Why I Am Changing My Mind About How Some Real Estate Investors Should Start

[Jonathan Greene]

I flipped my first house on my own in my early twenties. As a teenager, I managed properties that I owned a percentage of. I paid (twice) to regrade the slope of a commercial property that abutted wetlands. I learned something from these deals, but I am starting to think the path could look different for some investors getting started.

Too many new investors try to be too hands-on when they don't have the time. So, they outsource their time to property managers, contractors, and advisors. They pay other people to manage their assets but don't know how to manage the manager. They don't know when things are wrong, and they don't know when they are getting skimmed or scammed. They are too busy.

I didn't invest in syndications until I was 52. Now, I am invested in three of them. For new prospective investors who have more money than time, I think this might be a better first investment than trying to be an out-of-state landlord.

You do all of your vetting upfront—of the operator, the asset, the loan, and the area. After that, you can't manage the manager. You are a limited partner. You just follow along. You trust that you made the right decision. But once this thing is running, it's passive.

It's not for everyone. You need to have substantial capital and time for due diligence upfront. There are some fake syndicators out there. But it is for more people than most think.

Flipping isn't passive. Landlording isn't passive. Sober living facilities aren't passive. Short-term rentals aren't passive. Syndications are, if you are a limited partner.

What do you think?

[Jay Hinrichs]

Like you I think I made my first investment in a true syndication when I was in my early 60s.

the sponsor is what matters.. asset OK  but if the sponsor is not top notch I dont care how good the project is.. I can make money or more money than most sponsors on my own deals of course those are not passive.. Plus I need something to do everyday :)  so doing deals is my thing. Love it.

big issue for me is you lose all control when you go into a syndication.. And as we have seen here on BP is they turn turtle the investors are really in a bad place.