Have you ever heard about or explored the opportunity to sponsor a child through a non-profit program such as Children International? Contributions through these organizations change children’s lives exponentially in areas of health, education, and even safety.
As you may know, when you choose to help a child through such programs, you receive updates about the child regularly, including notes they’ve written and even pictures of them. You get to have a supportive hand in their growth from afar while never having to enforce a bedtime or wash the ice cream off the child’s shirt.
Investing in a real estate syndication is very similar in this aspect. As a passive investor, you would receive regular updates on the progress of the project after the deal closes, but you don’t have to field phone calls from tenants when an issue arises.
Typical Real Estate Syndication Communications and Touchpoints
There are 5 key communications you should receive at important intervals once you invest in a
real estate syndication. From the closing date, through the hold period, until the asset sale, here’s what to look for:
Investing in real estate outside your local market, in an area you may never visit, and where you have no trustworthy friends on whom to call can seem absolutely terrifying, especially for new investors.
However, this leap into seemingly scary territory may be the key to real estate investing success.
Most real estate investors begin with local deals, and while some get lucky, others do not. The truth remains: There are more opportunities “out there” than you could ever imagine, and you’ll never see or know about them without the courage and wisdom to explore outside your local market. Having a wide net to cast for deal flow and potential returns can be a powerful thing.
Investing Out of State, and Why Everyone Should Do It
Investing across state lines allows you to align your real estate portfolio to your long term investing goals through:
Are you considering investing in a real estate syndication but are leery that it sounds a little too good to be true? You’re not alone.
Many investors are shocked when they first learn about the potential cash flow returns they could receive through investing passively in real estate syndications.
The key, though, to putting your doubts and skepticism to rest, is to understand where that cash
flow comes from and how it makes its way from the asset itself to your pocket, and that’s exactly
what we’ll cover in this article.
Take a moment to think about the process that you used to find the home you’re currently living
You likely had a checklist that included a specific area, school district, commute, and the number of bedrooms you were looking for. If you were looking for a three-bedroom with plenty of green space in mind for your growing family, it’s very unlikely you would have settled for a one-bedroom high-rise condo, even with a great view.
Well, it’s the same type of situation when you’re investing in real estate. Before you even begin to consider potential investment opportunities, it’s imperative you know WHY you’re investing and WHAT you’re looking to get out of it.
Without clear goals, you’ll easily be swayed (or paralyzed) by beautiful photos and well-marketed opportunities that don’t actually align with your investing goals.
As we walk through these examples, see if one resonates with you. With clear goals in mind, you’ll know just what to do when the right investment opportunity comes along.
Any time “investing” is brought up, peoples’ minds flash between images of Warren Buffet, memories of the Great Recession, and those #goals filed in their “someday” folder.
Unfortunately, 60 percent of Americans find investing to be scary or intimidating, according to a new independent market survey. Alternatively, 60 percent also recognize that “someday” they will need greater financial security than what they currently have.
Too many people are putting off to tomorrow what they should be doing (or investing) today.
For the next several minutes, set aside any preconceived notions you may have, and take an honest look at the risks associated with investing.
Let’s take a close look at investing in stocks versus real estate, the four basic risks of investing, how commercial multifamily real estate investments mitigate risk, and why the stock market can be much riskier than real estate.
A Primer on Risk
As with any investment, there’s an element of risk. Just as you could have been hit by a bus this morning, unexpected things come up in life, the stock market, and in real estate.
The key is not to look for investments that are risk-free (that doesn’t exist), but to understand the risks thoroughly, determine your threshold for risk, and ensure that you’re doing everything you can to mitigate risk.
When it comes to investing in real estate, most people are fairly familiar with the process of buying a single-family home or rental property. You choose the market and neighborhoods, determine how many bedrooms and bathrooms you’re looking for, get together with a lender and a broker, tour potential properties, and then make an offer.
However, when it comes to investing in a real estate syndication (group investment), the process can be entirely foreign, especially if you’ve never invested in syndications before.
For this reason, let’s explore the syndication process together, from start to finish, so you can invest confidently in your first real estate syndication.
Here are the basic steps of investing in a real estate syndication:
1. Determine your investing goals
2. Find an investment opportunity that fits
3. Reserve your spot in the deal
4. Review the PPM (private placement memorandum)
5. Send in your funds
One of the best analogies for a real estate syndication is to think of it as an airplane ride. There are pilots, passengers, flight attendants, mechanics, and more, who all work together to get the plane safely to its destination.
In this analogy, the pilots are the sponsors of the syndication, and the passengers are the passive investors. They’re all going to the same place, but they have very different roles in the process. If unexpected weather patterns emerge, if an engine has issues, or any other number of surprises, the pilots are the ones who are responsible for the flight.
The pilots will likely update the passengers (“Just to let you know, folks, we’re experiencing some turbulence at the moment…”), but the passengers don’t have any active responsibilities in making the decisions or flying the plane.
A real estate syndication is much like this. The passive investors, sponsors, brokers, property managers, and more, all share a vision to invest in and improve a particular asset. However, each person’s role in the project is different.
In this article, we’ll talk about exactly who those players are, as well as their respective roles in a given real estate syndication.
People in a Real Estate Syndication
Here are the key roles that come together to make a real estate syndication
The vast majority of people spend their lives working full-time jobs to earn a “steady” paycheck.
Meanwhile, the wealthy have somehow unlocked the secret to working less while making their
money work for them.
So what is it that the wealthy know that the rest of us don’t?
One of the biggest secrets that the wealthy tap into is the incredible power of real estate. Real
estate has the ability to generate passive income and provide a path toward building wealth.
Every dollar invested in real estate works for you in these five ways:
One of the most common questions that we get asked is, “If I were to invest $50,000 with you
today, what kinds of returns should I expect?”
We get it. You want to know how hard real estate syndications can make your money work for
you, and how passive real estate investing stacks up to the returns you’re getting through other
types of investment vehicles.
In order to help answer that question, you should first know that we will be talking about
projected returns. That is, these returns are projections, based on our analyses and best
guesses, but they aren’t guaranteed, and there’s always risk associated with any investment.
The examples herein are only meant to provide some ballpark ideas to get you started.
In this article, we’ll explore the 3 main criteria you should look into when evaluating projected
returns on a potential real estate syndication deal.
Three Main Criteria
Each real estate syndication investment summary contains a barrage of useful data. Focus on
these core concepts:
I’m often asked about the best way for someone to get started in real estate investing. If you’ve been wanting to get into real estate investing but are sitting on the sidelines and not exactly sure how to jump in, you are not alone.
There are TONS of ways to get involved in real estate investing, which is why those who do it love it, but it’s also why those who haven’t yet taken the plunge are left feeling completely overwhelmed and intimidated.
If you’re one of those spectators on the outside looking in, rest assured that there are many ways to get involved. In this article, I will walk you through how to diagnose where you are, what you want out of investing in real estate, and the best way(s) for you to get started.
Here’s an overview of what we’ll cover
1. Get a Macro View of Where You Are
2. Determine Your Why
3. Decide How Hands-on You Want to Be
4. Assess Your Risk Tolerance
5. Determine How Much You Want to Invest
6. Decide Which Types of Real Estate Investments to Pursue
7. Recap and Takeaways
Use the Real Estate Investing Roadmap
Download this one-pager to help guide you through the steps below. There are spaces to organize and record your thoughts for each step.