Mark Khuri: Is Now the Time for Passive Real Estate Investing?

Imagine you're a mid-career professional, perhaps a first-generation entrepreneur from a diverse background, juggling a demanding job while dreaming of building lasting wealth without the hassle of day-to-day property management. What if you could tap into commercial real estate for steady passive income and growth, especially during a market dip? In a recent podcast interview, Mark Khuri, co-founder and CEO of SMK Capital Management with over 20 years as a real estate investor, reveals why the current historic market correction—where property prices have fallen 20-30% since 2022—presents a golden opportunity for passive real estate investing.

Khuri's firm has managed over 65 partnerships since 2010, focusing on diversified, low-risk strategies that deliver cash flow from year one.

Understanding the Commercial Real Estate Market Correction

The commercial real estate sector has faced headwinds from rising interest rates and economic shifts post-2022, leading to significant price declines. According to data from Green Street's Commercial Property Price Index, values dropped roughly 21% from their 2022 peak by the end of 2023, with some assets still discounted 10-40% today.

 Sectors like apartments, self-storage, warehouses, and industrial properties have seen the steepest corrections, making entry points more attractive for investors. Khuri emphasizes this timing: "Pricing's down anywhere from 20 to 30% over the last few years. Right now is a very opportune time to be getting into this space from an investment standpoint." This correction isn't just numbers—it's a chance for aspiring investors, including young professionals or those from underrepresented groups, to diversify beyond stocks and bonds without overextending.

Benefits of Passive Real Estate Investing

Unlike active investing, where you manage tenants, financing, and repairs, passive real estate investing lets you partner with experts for hands-off growth. Khuri's approach at SMK involves teaming up with operating partners to acquire undervalued properties, renovate them, and sell for profit after 3-5 years.

Key perks include:

• Diversification: Spread risk across assets, regions, and managers. As Khuri notes, "We take a diversified approach, investing in multiple assets, regions and operating partners... it helps investors reduce risk and earn great returns over the investment cycle."

• Passive Income and Tax Advantages: Most investments yield 3-7% cash flow in year one, plus depreciation for passive losses.

• Lower Risk: Rely on pros for operations, with quarterly updates and distributions.

  
  

For a hypothetical mid-career switcher from a tech job, this means allocating part of a portfolio to real estate without quitting their day job—echoing strategies in books like "Rich Dad Poor Dad" by Robert Kiyosaki. Reflect: How might passive income change your financial freedom?

Tips for Successful Passive Real Estate Investing

Getting started requires vetting opportunities carefully. SMK reviews 2-3 deals daily but invests in only 5-8 annually, passing on 98-99% after rigorous due diligence.

What to look for:

• Occupancy and Revenue Projections: Aim for 95%+ occupied properties with realistic upside. Understand why occupancy is low and how it impacts revenue.

• Acquisition Price and Comps: Compare sales within 3 miles, similar vintage, and amenities. Avoid cherry-picked comps—map them out.

• Cash Flow Focus: Target year-one returns of 3-7% to buffer against downturns.

Khuri advises: "We're looking for the lowest amount of risk with the highest potential upside."

Challenge yourself: Review a recent property listing—does it meet these criteria?

Top Asset Classes for Passive Investors in 2025

Khuri's firm focuses on four core sectors resilient to economic shifts:

• Mobile Home Parks: High demand, limited supply due to zoning—affordable housing with stable tenants.

• Self-Storage: Performs well in downturns, though watch for new supply.

• Multifamily Apartments: Steady demand; target value-add properties in growing suburbs.

• Industrial (Warehouses/Distribution): Inflation-resistant with triple-net leases shifting costs to tenants.

  
  

They avoid higher-risk areas like development, student/senior housing, or hotels due to volatility and expenses. Blending these into a fund further reduces risk while boosting returns.

FAQ: Common Questions on Passive Real Estate Investing

• What Are the Risks Involved?

  
  

While diversified, risks include market downturns or mismanagement. Mitigate by choosing vetted partners and focusing on cash-flowing assets. Studies show diversified portfolios weather recessions better.

• How Do I Get Started as a Beginner?

  
  

As an accredited investor, join networks like SMK's. Schedule a call to discuss goals—gender-neutral advice applies to all backgrounds, from global migrants to local starters.

• Is Passive Real Estate Investing Inclusive for Diverse Entrepreneurs?

  
  

Absolutely. It levels the playing field by removing active management barriers, allowing first-generation or underrepresented investors to build wealth through partnerships.

Conclusion: Seize the Opportunity in Passive Real Estate

The 2025 market offers a rare entry point for passive real estate investing, with price corrections enabling diversified, income-generating portfolios. As Mark shares, focus on low-risk, high-upside deals across resilient asset classes for long-term success. Apply these insights: Evaluate one opportunity this week using the tips above. For more, visit smkcap.com to join the investor network, access educational content, or schedule a call with Mark Khuri.

What's your take on real estate diversification?