Multi-Family Real Estate Syndication in a Nutshell
You may be curious about the different types of investment, particularly Single family and Multi-family investments.
Single-family properties are where a lot of investors get their start, but for most people, this means being the only investor and doing all the property management on your own. Multi-family real estate syndication can be a much better way to invest.
A. Definition and Basics
When you invest in a syndicate, you're working in concert with other investors to be part of larger deals on multi-family properties. You may be putting in about the same amount of investment as with a single-family property, but the deal is a lot larger, and you're no longer solely responsible for all management issues.
In other words, you risk the same amount of money and see similar and often higher returns, but someone else is finding and vetting the deals, pursuing the loans, and taking care of property management. This person or entity is known as the syndicate.
B. Benefits to Consider
Lowered Impact of Tenant Issues
When a tenant destroys your single-family property, doesn't pay rent for months on end and has to be evicted, or leaves with no warning, the impact for you and your investment is enormous. When you invest in a multi-family property, there are multiple tenants, so the effect of any one tenant's bad decisions is spread out.
If your single-family property stands empty, you have zero positive cash flow. But with a large property in syndication, you're still going to have positive cash flow even if there are several empty units at any one time. There's also more rental income cushion to deal with repairs and other unexpected expenses.
Your risk on a single-family property is 100%. By investing in a real estate syndicate, however, you spread out risk among multiple investors. In some cases, depending on the size of the syndicate, there may be several multi-family properties involved, which mitigates risk even further.
Access to Otherwise Unobtainable Investments
There are lots of reasons investors prefer multi-family units to single-family investment properties, but costs make it difficult for any single person to be the sole investor in these high-value properties. That's why the vast majority of multi-family deals are made through syndication. Syndication allows individual investors access to higher-value properties with greater ROIs than would otherwise be possible.
Single-family investment properties can be very costly to manage. The rent from just one tenant often isn't enough to cover huge (and usually unexpected) management expenses, like a new roof when a storm brings a tree down or complicated sewer problems. In contrast, a multi-family property brings in enough revenue for the syndicate to hire full-time management staff to keep on top of all management issues, saving individual investors a great deal in management costs.
Taking part in multi-family syndication has advantages over being the sole and only investor in a single-family property. To learn more about this real estate strategy and other ways to ensure your realty investments are working for you, visit Shannon Robnett today and get the tools you need to achieve true financial freedom.