given my professional background, I certainly have the ability to pursue the direct approach, but it’s really difficult to beat the ease and simplicity of investing in a syndication with a good sponsor.”

As with many investors, James manages a diversified real estate portfolio with a combination of single-family assets and multifamily syndication investments. However, to James, each investment comes with a completely different approach to ownership.

“They each have their pros and cons. In syndications, you’re really vetting the sponsor more than anything else. If you end up with the wrong group, you don’t have any recourse to rectify that,” James said. “Whereas with the direct approach, you have more control, but you’re also dealing with all of the decisions, too.”

Managing the element of control between passive and active investments also has implications beyond the bottom line of your portfolio. For James, passive investments are an opportunity to build additional wealth without creating an additional job.

“It’s easier to do syndications when you’re working a more traditional day job because the attention required on those deals is so much lower than doing something direct,” James said. “If you move into that direct space, then you’re effectively creating another job for yourself. One that you’re in control of, but at the end of the day, it’s something that’ll require more time and effort and still have elements of being a day job in some manner.”

For James, genuine pride in real estate has come in the quality of his syndication portfolio, not necessarily the quantity of investments within it. His excitement for his future in real estate is woven into the diversity of assets, from the location all the way to the age of the investments. The depth of his portfolio also isolates the bottom line if a deal were not to perform as expected.

“My focus on syndications was born out of looking to hit a cash flow number. I think that a lot of people looking for financial independence have a number that they would like to hit,” James shared. “Continuing to find deals that will generate consistent cash flow will build a portfolio up to a level where you have some options for yourself to do something else and walk away from a traditional day job.”

About the Author:

Leslie Chunta is a marketing consultant with nearly 15 years of experience in creating dynamic marketing programs and building brands for startups to enterprise organizations. She has worked agency- and client-side with high-growth companies that include Silicon Valley Bank, JPMorgan Chase, SailPoint, EMC, Spanning Cloud Apps, Ashcroft Capital, Netspend, and Universal Studios.

Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.

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