Real estate syndication, while not as well-known a topic in the real estate industry as it is in other industries, can be an immensely profitable way to expand your cash flow. With the right partner and strategy in place, you could find yourself building a large amount of passive income!
So why should investors invest passively in multifamily real estate?
Here are 5 reasons:
1) Taxes - When you invest in a real estate syndication, you get to take advantage of cost segregations and other strategies to minimize your taxes. This means more money in your pocket. What the cost segregation gives you is the opportunity to depreciate different components of the apartment complex by having a professional performing an engineering study.
2) Appreciation - multifamily properties tend to appreciate at a higher rate than other types of real estate. This means that your investment will grow in value over time. During that position process your syndicator will perform a detail underwriting the apartment complex. During this stage, your syndicator identified the highest and best use of the property the goal is to increase the income while reducing expenses. You could see a significant rise in the value of the property without spending any of your Budget if you're able to identify management and or process improvements. Another way to drastically improve the appreciation in your apartment complex is through force appreciation. This is where you renovate interior and exterior of the apartment complexes based on the demographics needs. It's important to understand what cycle the market is in to ensure that you do not over improve the asset.
3) Leverage - syndicating allows you to better leverage your capital. This means you can buy more property with less of your own money down, increasing your potential return on investment. Financial institution love the multi family asset class and here's why, in the last great recession multi family properties default rate was approximately .04% significantly lower than the 4% default rate in the single-family space. Another good thing about the quality of leverage for multifamily properties is that the property qualifies for the leverage and not you the passive investor.
4) Passive Income - syndication provides a great way to generate passive income. This means you can build up a stream of income that requires minimal effort on your part. perfect for those who want to retire early or just live a life of leisure and not have to worry about income! Here is a goal: $2.5M invested in income producing real estate could generate approximately $175K in annual passive income. That is at a 7% annual cash-on-cash return. With the right discipline, in 10 years, the initial investment and all returns could be $5M generating $350K per year.
5) Professional Management - when you invest in a syndication as a passive investor, you get to take advantage of professional management companies. This means you don't have to deal with the hassles of being a landlord, freeing up your time to focus on doing the things that you enjoy. The management company will be responsible for the day-to-day operations of the property, leaving you with peace of mind that your investment is in good hands.
Real estate syndication can be a great way to grow your portfolio and generate passive income. If you are looking for a way to diversify your investments and build long-term wealth, syndication may be right for you.
If this article piqued your interest in investing in real estate, then congratulations:
Download your Operations Manual Here. In the Operations Manual, you will learn how passive investors leverage Syndication to create Passive Income to grow their wealth for their future generation and create the ability to make an impact!
For more information on getting involved in a value-add multifamily syndication deal, don't hesitate to contact me at Hutch@HSquaredCapital.com or Dr. Heath Jones at Heath@HSquaredCapital.com. You can also visit our website at www.HSquaredCapital.com. We'd be happy to answer any of your questions and help get you started on the path to financial success through multifamily investing!
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