Passive investing: two words that have seemingly burst out of nowhere onto the financial scene. It seems like only a few years ago, hardly anyone was talking about how to make money by letting other people do the hard work of investing. Now, passive investing is in, but what is it, exactly? Is it really as simple as “doing nothing” and money ends up in your bank account? For answers, we turned to COO Sabrina Guler and CEO Sief Khafagi, the co-founders of Techvestor, which underwrites 100k properties every month, has raised over $37MM, and has 75+ properties in its portfolio. Through its institutional grade, proprietary rental platform, Techvestor analyzes over 18MM data points each month, identifying what, where, how, when, and if an investment should occur. Below, Guler and Khafagi explain passive investing, including why they believe it’s wise for anyone to remain aware of where they are putting their money.
“Passive investing is a legitimate opportunity, one that allows you to diversify your income streams while someone else does the hard work for you,” Guler explains. “In real estate, particularly short-term rentals, this is lucrative, as I learned in my days at Apple, when refurbishing STRs was my hobby. It is time consuming, of course, to identify the right property, renovate it, list it, and manage it. Allowing someone like Techvestor to be the investment platform, property sourcer, interior designer, and property manager can save you a lot of effort and also pay off.”
Khafagi believes that the best passive investment opportunities, especially in STRs, really do allow you to sit back and relax. “There’s a reason they call it passive,” he says. “But, to find them, you need a company that has its ducks in a row. Everything about it should be rock solid so that any problem that comes along can be handled quickly and efficiently.”
Khafagi explains that before buying their first STR, he and Guler created a realistic framework for Techvestor so that everything could be handled independently of investors. They designed software that pinpoints the right properties for Techvestor’s portfolio, meaning they know what to buy, where to buy it, how to best finance it, how to operate it, if the property is in a sustainable market, and what realistic growth looks like.
“We also designed a 16-point strategy for analyzing the potential of both a property and its location,” Guler continues. “We look at everything: uniqueness, seasonality, tax benefits, diversification, and STR-friendly states, among other crucial factors. All in all, we analyze millions of data points and 250+ markets monthly.”
That’s at the office, of course. On site, Techvestor’s project managers draw upon a local network of contractors and professionals to transform homes from ordinary to spectacular. Khafagi adds that they are careful to add amenities that will give the property longevity in a saturated market, including hot tubs, fire pits, and other perks.
“So, yes, we have set Techvestor up for passive investors, but at the same time, we believe in transparency so that they can know how their investment is doing,” says Khafagi. “That’s why we are careful to explain all of the terms before onboarding an investor and to keep them up to date as time goes by.”
Passive investors in Techvestor receive 100% of tax benefits, have zero liability for loans and lending, and have instant diversification with over 75+ properties. During the first five years that Techvestor holds a property, investors receive quarterly reporting and dividends, and the company targets a 7-12% cash on cash annually. After the projected hold period, Techvestor looks to sell the portfolio based on revenue or value, whichever is higher.
“As a passive investor, you want to make sure the company is healthy across the board,” says Khafagi. “Additionally, you want to be certain the market itself supports investments. 34% of people prefer short-term rentals, up from 10% in 2011. People are also interested in STRs because of the culture change to remote work. It has created a new asset class that Techvestor is defining.”
The most important advice for passive investors is this: run from anything that doesn’t feel right.
“Nothing happens overnight, so be careful with anyone who promises instant money,” Guler suggests. “At Techvestor, we love the potential of STRs for passive investors, but we never oversell it. If you do your homework, trust your gut, and ask questions, you will be able to diversify your portfolio and scale up your life.”
Techvestor is the leader in passive investments in STRs in the United States. It was co-founded by Sabrina Guler, a former Engineering Project Manager at Apple, and Sief Khafagi, who worked at Facebook/Meta and was a Forbes Business and Young Entrepreneur Council Member. Guler and Khafagi have grown Techvestor’s portfolio to encompass STRs across the United States, resulting in seven and eight figures in commitments and LOIs. In 2023, Techvestor will continue to expand, listing more properties in Southern Florida and other hot markets. For more information, please see www.techvestor.com.