Updated: Feb 24
There’s a good reason real estate has been part of so many successful investment portfolios over time, it's a limited commodity that has been proven to provide lucrative returns.
A person may hold several real estate assets including lots, single family homes, commercial properties or multifamily properties but one asset structure that is often overlooked is syndication, especially multifamily syndication.
One of the best reasons to invest with a strong syndicator is having an extensive access to deal flow. Passive investments offer access to deal flow and the change to invest in high quality real estate without having the most common hassles such as property management. Plus, good syndicators will have strong networks and can get access to off market deals and bigger assets than most people could get access to individually.
Here are the top five reasons to invest with a syndicator.
Diversification is one of the primary reasons people get started in real estate syndication, especially for those who are diligent about planning their financial futures.
Passive investments mean you are pooling your money with other investors to purchase multifamily properties. There is a real strategy behind passive investing.
Instead of buying a single-family dwelling for $75,000, you can invest the same $75,000 with a group of investors. Now, you don’t own one hundred percent of a single property, you own ten percent of all the profits generated from cash flow and the properties appreciation. By diversifying this way, you limit exposure to vacancy, maintenance and other expenses that pertain to single properties.
For instance, if you own a single property and it goes vacant, you have zero income for the month it sits empty. On the other hand, if you own ten percent of 10 properties and one goes vacant, you’re still 90% occupied and can still receive 90% of your expected rent.
Access to Better Opportunities
A second reason for participating in passive investments is the access you’ll gain to larger and more exclusive investment opportunities.
Commercial properties can be a huge investment, but it’s not always reasonable to pay the purchase price which can be between $5 million and $500 million! Syndicators allow you the opportunity of pooling funds with other investors, so you get exposure to this asset class without having to invest seven-figures.
Syndicators create large investment opportunities such as these and they can determine a minimum investment which may be as low as $25,000. This allows you the exposure to larger investing opportunities that might not otherwise become available to you.
There is a distinct advantage to investing passively, meaning the syndicator takes care of all the details and as an investor, you are removed completely from the management, asset and the general operations of the investment.
The syndicator handles all these aspects. It is common for the investor to pay the manager through a performance fund which is split between the appreciation and the cash flow. Common splits for investors are 80/20 or 70/30. In exchange for the fee, you can be completely passive.
Passive investments let you utilize LLCs and limited partnerships which opens up a new status of tax-deferred for you.
You can compound every cent of the fund’s proceeds for several years as long as the gains are not distributed outside of the fund. Depreciation often provides several write offs like interest payments or expenses. This means your annual tax exposure may be zero, or negative even though you are the recipient of thousands in distributions from cash flow.
When the property is sold, investors pay taxes on the gains they received.
High Returns with Lower Risk
Finally, as a passive investor, you can enjoy high returns without being exposed to personal liability or credit risk. When investing with a syndicator, you are not required to sign on the loan, the syndicator takes care of that.
The lender will offer the syndicator funds because of their track record, credit worthiness and experience in the field. Your maximum risk is the money you put in the investment.
Passive investing is for those who are looking to build long-term wealth and creating a stream of passive income. It’s basically a wealth-building strategy which is easy to get started as well as sustain for the long haul.
Hopefully you found this helpful. If you'd like to find out more about Blue Lake Capital or if you're interesting in investing in our new Multifamily Fund, just send an email to firstname.lastname@example.org or fill our out investor for by clicking here. I invest in every one of our deals, and it would be an honor to have you invest alongside of me.
As always, Be Bold, Be Great, and Keep Pushing Forward.
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If you are an accredited investor interested in learning more about passively investing in multifamily properties, click here to complete our investor form and schedule a call with our Investor Relations team.
About Ellie Perlman
Ellie is the founder of Blue Lake Capital, a commercial real estate investment firm specializing in multifamily investing throughout the United States. At Blue Lake Capital, Ellie partners with both institutional and individual investors to grow their wealth by achieving double-digit returns by investing alongside her in exclusive multifamily deals they usually don't have access t
A defining factor of Blue Lake Capital’s strategy is founded in utilizing machine learning/artificial intelligence throughout the course of all acquisitions and asset management. This advanced technology enables the company to produce accurate and data-driven forecasting for all assets on a market, property, and even tenant basis. In doing so, Blue Lake is able to lead commercial investments with the full capabilities of today’s technology.
Ellie is the host of REady2Scale, a podcast that highlights the assets, processes, and strategies for the multiple approaches to successful real estate investing.
She started her career as a commercial real estate lawyer, leading real estate transactions for one of Israel’s leading development companies. Later, as a property manager for Israel’s largest energy company, she oversaw properties worth over $100MM. Additionally, Ellie is an experienced entrepreneur who helped build and scale companies by improving their business operations.
Ellie holds a Masters in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.
You can read more about Blue Lake Capital and Ellie Perlman at www.bluelake-capital.com.