Making Multi-Family Investing a Passive Career

[Lukas James]

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!

[Michael Tomasino]

@ 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.

[Jackson Babcock]

@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.

[Jeffrey Donis]

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.  

[Evan Polaski]

@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.  

[E. C. "Stony" Stonebraker]

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.

[Sam Bates]

@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.

[William Costello]

@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. 

[Mike Lorence]

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.

[Debbie Wilcox]

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

[Paul Moore]

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

[Paul Moore]

@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!