Whats the best way to start investing if you already have capital

[Zach Crawford]

I need help! Im looking to start investing and just want to go out and finance a 10-20 unit apartment building. Is this a good idea? 

[David Thompson]

Zach,

There's a few ways.  You must first determine your accredited status and then that would open up the doors to more of a full spectrum of opportunities.  REITs are more like a mutual fund that targets different RE niches but unfortunately you really don't get much learning as you are just dealing w/a fund company.  Additionally, most REITs focus on class A type property where most of the big gains are not made.

You could also look at crowdfunding sites and see what they are offering. Many times you don't have to be an accredited investor in these deals. The advantages of crowdfunding from an investor standpoint is that you can create your own type of quasi mutual fund by investing small amounts in a variety or REI niches, diversifying into many deals, geographies, etc. On the flip side, not a lot of learning going on here either but is an interesting angle and appreciate its appeal.

Syndication deals are simply a formal way that deal sponsors (general partners) raise capital taking on investors as limited partners that typically focus on one REI market niche, such as large MF apartments. As opposed to most REITs, these sponsors would look at value add / special situation / turnaround deals in the B/C class category (think 1980s apts that need a facelift, remodel, bring in new property management to improve efficiencies / NOI) where they could create massive value in a short period of time, then look to refinance and eventually sell the asset. Investors get typically quarterly distributions along the way. Many syndications solely deal w/accredited investors and some allow sophisticated / non-accredited investors depending on how they are setup.

For BP folks who want to earn passive income but be intentional about the process of being a more educated investor, I think working w/syndicators is a better option. Personally, I prefer to spend time w/my investors and can educate them to any level they would like. I don't get that typically w/a REIT ownership or a Crowdfunding portal. I think investors who want to learn about large MF investing should start as an investor if they are accredited. They may choose never to be a sponsor, but at least they can get close to the sponsor and be a better, more informed investor while earning very attractive returns. Typical targets are 10% CoC and 20% IRR range.