If you are new to apartment syndications, I recommend you check out What Is Multi-Family Syndication, which should be a helpful resource and introduction into how this niche works and how many have become financially free by investing in apartments.
Now that you are somewhat familiar with how it works, why would any working professional seek to consider investing in Apartment Syndications?
Diversification
True diversification happens not from investing in different types of stocks, for example, but investing across various asset classes. Perhaps, you are well invested in stocks through your 401k and have some cash. If stocks -which as of writing this are currently on a run due to many investors taking their cash and putting them into the market – begin to take a hit, at least you have cash and liquidity. If the spending power of your dollars increase due to inflation – which should be feared due to the trillions of dollars being printed to keep the economy going – at least you have some exposure to stocks and a means to hopefully beat inflation.
But what if both the value of your dollars are at risk of decreasing and this excitement in the stock market begins to wane, leaving emotional investors to sell off their stocks en masse and finally slowing the rally that we had seen for the last year? Where should your assets be?
This is why investing in real assets is such a great way to diversify. Having a healthy balance of stocks, cash and real assets protects against inflation but also gives you better chances of growing wealth. Most people do not have real estate investments in their wealth portfolio, and I think they should. If the above is not enough to convince you to take real assets seriously, consider this: As Robert Helms from the Real Estate Guys Radio Podcast says, Until some technology replaces people’s need for housing, People always need a place to live.
Passive Nature
My strong conviction is that what attracts people to stocks is its passive nature. They can create a brokerage account, fund it, and invest through their phone, looking at their portfolio performance while on the toilet. They can keep their day job and invest for passive income and wealth creation without convergence.
Many do not realize that real estate can afford the same passive nature, just with a little more intention and relationship building. You can keep your day job earning income while get your money to work harder for you from real assets.
Scalability
If you are like me when I first started, you had more of an individual versus team mindset. I wanted to be independent, to do everything on my own. I wanted to invest with my own resources, not rely on others and grow wealth alone. This can and has been done but there is one major drawback (maybe two):
1) you are limited in resources, and
2) If you want to grow, you will likely take on too much on your own.
The benefit of investing alone is that you are entitled to 100% of the cash flow. The downside, is that you cannot scale as fast and may only have 3 single-family homes versus the possibilities in multi-family. This is why I decided to make the transition from single-family to multi-family. If appreciate the benefits of partnering for larger acquisitions and receiving a fraction of a larger deal (a deal that I could not have done on my own).
One more thing: even if you had $10 million to invest as an active individual investor, you would soon find yourself out of funds because you will have acquired larger properties and will not have enough to continue investing on the scale at which you desired. Without partnering, everyone is limited in scalability.
I only know this from experience. I still plan to grow my personal portfolio, but only when it makes sense. Working with a team will better help me achieve my goals, and it should do the same for you.
Taking Action
Interested in diversifying or scaling your real estate exposure through apartment syndications? Here are some tips for taking action:
– Understand the value proposition of real estate
– Learn about multi-family syndication and how to gain freedom as a passive investors
– Find a great syndicator through these recommended channels
– Get to know syndicator and ensure alignment of interests
– Invest when a deal comes that is the right fit.
Of course, you want to get educated so that you are equipped to invest when the time is right. This is precisely why this blog exists! Sign up here to receive our latest articles in your inbox as well as our monthly newsletter. Contact me with questions and to find out your fit and how you can take your next step in wealth creation through real estate.
