There are so many ways to invest in real estate. You can buy and hold, or Fix and Flip. Some focus on cash flow, while others prefer appreciation. You can invest in residential or commercial real estate. Just as there are many ways to invest in real estate, there are many ways that an investment can go wrong if not carefully executed or managed. Many investors that do not have the time or knowledge to actively invest, opt to invest in real estate syndications. Some of main advantages of investing in real estate syndications include passivity, professional management, and reduced risk.
First of all, it is important to define what a real estate syndication is. The word “syndication” is defined as “the transfer of something for control or management by a group of individuals or organizations”. In the context of real estate, this means that a group of investors will pool their resources together to invest in large deals, such as apartment complexes, shopping plazas, or office buildings. There are many different ways to structure syndications and various minimum investments required, yet the fundamental concept of bringing people’s money together to fund deals remains the same.
Many people think of real estate investing as passive income. While in some cases that can be true, oftentimes it is not. Say you want to buy a duplex and rent it out as an investment. In order to do that you will have to secure funding, find the right property, close on the deal, make any necessary repairs, fill vacancies, and manage the property’s day-to-day issues. As you can see, traditional real estate investment is not so passive as some may think. However, with real estate syndications, the general partner will take care of all the work, while you enjoy the cash flow and appreciation. You will likely have to pay acquisition and asset management fees to the syndicator so make sure to read the fine print and understand how those fees will be structured. However, the fees are typically small enough that you still get a great return on your investment providing you chose a solid syndication to invest with.
Professional management is a huge benefit of investing in a syndication. There are many hassles and headaches to deal with when managing your own rental properties. However, the syndication will have a team in place to professionally manage the asset throughout the entirety of your investment. This helps assure that the property will perform at optimum levels and continue providing investors with great returns.
Risk is an inherent part of any investment. However, investing with a reputable syndicator will reduce the risk by dispersing it between investors. Also, by investing in a syndication you are diversifying your portfolio into asset classes that you may normally not be able to afford to invest in. This diversification reduces your risk in the event of an economic downturn or recession.
If you have some money to invest in real estate, but don’t want to do all the work yourself, investing in a real estate syndication might be the perfect way to diversify your portfolio and passively collect some great returns. We currently have an active deal and are looking for investors to fill a few spots in our latest project. Check out https://www.investinbluestone.com/ to find out more. Also, if you want to learn more about real estate investing and keep up to date with related stories, you can find more articles as well as podcasts at https://bulletproofcashflow.com/.