Multifamily Real Estate Investment vs. Apartment Syndication – What’s the Difference?
You have been presented with the opportunity to purchase a non-residential property and, when you look at the potential asset, you see dollar signs. The question now is, how exactly are you going to fund it?
When it comes to multifamily real estate investment, you have a couple of funding options. One, you could use your own money for apartment building investments. Two, you could take advantage of apartment syndication, a popular way of buying multifamily homes for investment.
Let’s take a look at both of these options and why apartment syndication may be the best approach for you.
Buying Multifamily Properties Without Syndication
If you’re interested in apartment building investments, you may be tempted to use your own cash. However, you may not have enough to cover the cost of the down payment and the closing costs. After all, these properties require far more upfront capital than single-family residences do.
Likewise, you may not have sufficient funds to cover the rehab costs associated with the commercial building. Or perhaps you’d rather not drain your coffers to make this happen. In light of this, a better way for many investors interested in apartment investing is apartment syndication.
A Look at Syndication
Syndication involves raising capital from high-quality private investors to fund a large real estate project. This can be done not only for apartment buildings but also duplexes and condos. All of these assets can generate more cash flow than you’d produce with several single-family rental units.
Syndication is a great move if you cannot afford to purchase the property on your own or you don’t have hands-on experience in managing these types of real estate properties. It essentially allows you to leverage your partnerships as well as additional financial resources to close on more deals and build an empire.
How You May Profit from the Syndication Process in Multifamily Real Estate Investment
Your profits from syndication can come in the form of acquisition fees. As a syndicator, you’ll get compensated for locating a deal and structuring it. Your fees could be between 1% and 5% of your project.
You could also receive asset management fees, totaling between 1% and 5% of the gross income each month. This is possible if you manage your partnership as well as the deal syndication process.
Furthermore, you could be compensated for your participation in the project. This equity participation percentage could range from as low as 5% to a whopping 50% ownership.
Start Making Syndication Deals Today!
If you are ready to build a real estate empire, there’s no better time than the present to start taking advantage of multifamily real estate investment opportunities. Still, apartment syndication carries with it a great deal of responsibility, so it’s critical that you know what you’re getting into.
Fortunately, you don’t have to embark on the journey to making money from apartment building investments on your own. You can start today with setting a 12-month goal and using the right success formula to get you on the path to building financial wealth. Get in touch with me, Joe Fairless, to find out how you can capitalize on the benefits of apartment syndication and enjoy its benefits for years to come.