If you’ve decided that real estate syndication is a must-have for your passive income wealth strategy, the next logical step is learning how to find the right deals. Just as with any sort of investment, you want to get your bearings in this new type of deal. It’s best to take your time and follow the tips we outline below to ensure that your first syndication investment is a profitable one.
Know Your Investment Time Strategy
Everybody invests with different goals. Part of these goals is having money by a specific time. Whether it’s having a certain amount of money when you retire or having money available for your child’s college fund, you likely have deadlines you need to meet. It’s important to have these figured out ahead of time, so you know which types of investment periods are right for you.
You’ll be able to find real estate syndication investments that range from as little as 1 or 2 years up through 10 to 15 years. Let’s say your goal is tuition money for your child who graduates high school in three years. You’re going to be looking for a syndication opportunity that is in the one to two-year range.
Know Your Acceptable ROI
As an investor, you know that ROI can make or break a deal. Each investor should have a clear idea of what ROI minimum they’re willing to accept. Each syndication deal is going to be a bit different from the next in terms of ROI. By having your minimum ROI percentage ready to go, you can easily sift through syndication deals and expel those which don’t meet your minimum ROI requirement.
Decide On A Syndication Strategy Up Front
Syndication deals come in different strategies. It’s important that you decide what syndication strategy you’re going to be investing in before you start looking for a sponsor. The most common types of syndication strategies include:
Aggressive Value-Add Strategy
With this strategy, an entire property will be purchased and vacated. It will undergo extensive renovations. Once the renovations are finished, the building will be leased at higher rental rates than in the past.
Mild Value-Add Strategy
With this strategy, the property isn’t vacated once bought. Rather, as normal tenant turnover occurs, the existing units are renovated. Then, they are rented for higher rates than in the past.
Buy And Hold
This is the most traditional investment strategy most investors are familiar with. An investment property is simply bought and held for long-term cash flow benefits.
As you can see, each strategy comes with its own pros and cons. The value-added strategies can be riskier than the buy and hold strategy. If you’re willing to take on a lot of risk, then the aggressive value-add strategy may be a profitable one for you. If you want to limit your risk, then buy and hold syndication deals are your best bet.
Are you interested in learning more about creating turnkey passive income and generational wealth through multifamily apartment investing? Visit www.syndicationcapital.net for more information, resources, frequently asked investor questions and our free e-book: How to Passively Invest In Multifamily Apartment Syndications.
