First deal and syndication

[Jared Lomker]

I’m looking to step into my first investment property. Is syndication the right way? Does anyone have experience with with this in California?

[Chris Collins]

@Jared Lomker I just had this same convo with an investor yesterday, happy to expand more if you like...but here are the basics:

1. Know your goals for your lifestyle: 
•Are you looking to be an active investor, a semi-active investor, or a passive investor?

•Active= you find and buy the property, self manage, call all the shots, do all the hiring, firing, finding of residents, etc.
•Semi-active=you buy a property, hire a property mgr who takes care of MOST of the work, and you simply thumbs up or thumbs down to work orders over X $ amount, or incoming resident applications, etc.
•Passive = you simply write a check, go back to your life, and you receive distribution/profit sharing checks from the property.

2. That answer will help you to clarify your next steps...

If you're just starting out, and want to be Active or Semi-Active, then I suggest you stick to a single-family house or duplex for your first purchase.  This allows you to get involved, without too much financial risk (houses can be bought for $10-$20k in reasonable areas), and can learn the basics of self-managing.

If you're just starting out, and want to be Passive, then consider investing in an apartment syndication with an experienced team/sponsor.  

Syndications offer you the ability to be involved in a figurative giant machine with the economies of scale that come with it.  A 200 unit apartment complex runs more efficiently than a single-family house and is set up to withstand vacancy, maintenance, etc without it affecting your returns (since those items are all built into the business plan to start).

So, what is it you want? A passive investment in a larger apartment deal, running effeciently like a large machine? Or a more active investment in a smaller property where you have more control, with the potential for some more dynamic ups and downs.  

Both can have great returns on your investment, so to me, that's not the best deciding factor, it is more about what you want to do with your time and your future.

I have done all of these options, and now syndicate mid to large apartments, helping investors create passive income.  My friends and investors like the life it affords them. That being said, I certainly applaud anyone doing any kind of investing. There's no 'right or wrong' in my opinion.

Hope that helps!