When it comes to making investments, real estate is usually a great option. It’s a way to generate passive income and can lead to additional wealth in the future. It’s also quite challenging. Whether you’re a seasoned real estate investor or just looking into jumping into the exciting world of real estate investment, taking advantage of real estate syndication can work for you. In this article, we’re taking a look at real estate syndication and how you can make it work for you.
Getting Started With Real Estate Syndication
Investing in real estate can be a costly endeavor, as it requires generous capital to get started. And the buck doesn’t stop there; you need to maintain and develop your real estate as time goes, especially if you’re renting it out. There may be a gap between tenants or required repairs. Either way, investing in real estate is sort of a long game—house flipping included. Research and planning will help get you going—there are plenty of planning utilities and calculators online—and it’s always a good idea to start with something small or mid-size and work your way up. That’s where something like real estate syndication comes into play. By pooling your money with other investors, you can distribute some of the responsibility and costs of the investment while reaping the returns down the line.
What Is Real Estate Syndication?
When it comes to investing in real estate, it can be tough to get started. Real estate syndication is a way to simplify the process. In real estate syndication, two or more investors combine their skills and capital to take on mid-level or high-level investments. Teaming up with another investor can open up a realm of investment opportunities that may not have otherwise been available to a single individual. In real estate syndication, two or more parties pool their money together to invest in properties that might otherwise have been out of their respective price ranges. There’s a sponsor (the syndicator) who scouts the property and invests around 20%. The other investors pool in the remaining capital. Syndicators may also occasionally take an acquisition fee upfront. Later, investors receive a return on the investment (from sales, rental income, and other aspects of the investment) and it’s largely up to the syndicator to make sure everything runs smoothly to maximize the ROI. The entire process is straightforward and allows all parties to invest in larger properties and eventually receive better benefits and returns.
Online Investment Opportunities
There was a time not too long ago when investing in a property remotely required a lot more work than it does now. Thanks to modern investment firms who’ve decided to leverage the power of online tools to handle investments, it’s easier and convenient to expand your options within the real estate market at large. Using a firm that has these capabilities allows you to track your investment in real-time and help you find new investment opportunities easily. It’s a good way to get a wealth of information about your past and present investments easily while also giving you the ability to manage everything securely online.
Types of Investments
Real estate investments offer tons of variety. Depending on your investment goals, amount of available capital, and future plans, it’s possible to use real estate investments as a path to building wealth and diversifying your portfolio well into the future. Here are a few of the most worthwhile investments to consider:
- Luxury Homes – these long-term investments involve investing in the purchase or building of luxury homes.
- Home Flipping – a short-term investment where you renovate a house and sell it for profit.
- Single-Family Rental – rental properties for a single-family.
- Multi-Family Rental – rental properties (like condominiums and apartments). Rental properties tend to be a bit more stable but can require some work.
- Multi-Family Developments – a mid or long-term investment involving purchasing a single-family dwelling, tearing it down, and placing Multi-family units in its place.
Each one has its own pros and cons, as well as its own investment costs so be sure to do your research, understand what you’re getting into, plan ahead, and enter into partnerships that’ll last before you commit to anything.
How Do I Get Started?
Now for the difficult question: how and where do you get started? There are actually several ways to get the investment ball rolling. Some investors might begin with real estate investment trusts. You can also get into rental properties or decide to purchase a property to fix up and sell at a profit (this is known as house flipping). All of them are excellent ways to get started. Going through an accredited real estate investment firm like Los Angeles-based Gatsby Investment is another good option for diving into real estate investing. They can help investors get started with their next investment with any amount of capital. Everything is predominantly online, so it’s easy to access and see (in real-time) exactly what your investments and returns look like. Most firms also have a team of specialists that can help with the entire process from securing and scouting properties to making investments and helping to line up contractors for potential renovations.
Understand Minimum Investments
As with any investment opportunity that comes along in our lives, investing in real estate has minimum investment requirements. Traditionally, the minimum investment varies by property type. It can start as low as $500 in some cases. Typically, the minimum amount for most real estate syndication is $10,000 and depends on the type of investment you’re making. House flips will have a different cost of initial investment compared to multi-family developments for example. Commercial real estate like office buildings and similar structures might require as little as a $25,000 investment to get started. It ultimately depends on the type of properties you’re interested in and the sort of returns you’re seeking. Either way, investment is a good way of diversifying a portfolio and increasing passive income over time.
Source: Upscale Living Magazine