Different Multi-Family strategies?

[Lukas James]

Hi,

New to the multifamily scene. I want to know more about the individual benefits and drawbacks of the different multifamily strategies (syndication, going solo on a deal, etc..) Drop all your knowledge here! Thanks.

[Paul Shannon]

Very broad question, but you mentioned syndication or going at it alone, so addressing that....simply put, if you can hang on to your equity in a good deal, do it. When you JV, you start to split equity. When you syndicate as a general partner, you start charging some fees, but you give up the majority of the equity. There are pros and cons, but the more investors, the more diluted your position. That can be good for diversification and risk mitigation, but bad for returns.

Syndicating allows you to scale and take down deals you would never be able to due to capital constraints in your personal funds.  

JV is a happy medium. Maybe you have 25% equity between 4 partners, can gain some scale, tax benefits, forced appreciation, etc, of multifamily, but could take down a 20-unit or so that you couldn't alone.

If you can buy an apartment buy yourself and its a good deal, you have total control, 100% upside, etc.  With that of course comes concentrated risk, to be fair in assessing the downside. 

It depends on the deal, your risk tolerance, and your goals.