Syndication vs. Direct Ownership

[John Nachtigall]

Hi, I am looking for some opinions.

I am about 6 months into my journey in real estate, when I stated I was looking to diversify my portfolio and put about 20% of my wealth in real estate.   I have worked hard in my career and I qualify as an "accredited" investor.   So I began this by looking at syndicated deals on sites like RealCrowd and CrowdStreet.   I came across BiggerPockets when I was educating myself about real estate and it has been quite useful.   

So far I have invested in 4 syndications.   All 4 are different commercial real estate, 1 multi-family, 1 self storage,  1 office, and a part of a 150 Million private fund that invests in various assets in various areas).   Generally they last 3-5 years with 0-10% cash flow and 2-2.5X total return.   There are an abundance of deals on these sites, all professionally vetted, and a diversity of objectives.   Some are cash flow deals, 8-12% return a year, some maximize total return, it is a variety

So I am down to my last bit to invest, about 100k, and I find myself torn.   Do I invest in 1-2 more syndication or do I try direct investment into a small multifamily.   Having been bitten by the bug I have been trolling the normal sites looking for possible investments.   I should add that I have 4 other friends and family members in my home town that are interested in direct investment and would go in on a deal allowing us to buy a small apartment building or MHP.  

Syndication, however, is hard to beat.   100% passive investment with some of the same tax benefits but none of the heavy (or light) lifting.   All great properties run by (or turned around by) people with decades of investment experience.    I can even invest in Direct money lending (which I consider just like syndication) where it is about 8-10% return and all about the cash.  But there is something about actually owning the building outright (or with a small group).     I would add the group I would work with does have 32 doors (8 4plex) under ownership and 2 of the 5 are civil engineers with construction experience, so it is not without its resources and experience.   

It is a good situation to be in for sure.   So I am turning to the internet and this forum for what the internet (and forums) do best, provide opinions for free.

Syndication or Direct Investment...which one and why?

[Jillian Sidoti]

I am a securities attorney. I see a lot of deals and I watch a lot of people make a lot of money by doing direct investment. I also worked in commercial real estate and am a CCIM.

With all this being said, I have realized something very clear about me personally: I am a much better passive, syndication investor than a direct investor. I tend to get overly emotional about direct investments, don't take care of things that need to be taken care of, and nitpick and worry about the unimportant. Yes, there is potential to make more money, but the stress is too much for me.

I still own some single families and a duplex directly, but once I get rid of those I am going to most likely stick to my current model of investing with other people that have a dedicated, full time team to direct investments.