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March 13, 2022

TLP05: The Perks of Being a Limited Partner with Paul Shannon

TLP05: The Perks of Being a Limited Partner with Paul Shannon
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Joining us in this episode is Paul Shannon. Paul is a passive, limited partner in over 1,400 multifamily units, numerous industrial offerings, and ATMs. Paul talks about some of the perks of being a limited partner or passive investor. He shares what got him to leave his W2 role and how his little bit of experience as a property manager of a duplex that he bought years before helped him develop relationships and find a deal that gave him the confidence to move forward, take a chance on himself and scale in the process. Paul also gives some tips on evaluating a sponsor and choosing the right market.

Key Points from This Episode:

  • Paul shares what got him into the real estate business.
  • What was the deal that gave him the confidence to move forward and jump in full time?
  • What Paul loves about passive investing is that it’s mailbox money. Having the freedom to do things on his terms and do meaningful activities that drive his business makes real estate exciting for Paul. You should have something that inspires and drives you to grow professionally and mentally.
  • A great sponsor and a great deal go hand in hand. Examine how the sponsor tells the story to get the numbers to come out. If you’re going for the mailbox money, it’s better to invest somewhere where you can’t get that money actively yourself. Paul’s biggest mistake was not getting started with the real estate business sooner.
  • What are his thoughts on capital risk? One thing to watch out for is that the interests of the limited partners are aligned with the general partners, and they're not working just for the fees and for the upside potential that they hope happens.
  • Paul explains the idea called the development spread.



“So, I'm an active and a passive investor. And I see benefits to both. But what I love about passive investing is that it's really mailbox money, right? I mean, you kind of research the sponsor, the market, the asset class. And once you're comfortable with those things, and you wire your funds, you're pretty much in the backseat. But every month or every quarter, you're going to get those distribution checks. And it's pretty easy money from that standpoint.”[00:03:15]

“For me, work is exciting now. And there's no nine to five about it. It's really, you know, when I feel like working, I'm working. Which happens to be probably about as much as I was working before. It's just on my own terms, doing the things that I want to do at times when I want to do it.”[00:06:02]

“Being active right now, it's fun. But at the end of the day, you know, when I'm older, there's not as much time or, you know, other things to consider like health, mailbox money is going to be where it's at, be it a passive limited partner, or collecting dividends off of stocks, or whatever the case may be at that time.”[00:08:36]

Links Mentioned in Today's Episode:

Redhawk Investing website

Paul Shannon on LinkedIn

About Paul Shannon

Since becoming an entrepreneur in 2019, I’ve acquired 80 units and been involved in over 30 rehabs, many of those deeply distressed properties. I have experience in people management, negotiation, and acquisition, raising capital, project management, property management, and am a licensed Indiana Realtor. I most recently repositioned a 40-unit distressed apartment building, effectively doubling the equity in the property, while generating cash-on-cash returns you cannot find in other assets. I’ve done this without equity partners to date, creating passive income that gives me and my family, security, flexibility, and freedom. Additionally, I’m a limited partner in over 1,400 multifamily units across the country, as well as a number of other alternative assets.