Over the years, I have learned that investing in single-family homes (SFH) would not get me to the financial freedom I was seeking, especially while serving overseas. For example, trying to research new markets, find that next investment property, complete the due diligence, and form the team to fix and manage my rental property took up a lot of my time and effort. These are just a few of the challenges that investing in single family rentals presented.
While serving overseas, I became even more frustrated as my SFH investing plateaued but luckily I was introduced to Multifamily real estate. In just one year, I was passively invested in over 4 different apartment complexes (over 1000 doors total) and learned quickly that multifamily allowed me to 10X my rate of investment.
When I speak about investing in multifamily real estate, many people do not even know that there are options available in these investment vehicles. For the longest time, I never even considered the idea of large apartments deals since I didn’t have the capital or experience to purchase a multifamily complex. I was very stubborn to look at anything other than SFH, until a mentor introduced me to the idea of Multifamily Syndication.
My mentor opened my eyes to that fact that there are opportunities to passively invest in multifamily real estate while still enjoying all the benefits of real estate investment. I remember him saying “every time you drive by an apartment complex just think that someone owns that property, why can’t it be you?”
To get in on Multifamily investing, I invested Passively in a Multifamily Syndication as a Limited Partner. Passive investing is an approach for investors who are looking to establish long-term financial returns while minimizing their time investing. By investing in multifamily syndication, you can enjoy the six benefits listed below, and more, of this investment class.
- Time – Let’s face it, your time is one of your most valuable resources, and you should spend it on doing things you love. By investing passively, sponsors like JCORE Partners are spending the time to find the right property and execute a sound business plan so that you focus on doing other things. (we like to call this making money in your sleep, a.k.a. mailbox money!)
- Tax Benefits – Like any investment, you should anticipate some sort of return, but along with the opportunity to earn income, investing in multifamily properties offer several tax benefits to investors. Taking advantage of these tax benefits allows you to increase cash flow in the short term while maximizing tax savings.
- Diversification – The most commonly cited reason for investing in multifamily real estate is portfolio diversification. Meaning you are looking to add real estate to your investment portfolio. You can also diversify your real estate investments across several properties in different areas with different property types and other sponsors. Doing so keeps you from over-allocating assets to any one group and will help you learn what you do and do not like from a multifamily sponsor.
Liability – With syndications, one of the greatest benefits to investing passively is that you have no liability beyond your investment. - Philanthropy – With most investments, only you or your family are receiving the benefits of the investment. However, when you invest in a multifamily syndication, you have the opportunity to not only receive monetary returns but positively impact the lives of many families. Each multifamily syndication we execute aims to create a clean, safe, and pleasant place for people to live. Doing so also has a positive influence on the community and environment. This is a benefit you typically do not see from investing in stocks or bonds.
- Leverage – When you invest in multifamily syndications, it all comes down to leverage. In this instance, we define leverage as using something to its maximum advantage. Leverage allows you to use various instruments of the sponsor to increase the potential return of your investment. Passive investing enables you to leverage things like experience, knowledge, research, time, network, teams, and ability to syndicate with other like-minded investors to take down large multifamily deals.
Passively investing in multifamily real estate is a great way to diversify your portfolio and mitigate risk. It allows you to use your most finite resource, time, on the things you love instead of doing so much effort to find that next SFH investment. Also, you aren’t involved at all with fixing toilets, screening tenants, or handling the day-to-day operations of your SFH property. You benefit from several tax advantages, have minimal liability, and positively impact many families and communities. That said, we hope that this article helps you build a stronger foundation in making an informed investment decision.
