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Updated over 3 years ago, 05/08/2021

User Stats

7
Posts
10
Votes
Lukas James
  • New to Real Estate
  • Sarasota, FL
10
Votes |
7
Posts

Making Multi-Family Investing a Passive Career

Lukas James
  • New to Real Estate
  • Sarasota, FL
Posted

Hey everyone,

Being that I have other ambitions and income streams, the goal of mine is to use my capital to invest in multi-family real estate, but with as hands off as possible. What are the ways I can do this? Thanks!

User Stats

24
Posts
11
Votes
Michael Tomasino
  • Investor
  • Charlotte
11
Votes |
24
Posts
Michael Tomasino
  • Investor
  • Charlotte
Replied

@ Lukas - The easiest way and most passive way to invest is as a limited partner in a syndication deal. The sponsor will manage the investment(s) and you will receive quarterly distribution through the hold period. A typical deal may be 8% cash on cash with 15% IRR. If the deal is refinanced you might get your equity back early and be able to reinvest it in another deal while still receiving the distributions on the first deal.

User Stats

120
Posts
108
Votes
Jackson Babcock
  • Investor
  • Charleston, SC
108
Votes |
120
Posts
Jackson Babcock
  • Investor
  • Charleston, SC
Replied

@Lukas James Yes being a passive investor in multi family syndications is definitely the most hands off approach to real estate investing.  But with that being said, you need to educate yourself in multifamily so you can analyze deals that the syndicators offer.  You don’t want to just hand off your money to just anyone.  Make sure you know, like and trust the operator.  Make sure there is an alignment of interest between you and the general partner.  I recommend reading The Hands of Investor by Brian Burke.  Also you will gain lots of knowledge by starting to listen to multifamily podcasts and learning the terminology. 

Depending on if you are are an accredited or non-accredited investor will also determine which syndicators you can invest with.  I would be happy to connect if you would like to talk in further detail.  Good luck with your real estate investing.

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User Stats

1,221
Posts
689
Votes
Jeffrey Donis
  • Investor
  • Durham, NC
689
Votes |
1,221
Posts
Jeffrey Donis
  • Investor
  • Durham, NC
Replied

I agree with @Michael Tomasino. Being a passive investor in a syndication deal allows you to get the benefits of commercial real estate, like depreciation, preservation of capital, etc. without the day to day involvement in the management of the asset. 

It seems like you're ambitious and already looking to get multiple streams of income. I love to see another young hustler looking to increase their wealth. PM me if you want to hop on a call and connect.  

User Stats

3,716
Posts
3,365
Votes
Evan Polaski
Pro Member
  • Cincinnati, OH
3,365
Votes |
3,716
Posts
Evan Polaski
Pro Member
  • Cincinnati, OH
Replied

@Lukas James, there are definitely "full time passive investors", and syndications are the most common route.  But remember as you have more money under management, you have more work to do.  It is not answering tenant calls, it is vetting sponsors, deals, staying on top of the performance of your existing deals, etc.  

  • Evan Polaski
  • [email protected]
  • 513-638-9799
  • User Stats

    199
    Posts
    266
    Votes
    E. C. "Stony" Stonebraker
    • Rental Property Investor
    • Coral Gables, FL
    266
    Votes |
    199
    Posts
    E. C. "Stony" Stonebraker
    • Rental Property Investor
    • Coral Gables, FL
    Replied

    Lukas, all the comments here are fine.  Certainly syndications are passive for LPs and can provide good returns.  The #1 rule is vet the sponsors and be sure you trust them.  

    As you are developing your financial future, be sure to get good legal, tax and financial planning advice for asset protection, tax planning and estate planning (even at your young age).  It can make a multimillion dollar difference in your future and years difference in your financial freedom timeframe.

    User Stats

    62
    Posts
    77
    Votes
    Sam Bates
    Pro Member
    • Rental Property Investor
    • Dallas, TX
    77
    Votes |
    62
    Posts
    Sam Bates
    Pro Member
    • Rental Property Investor
    • Dallas, TX
    Replied

    @Lukas James, everyone here has provided great information and I would agree that being a limited partner (passive investor) sounds like the way to go for yourself. I've been both on the limited partner and general partner side and it's important to select a general partner you know and trust. Even if you know a trust a sponsor, it still might not be the right deal for you. You should still vet every deal they send you and make sure it aligns with your financial plans at that specific moment. Each deal can be different and can provide you with different outcomes. For instance, ROI, hold period, geographic location, asset class, and many other variables to consider.

    If you'd like to set up a call I'd be glad to discuss in further detail.

  • Sam Bates
  • User Stats

    193
    Posts
    150
    Votes
    William Costello
    • Indianapolis, IN
    150
    Votes |
    193
    Posts
    William Costello
    • Indianapolis, IN
    Replied

    @Lukas James syndication is definitely a great way to be a passive income investor especially with a firm that invests in larger sized deals (150+ units). Syndication gives you an opportunity to invest in larger deals in cities that you may have not of had the opportunity to invest in on your own. Plus and added bonus, most or all syndicates have their own asset management firms and property staff on site. 

    User Stats

    70
    Posts
    41
    Votes
    Mike Lorence
    • Rental Property Investor
    • Boca Raton, FL
    41
    Votes |
    70
    Posts
    Mike Lorence
    • Rental Property Investor
    • Boca Raton, FL
    Replied

    Jeremy Roll is an example of someone who is completely full time LP.  I'm interviewing him on my podcast about it soon.  That episode will go deep on the topic.

    User Stats

    23
    Posts
    18
    Votes
    Debbie Wilcox
    • Rental Property Investor
    • Honolulu, HI
    18
    Votes |
    23
    Posts
    Debbie Wilcox
    • Rental Property Investor
    • Honolulu, HI
    Replied

    @Mike Lorence What is the name of your podcast? Very interested in listening to that episode!

    User Stats

    1,478
    Posts
    1,267
    Votes
    Paul Moore
    Pro Member
    • Commercial Real Estate Fund Manager
    • Lynchburg, VA
    1,267
    Votes |
    1,478
    Posts
    Paul Moore
    Pro Member
    • Commercial Real Estate Fund Manager
    • Lynchburg, VA
    Replied

    @Debbie Wilcox Mike’s podcast is called the Florida Multifamily Investor Show and it starts ~ June.  You’ll love it!  

    User Stats

    1,478
    Posts
    1,267
    Votes
    Paul Moore
    Pro Member
    • Commercial Real Estate Fund Manager
    • Lynchburg, VA
    1,267
    Votes |
    1,478
    Posts
    Paul Moore
    Pro Member
    • Commercial Real Estate Fund Manager
    • Lynchburg, VA
    Replied

    @Lukas James if you decide to go down this path of passive investing in syndications, you’ll need to become an expert in vetting sponsors. Here are two resources:

    1. The Real Estate Crowdfunding Review. This is a website dedicated to reviewing Syndication sponsors and it’s only available to accredited investors. 

    2. @Brian Burke’s book “The Hands-Off Investor.” 

    Good luck!