Multi family Syndication question

[David Muellers]

Hello, I am looking for some wisdom and maybe you would like to contribute. If I have never done a flip or a BRRR why should I? Why should I just not give my 50k - 100k to a multi family syndicator with a track record of success? Sure there is a the velocity of the money in which I may have control over, if I have made the correct decisions however what if I am wrong and pick the wrong city or the wrong side of the tracks and I just spent 3 months and tens of thousands on a dog that just won't sell or rent?

Let me know what you think if a person ends their real estate career with a MFS why just not start there ? 

[Ian Ippolito]

Originally posted by @David Muellers:

Hello, I am looking for some wisdom and maybe you would like to contribute. If I have never done a flip or a BRRR why should I? Why should I just not give my 50k - 100k to a multi family syndicator with a track record of success? Sure there is a the velocity of the money in which I may have control over, if I have made the correct decisions however what if I am wrong and pick the wrong city or the wrong side of the tracks and I just spent 3 months and tens of thousands on a dog that just won't sell or rent?

Let me know what you think if a person ends their real estate career with a MFS why just not start there ? 

 I have both directly owned real estate and passive investments (i.e. syndications/crowdfunding) in my portfolio. In my opinion neither is 100% superior to the other and they both have their pros and cons. So the best answer for someone will depend on their personal situation.

Yes you are right that one of the main advantages of passive investing is that you do not have to do any work (once you have identified the sponsor and deal). And if you've chosen wisely, you should be able to get a sponsor that has years more experience than you could ever get on your own.

The other advantage of passive investing is that you only have to fund a small portion of the investment rather than the whole property. So with a smaller amount of money you can be diversified into multiple properties, multiple asset types, multiple geographies, multiple strategies etc. versus more single property risk with direct investing.

On the other hand, investing this way requires feeling comfortable turning over control to someone else, and not everyone can do that. Also, the returns will not be as high as direct investing because a person cannot put in any sweat equity, and be paid for that. So someone who has more time than money will probably choose direct investing instead.

The other advantage of direct real estate is that a person can customize it exactly how they want and make it as unusual as they please. For example if someone wants to set up a no debt investment it can be very difficult to do it passively.