How To Get Started Passively Investing in Real Estate Syndications

Passive investing in real estate syndications is a fantastic way to grow wealth. One reason many sophisticated investors do this is they want to buy real estate assets and take full advantage of the benefits of owning real property, but don’t have the time or desire to make it their job. For those who do want to be more active, they understand that they must be part of an experienced team to make their effort worthwhile.

It’s important to set goals to ensure your investing strategy and focus align to your life goals. I recommend spending dedicated time to writing one year, 5 year and life goals, then reading them out loud frequently and updating them as they change over time. After this, you can choose an investor identity that aligns with your goals. An investor identity describes who you are as an investor. It outlines what you focus on and this allows you to hone in on one investment type and become knowledgeable in this area. With knowledge comes the confidence to take action and invest when the right opportunity presents itself. A great tool for creating an investor identity is this investor identity canvas.

Some people get stuck. They may get stuck in the getting started phase. They never invest because they are afraid of what they do not know. Some people get stuck in the education phase. They enjoy reading books about it, dreaming of one day investing “when the timing is right” or they may analyze many deals, always finding something to prevent them from moving forward. This is commonly known as analysis paralysis and it is a real thing. All of this is related to fear. It will keep many good people from realizing their full potential.

For those who choose passively investing in multifamily syndications as their investor identity, they must find a good sponsor, often called an operator or a syndicator, and a good property, often called a deal, an offering, a property, or a project. Both the team and the deal are important.

You want a team you can trust. It’s important to know the team is honest, ethical, credible, has integrity, is knowledgeable, is trustworthy, has experience and has capability. This is a long list of things the team must have! Not every team does, and it’s important to do your homework and determine this before investing with them.

With the knowledge you’ve gained from educating yourself on your investment type, you can analyze a deal well enough to understand if the numbers will work for you. You should understand and be comfortable with the risks involved with any investment. You should feel confident the business plan is realistic and the team can execute it. If your due diligence reveals that this is a good investment, you are ready to take action and invest!

Good sponsors and good deals aren’t always easy to find. With patience and determination, you will find both. Don’t give up and once you find the right combination, use your knowledge to invest in a great deal that will place you on the path to financial freedom. Investor knowledge and financial intelligence grow with experience. As you invest and continue to learn, you will find more opportunities because you learn to recognize them, even when others don’t. This is a true path to wealth and financial freedom.