5 Reasons You’ll Love Investing Passively In Real Estate Syndications

5 Reasons You’ll Love Investing Passively In Real Estate Syndications

 If you’ve ever owned a single-family or multifamily home, you know how much time and effort these investments require.

Investing in residential real estate can be difficult since you, as the investor, are expected to wear multiple hats during the seemingly endless process. Finding the property, negotiating and funding the sale, renovating the home, interviewing renters, and even conducting maintenance are just a few of the responsibilities.

The problem is that it does not end there. When your tenant’s lease expires, you must repeat the bulk of the process.

Why Investing in Multifamily Rentals Can Be a Lot of Work

Compared to single-family houses, small multifamily rentals have some advantages. If one renter leaves, for example, the tenants in the remaining units will continue to pay the mortgage. Plus, managing one property with multiple tenants is much easier than managing multiple properties with one tenant each.

Even if you hire a property manager to assist you with your rentals, you are still responsible for bookkeeping, strategic decisions, and maintenance/repair expenditures. You’re essentially running a little business, which can be difficult to manage while working full-time.

The Case for Passive Real Estate Investments

 On the flip side, there are fully passive investments in commercial real estate. These are professionally managed and operated investments so you don’t have to deal with any of the three T’s  – Tenants, Toilets, and Termites.

Once investors begin to understand passive commercial real estate investments, it’s common for them to move toward syndications. Here’s why:

  1. Minimal Time Required

Have you ever heard the expression “set it and forget it?” You put money into a syndication deal, get cash flow during the hold term, and receive profits when the property is sold.

You won’t be cleaning toilets, screening tenants, or maintaining the property. The sponsor team and property management staff take care of those details so that you can relax, enjoy the benefits, and live life.

  1. Opportunity for Diversification

It wouldn’t make sense for anyone to try becoming an expert in every part of the property investment process, and far less sense when it comes to different markets.

By investing with experienced deal sponsors, you can easily diversify into different markets and asset classes while knowing that the professionals are taking care of business. This allows you to scale your portfolio rapidly and easily while mitigating risks.

  1. Did You Say Tax Benefits?

 When you invest in real estate syndications, you obtain pass-through tax benefits similar to when you own a rental property. You’ll be able to deduct the majority of the quarterly payouts, resulting in tax-free passive income for the duration of your investment.

However, you would almost likely owe taxes on the appreciation income you receive when you sell the property. Always consult with your own CPA about your specific situation.

  1. Limited Liability

 When you invest passively through real estate syndications, your liability is limited to the amount you invested. Your biggest risk if you invested $50,000 would be losing that money. You wouldn’t be responsible for the entire property’s value or the loan used to purchase it, and none of your other assets would be at risk.

  1. Positive Impact

You can make a difference in the lives of two to four families by making personal investments. However, real estate syndications provide you the chance to impact the lives of hundreds of people and entire communities with just one transaction.

Each syndication improves the community and the environment by making it a cleaner, safer, and nicer place to live. That’s something stocks and mutual funds can’t provide.

Conclusion

If you’re debating between active and passive real estate investing, the experience you receive from owning small rental properties is invaluable. However, owning rental properties is not a requirement for commercial real estate syndications.

In either case, investing in real estate is a great way to diversify your portfolio and mitigate risk. It allows you to have a positive impact on both the families who will live in your units as well as the environment and community.

What does FreedomInvesting.com get out of it?

We’re in the business of helping people. We’ve seen firsthand the difference that great sponsors and syndications can make to a community. We’ve had tenants thank us for the work we’re doing in turning their communities around.

We’ve also been thanked by investors whom we’re helping to build passive income streams, so they can stop worrying about money and start living the lives they’ve always wanted.

As for how we keep our lights on, that part comes from our partnerships with the sponsors. We work hard to find great sponsors and great deals. When we find them, we partner up with the sponsors and join the general partnership.

As such, we get a cut of the sponsors’ fees and equity in the deal. That means that, as an investor, you invest your money directly into the deal; you don’t pay us any extra fees.

Ready to learn more?

The best way for you to learn more about real estate syndications, as well as our current, previous, and upcoming deals, is to join the Freedom Investor Club.

Through the Freedom Investor Club, you’ll get first looks at all the deals we offer. We’ll work with you to figure out your investing goals and to help you find the best deals to meet those goals. We’ll then walk with you every step of the way as you invest in those deals.

So if you’re ready to be done with the headaches of being a landlord, sign up for the Freedom Investor Club below, and get started on your path toward becoming a passive real estate investor.

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