Investment Opportunity for Accredited Investors: What is Multifamily Syndication?
While many accredited investors go for venture capital and hedge funds, those with sufficient knowledge invest in real estate. Real estate can be a lucrative investment and there are many ways to invest in it. But the general consensus is that taking care of a property yourself is too time-consuming and requires a lot of personal involvement.
Accredited investors have access to a passive real estate investment through syndication deals. If you want to get into real estate investing without the hassle of taking care of a real estate property yourself, real estate syndication is the best way to do it.
A real estate syndication deal is when multiple investors pool their resources together to purchase a single property. [5]
Multifamily properties are perfect for syndication for a lot of reasons. These real estate properties are large and have many units, meaning they can generate consistent amounts of income and not have to worry about vacancies. Examples are condominiums, duplexes, triplexes, and apartment complexes. Even if one or two units become vacant, the remaining units can still generate income through monthly rent while you wait for new tenants.
These properties can produce a strong cash flow, but they are generally too expensive for a lone investor to buy. This is where syndication comes in.
With syndication, investors can participate in real estate deals that they normally would not be able to. Accredited investors can participate in real estate investing without having to spend as much money. [5]
There is also much less work involved for the participating investors. The syndicator does most of the hard work. They put the deal together, locate the real estate property, coordinate the funding, and look for accredited investors who will participate. Keep in mind that most real estate syndication deals are exclusive to accredited investors.
Accredited investors provide most of the capital needed to purchase the property. They often get equity upon resale of the property, depending on the deal structure. They also get a share of the cash flow, meaning they get to enjoy a true passive investment. [5]
Investors don’t even have to worry about managing the property. Unlike your traditional real estate investments, you do not have to play the role of landlord when you participate in a syndication deal. Either the syndicator will hire a third party property management team or they will handle it themselves. Regardless, it will not be your responsibility. You will not have to collect rent, manage the property, deal with tenants, handle emergencies, maintain the facilities, etc.
An LLC or limited partnership (LP) may be formed for the purposes of the multifamily syndication deal. [5]
Multifamily syndication is one of the best sources of passive income for accredited investors. Diversify your portfolio and get into real estate investing without the headaches associated with it.
