Investing in your first real estate syndication can feel overwhelming and scary. You may logically know there are possibly hundreds of other investors taking the same steps, yet feel as if you’re walking this path alone.
Learning the lingo, reviewing deals, and committing a huge chunk of savings can bring up all kinds of fears, but as you continue to research, learn, and have conversations about investing passively in real estate syndications, you’ll naturally gain peace of mind.
A few recommendations for working through these initial insecurities include doing research, asking questions (all of them), connecting with other investors, reviewing old deals, and taking all the time you need to choose your first deal.
The allure of investing in US real estate is strong, but it may be tough to find someone who would or could walk a foreign investor through the process from start to finish… until now.
Taxes and other potentially confusing details can make or break the investment decision when considered for cross-border investments. So, having gone through being a limited partner, to taking a lead role in due diligence, to underwriting, and to running deals myself, I want to share what I’ve learned as a foreign investor.
7 Reasons Foreign Investors Love US Real Estate
If you start out investing as a spring-chicken, you may be excited to dive into scrubbing moldy cabinets, exterminating bug-infested corners, painting, repainting, and installing sheetrock until your arms are weak with exhaustion.
The truth is, the hustle and bustle of real estate is fascinating and it’s thrilling to be a part of it all. Investing in real estate provides experience in both the finance side and the construction side of things. But after a while, you may begin to feel like you need a more simple option.
As we get older, life is more complicated instead of less so, we have kids in the house, and honestly, cleaning someone else’s mess is the last thing we look forward to. So, in an effort to continue to provide good quality housing for people, my approach has adjusted slightly over the years.
Quite simply I want low effort, low-risk projects that provide cash flow so I can spend my energy with my own home and family. Hey, if you can dream it, you can do it.
In some of the most expensive real estate markets in the US, a two-bedroom home may sell for over $950,000.
IF you were considering buying that thing, you’d have to put hundreds of thousands of dollars down, just to buy a starter home. Eeesh!
In a real estate market that’s overheated, does the traditional narrative of “get married, buy a house, have kids” make sense financially?
Or does it make sense to go against conventional wisdom, continue renting, and invest that money into a real estate syndication instead?
Here, we’ll explore the math, as well as the potential risks of two paths a young family might take.
When it comes to investing, as with many of life’s major paths, it’s easy to look back and see the best choices, what should have been done, and what would have been a smart decision. Harnessing the ability to thoroughly understand your financial situation, identify actual financial goals, and commit to a plan of action are all easier said than done.
By looking at the past performance of three multifamily real estate investment projects, how much they returned to investors, and the impact they’ve had in their respective communities, it might help you understand what real estate syndications could add to your portfolio.
Keep in mind that, although these are based on actual projects and data, some identifying information has been adjusted to protect the privacy of the deals, partners, and investors.
Ready to dive in? I sure am!
As a new investor, it’s common sense to believe there exists a wide range of experience levels in the real estate investment world. But when you start digging into potential investment opportunities and realize that sometimes only accredited investors are allowed into certain deals, it feels like a total slap in the face.
That slap starts to sting when you learn that there’s no online class or certification you can take to become “one of them.”
So, what then?
Fifty thousand dollars is a LOT of money. Nevermind fifty thousand dollars per year. I get it, but hear me out. Once you see the potential results, I strongly believe you might be more willing to put forth the effort required to get there.
I’ve seen regular people with regular salaries (even teachers!) do this and change their trajectories forever. So, as with most things in life, it’s about resourcefulness, not resources. You can do anything you put your mind to, and seeing the progression of investing in syndications year after year might help you put your mind to it.
Here’s what could happen when you invest $50,000 a year into real estate syndications:
One question that comes up most often is, which investment provides a better return? People want to know if investing in real estate properties is more lucrative or if real estate syndications are truly the best choice.
Real estate syndications’ major benefit of being a true hands-off investment, saves investors from the stress of maintenance issues, tenant complaints, and dipping cashflow. That right there can make you feel like syndications are a better deal (who wouldn’t want to avoid that stress!?).
On the other hand, with rental properties, you have to do all the legwork. That includes finding a broker and a property manager and coordinating with lenders. So, in exchange for all that hard work, you’d expect better returns, right?
Thankfully, I’ve owned and participated in both types of investments, so I’m able to honestly answer this question. So let's do a little bit of math and dive in to find our answer...
When you first learn what real estate syndications are and how passive investing works, your first question might be, “What’s the catch?”
Receiving a check in the mail for doing, seemingly, nothing sounds too good to be true. What are the hidden risks of investing in real estate syndications? What goes on behind the scenes of a real estate syndication?
This is a good thought process because it means you’re not blindly jumping in. Instead, you’re thinking critically and doing your own due diligence. Kudos to you.
What Are The Pros & Cons of Real Estate Syndications?
Just like for every purchase, investment, or decision, there are pros and cons to real estate syndications as well. Each one may matter to you … or not. It completely depends upon your investing goals, time-frame, and financial position.
If you’ve spent any time on the site at all, you’re familiar with our perspective on real estate syndications.
We think they’re awesome, that people should be interested and trying to invest in them, and we can’t wait to continue to share about them so that more people have the opportunity to learn about these types of passive investments.
However, we also know that real estate investments are a big investment and are not the perfect choice for everyone. So, here are the top four reasons why someone should NOT invest in real estate syndications.
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