As early as the 1800s, entrepreneurs knew that the road to riches could be found in real estate. The late Andrew Carnegie, a 19th-century steel industrial pioneer and billionaire, is famously quoted as saying, “Ninety percent of all millionaires become so through owning real estate.” 

Over a century later, that fact still rings true. Real estate is an investment opportunity unlike any other. Well-chosen assets can provide investors with predictable cash flow as well as tax advantages, high returns on investment, an opportunity to build generational wealth, and so much more.  

The Carnegie quote goes on to say, “More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his (her) money in real estate.” 

Not all real estate is created equal, however. Grant Cardone, New York Times Bestselling Author and Sales Expert, put it like this, “Real estate is real, and it’s always a good idea to put your money in real assets. But let me be clear: that doesn’t mean that all real estate is a good idea. I only buy certain types of properties, generally multifamily.” 

We agree with Mr. Cardone, of course. 

While there are countless benefits to the various investment paths available, we are partial to the perks associated with multifamily, specifically apartment syndications. Sure, there is nothing wrong with investing in a single-family home, but what if you could approach it Grant Cardone-style and 10X your investment? Multifamily syndications allow you to do just that without taking on the burden of being the landlord of the building. 

If you’ve imagined a way to invest in big apartment complexes, but you don’t have the time, skills, or know-how to complete the job, you’re in luck. Multifamily apartment syndications require very little work from passive investors because there are other partners who do the heavy lifting, yet everyone shares in the profits. Syndications allow you to invest like a multi-millionaire without actually being one (yet). 

Syndications essentially democratize the ability to invest in large-scale assets that you might not otherwise be able to afford. They allow you to have a seat at the table with people who are multi-millionaires and do have the money, knowledge, time, and expertise. It’s a great opportunity to learn the process of purchasing and managing large-scale projects without being on the hook for the execution.

Even a 30-unit property that might be considered a smaller apartment complex can cost up to $5 million. Most investors can’t afford to purchase a property of that size on their own. Even if they could, they may lack the bandwidth or willingness to manage the asset effectively. This is where we typically see many single-family home investors getting stuck. They start off purchasing a few homes and are able to manage them themselves, but when they want to scale up, they encounter barriers like we just mentioned. Syndications offer the ability to scale up your real estate investing quickly and with less investment of your time and money.

When you invest in multifamily apartment syndications, you leverage the power of a group. You’re no longer relying on your own money, time, or knowledge to increase your wealth. You become a part of a team and a legal structure (LLC) that protects you from mishaps along the way. You get to have a sweet piece of pie without having to bake it all yourself. 

Being a part owner of the property because you are an LLC member means that you get to actually include the value of your ownership percentage in your net worth calculations. Even owning 1-2% of a $10M property positively adds to your net worth and continues to do so as the property increases in value. Plus, you personally are not adding liabilities to your net worth because you personally are not taking on the debt via a loan to purchase the property.

So, how do you do it?  

The multifamily apartment investment process can be broken down into 7 steps, outlined in further detail in this blog. 

Learn the basics 

In order to invest in multifamily syndications, you do not have to be an expert. However, you should be generally informed about the process, what types of questions to ask syndicators, and the types of assets and markets you’d like to invest in. 

Decide to invest 

Making the choice to invest in a project of this scope is no small decision. Take the time you need to discuss with your CPA, spouse/partner, and anyone else who is important in your financial plans.

Gather your funds 

The average minimum investment for an apartment syndication is $50-100K.  Begin to decide where you will pull the funds from, whether it is from savings, retirement funds, company stocks, or some other avenue. 

Get to know your syndicator 

We can not stress the importance of this enough. You have to take the time to vet your potential syndicator. Who you are investing with is just as important as what you are investing in. This business is all about relationships. 

Research the market 

When you invest passively, the lead syndicator does a lot of the underwriting and research work; however, as an engaged investor, it’s important that you still take the time to understand the potential deals that are sent to you. Take a look at the neighborhood, median income, and other factors to make sure the deal fits your investing criteria. 

Invest 

Initial investments come with a decent amount of documents to review. Be prepared to review the subscription document package, including investor questionnaires, the company agreement, and PPM. Don’t let this process overwhelm you. It’s all in place for your protection and ultimate success. Once that’s done, it’s time to put your money on the table and let it work for you. 

Receive distributions and communications 

Here comes the best part! Now you get to let the general partner lead the way while you look forward to regular communications and payouts. You can expect these to come monthly or quarterly or at the end of the deal, depending on how the deal is structured. 

Rinse and repeat! 

Still not sure if the benefits of multifamily investing outweigh the risks? Check out our previous blog that outlines what you gain and what you give up when investing both passively and actively. Only you can decide the best path for your financial goals. We are here to provide you with information and opportunities to achieve optimum success as a real estate investor. 

To learn more about the benefits of passive real estate investing, take a look at this article - The Top 5 Benefits of Investing in Multifamily Real Estate Syndications. 

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