5 Reasons to Love Passive Investing in Real Estate Syndications
What if you could wake up every morning knowing you could do exactly what you WANTED TO DO instead of what you HAVE TO DO?
Steady passive income can afford you the opportunity to live your life by design. In this article we’ll cover just some of the amazing benefits of passive investing.
If you have ever been a landlord, then you know that it can be a lot of work, time, expense, and energy.
When you are a landlord, you are responsible for it all: locating the deal, running numbers, negotiating contracts, funding the project, making improvements and repairs, screening tenants….phew…are you tired yet?
It’s a lot of work, and it’s anything but a passive income opportunity.
And it is a rinse and repeat type of business in order to accumulate enough rentals to have enough income to replace a salary and take care of all of your monthly expenses.
Small Multifamily Rentals Are A Lot Of Work
There are advantages to investing in small multifamily rentals versus single-family home rentals. Namely that it is easier to manage a series of units under one roof than it is to manage several single-family rentals spread across a geographic area. Multifamily rentals create an economy of scale that single-family investments just can’t compete with. Small multifamily rentals are simply easier to manage than single-family rentals as a whole.
If a tenant moves out of a 10 unit apartment complex, then your vacancy is at 10%, right? The other 9 tenants can make up for or offset the loss of the rental income of that one unit in most cases. But if a tenant moves out of your single-family home, you have a vacancy on that property of 100%.
In either scenario, however, you will be responsible for all of the work that goes with rentals that we talked about earlier, even if you have a property manager, these are not hands-off investments. They still take quite a bit of time, treasure, and energy.
What’s So Great About Passive Real Estate Investments?
On the other hand, you can invest passively in commercial real estate syndications. A real estate syndication is professionally operated and managed by experienced team members who do all of the work for you. They take care of all of the day-to-day management of the asset on your behalf, and you never have to be a landlord to invest in these real estate opportunities.
Recently Forbes outlined the vast benefits of real estate syndications and why investors gravitate toward this investment vehicle.
1. There is Very Little Time Required
Syndications are a “set it and forget it” type of investment. With syndications, your capital is working for you not the other way around. You simply deploy your capital into a solid, tangible real estate investment that you can see, feel and touch and you receive cash flow from the investment as well as and profits from the sale of the asset at a predetermined timeframe.
You literally do not have to do a single thing after your capital has been invested. The deal sponsor team (general partners) executes the business plan for the project to help ensure steady returns and a profitable exit for you. You just have to focus on designing your life and doing the things you want to do every day.
Sounds simplistic because it is.
2. Benefits of Market Diversification
It would be impossible for one person to know every single aspect of property investing in every single market across the United States. That is why it is so important to align yourself with deal sponsors who have expertise in various markets. Most deal sponsors concentrate on a handful of markets to invest in so that they can be extremely proficient and efficient when operating in those markets.
When you invest alongside these experienced general partners, you are able to diversify your investments into a variety of top real estate markets and various asset classes so that you can mitigate your risk better while having an opportunity to make better returns.
3. The Tax Benefits Can Be Outstanding
If you have had or have any rentals, then you are aware of the benefits of pass-through tax advantages. Similarly, you receive pass-through tax advantages with real syndication investing as well.
So what this means is that you will likely be able to offset the monthly/quarterly distributions with write-offs meaning your investment could afford you passive income that is virtually tax-free during the hold-term of the asset. How cool is that?
Just know though that there may be a tax consequence when you receive the profits of the asset upon its sale. There are a number of ways to offset that as well that you would want to discuss with your CPA prior to the sale of the asset to do any planning.
4. You Have Limited Liability
Passively investing in real estate syndication allows you to have a limited liability stake in the investment. You are a limited partner so your exposure to risk is limited ONLY to the capital you have invested, you would not be responsible for the debt on the property or any legal exposure nor would your personal assets be at risk in any way.
In the very unlikely event, something went horribly wrong, your biggest risk is only the capital you have deployed, and while that is still a big deal that no one should take lightly, it is important you know that every investment has risks. Some investments have more risk than others, and by comparison, real estate syndications have very low risk exposure to the limited partners or passive investors who invest in them.
5. Investments That Make A Positive Impact
More and more people are looking for investments that have a positive impact on others as well as creating a good return. With real estate syndications, you have the opportunity to provide much-needed clean, safe, pleasant, and affordable housing to hundreds, if not thousands, of individuals and their children. You can change an entire community for the better by investing in one deal at a time.
It’s what we call doing good while doing well.
If you’re still unsure if you want an active role or a passive role in real estate investments, just know that gaining experience in owning rentals can be invaluable, but it is not necessary to have that experience in order to successfully be a passive investor in real estate syndication opportunities.
No matter which path you take, investing in real estate can help you mitigate your risk in the investment and help you to diversify your portfolio for better returns all while creating a positive impact on residential communities across the United States.
It’s a win, win, win!
Ready to Learn More?
The best way for you to learn more about passive investment opportunities in commercial real estate syndications is to join the PCRP Passive Investor Club.
Through the PCRP Passive Investor Club, you’ll get a priority review of all the deals we offer. We’ll work with you to determine your investing goals and then present you with the best deals to meet those goals. We’ll then guide you every step of the way as you invest in those deals.
So if you’re ready to start investing passively in institutional-grade, commercial real estate in fast-growing, climate-resilient markets in the U.S., join the PCRP Passive Investor Club – IT’S FREE! – and get started on your path to EARN PASSIVELY and LIVE ABUNDANTLY!
If you would like to know more about what we do and how it may be of value to you, please reach out to us anytime. We’re always happy to help!