Starting Syndication - SFH (BRRRR) or Apartments?

[Robbie Best]

Hi All! I am starting a syndication and have several investors looking to be limited partners. I'm looking at properties out of state near Kansas City right now. I have 2 asset types in mind, SFH and apartments. General strategy outlook as follows:

1. SFH - I would BRRRR single family homes, potentially near the city to have the option of converting to a short term rental. I like this strategy because if I can do this successfully, I can maximize the velocity of my investor's money (regardless of whether I go Air BNB or long term rental route). However, I have not done a BRRRR before, so this is arguably more risky.

2. Apartments - I would purchase an 8-12 unit apartment building with forced appreciation potential (i.e. light rehabs). I like this strategy primarily because there is less risk and less hands on requirement (being out of state). Potential rehabs are relatively more straightforward and repeatable between units, the income is diversified between the units mitigating impact of vacancies, and less management costs compared to STR.

For both of these routes, I am seeking to maximize cash flow for my investors above all. I would appreciate some insights as to potential pros/cons here and which strategy is better. I have been unable to move forward because I can't decide on my asset class and overall strategy. I'm a new investor with only a couple doors to my name. Of course if anyone has an alternate approach, I would love to hear it. Thanks all!

[Rick Martin]

The legal costs of syndicating are quite steep up front. I don't think syndicating an 8-12 unit building is feasible, and you won't have the luxury of hiring professional, third-party property management. Maybe a JV is a good route to start as you build up unit size. You want to be well equipped and not experiment with investor money.