Ultra-Niche Passive Real Estate Investments That Pay Ultra-Returns

At a Glance:

• • In general, the deeper the niche, the higher the returns.

  • We’ve had good experiences with these four niche investments over the last year.

Ever hear the expression “the riches are in the niches”?

Hokey rhymes aside, it’s true. Here are a few examples of deep niche investments we’ve made in the Co-Investing Club, which come with high potential returns.

Hokey rhymes aside, it’s true. Here are a few examples of deep niche investments we’ve made in the Co-Investing Club, which come with high potential returns.

Property Tax Abatements

In exchange for setting aside some or all of the units in an apartment building for affordable housing, the operator gets a 50-100% break on property taxes.

When done right, this creates an instant jump in net operating income (NOI) and property value.

In other words, they add value to the property without having to do any renovations at all. Read: no construction risk or delays. Pretty sweet, right?

Setting aside units for affordable housing often doesn’t even restrict rents. In many cases, the units are already renting to moderate-income residents.  

We’ve invested in several of these together in the Co-Investing Club, and already seeing strong returns on them.

Mid-Range Land Flips

Sure, there are high margins on cheap land flips. But it can be a lot of work to earn a few thousand bucks, and there’s growing competition.

On the opposite end of the spectrum, high-dollar land parcels face competition from institutional investors, and lower margins to boot.

The sweet spot lies in the middle, for parcels priced $25K-$250K.

Last year, the Co-Investing Club invested with a land flipper who targets this zone. And we’ve been collecting 16% distributions like clockwork ever since.

We hope to invest with him again over the next month or two.  

Prefab Home Placements

Another land investor we partnered with earlier this year has his own spin: he installs manufactured or modular homes on land parcels and sells them to first-time homebuyers.

In the market where he operates, the median home sells for $460,000. But he manages to price his homes at $230,000.

Even in a recession, homebuyers will still line up for homes selling for half the local median. We love it.

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Real estate investments? Awesome.

Being a landlord? Less fun.

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Industrial Seller-Leasebacks

Industrial companies sometimes want money to expand operations, but don’t want to take on any more debt. So they sell the real estate where they operate and lease it back.

We invested in one of these deals earlier this year, and it started paying solid distributions ahead of schedule. This particular company has a backlog of orders through 2028, with clients including the US Navy.

And worst case scenario, if they default? The syndicator ran the numbers and knows they can re-rent the property for even higher rent than the current company pays.

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Beyond Rental Properties

Don’t get me wrong, I have nothing against good ol’ fashioned rental properties. But they’re a lot of work, and it’s a saturated field.

I’d much rather invest $5K at a time in passive investments like the ones above and the deeper the niche, the better. We get the full tax benefits, cash flow, and appreciation without having to hassle with renters or repairs or lenders.

Curious about the Co-Investing Club and how we vet deals together? Join as a free member to get notified about our next deal discussion!

And like we do every Thursday, we’ll host an Open Office Hours Zoom call tomorrow at 3:30 EST.