All Forum Posts by: Jay Amin

I think that's a great description of what I am trying to do as a LP, but often the challenge is trying to determine if one should invest for cash flow (pref equity) vs building net worth (traditional equity).  I know that many real estate investors focus on generating consistent cash flow, but I think it depends upon what stage you are in your path to financial freedom, your risk capacity and risk tolerance, and what the actual $$$ nest egg you are trying to acheive.

The Hands-off Investor.  It’s dense reading at times but a fantastic reference book.  I look at it frequently.  

The beauty of investing in real estate are the tax advantages that you mention. The added bonus is the fact that you can be as active or passive as your comfort level, financial goals and personality allow. I've invested as a LP in multifamily syndications since 2019, and that really suits me just fine. I tip my hat to those active investors that focus on SFH and other rental properties that can sometimes hit it out of the park with great cash flow and ROI, but personally, it's not really what I am interested in doing. My goal is to become an excellent A+ passive investor with solid, consistent returns year after year by laddering investments over the next 3-5 years. Thus far, I've participated in two deals that have cycled since 2019 with an average return of 1.8x, 40% AAR, and 32% IRR. I am happy with my progress thus far and love learning about investing in CRE from intelligent people on this forum. At the end of the day, it's all about diversification of portfolio and minimizing risk in order to seek the best returns and building wealth.

I would be curious to hear thoughts on those LP investors that have focused on investing in commercial real estate primarily as "Pref Equity" investors rather than "Traditional Equity"  investors.  I began my real estate investing journey in the Fall of 2019 and have focused only on "Traditional Equity", but I am wondering if I need to have a balance of both.  I have reasonable risk capacity and risk tolerance for investing in RE over the next decade, but I hear from many experienced real estate investors about generating regular cash flow, and obviously in some traditional equity investments in multifamily that's not always the case.  Thanks and happy real estate investing!!

Thanks very much to all those that have commented!!  I really do appreciate it.  

I'm very new to real estate investing, but have a few questions about the tax benefits of becoming a passive investor in a real estate syndication investing in multifamily residential properties.  According to section 469 of the tax code (I'm not a CPA), the losses from passive investing can be used to offset the gains from passive investing.  Does that imply the monthly distributions received from these properties are essentially exempt from federal income tax?  Also, the losses exceeding the gains can be carried forward to the following year and be used to further offset future gains?  What happens when the properties are sold?  There is a capital gains tax (20%), but there is also another tax  "depreciation recapture".  I am assuming that the losses being carried forward from year to year, can be used to offset those as well once the properties are sold?  Also, I have no intention of becoming a "real estate professional"

Thanks!