How Entrepreneurs Earn Tax-Free Money with Real Estate Syndication
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Entrepreneurs are always looking for great opportunities to grow their business and their wealth. This is why a lot of them look into real estate as a potentially lucrative way of maximizing their profits.
Real estate investing is one of the best strategies for entrepreneurs because it is a lower risk, long-term approach. Smart entrepreneurs can take their income and put it into a real estate property to earn even more money in the long run through monthly rents and capital appreciation.
That said, there are entrepreneurs who hesitate to invest money into real estate because it is a hands-on investment and they don’t have the time to be directly involved in it. This is where real estate syndication comes in.
Multifamily Real Estate Syndication for Entrepreneurs
Real estate syndication is when a group of investors pool their resources together in order to build or purchase a property. When a group of investors pool their money to buy a large property such as an apartment complex, a condominium, or any real estate property with multiple units, this is called multifamily syndication. Other syndication types focus on hotels, student housing, self-storage, manufactured home parks, warehouses, land development, etc. [1]
Although multifamily properties are generally more expensive, syndication allows investors to purchase real estate assets that they otherwise wouldn’t be able to afford.
Tenants pay rent on a regular basis, which means multifamily syndication generates a continuous cash flow for its investors.
In a multifamily syndication deal, investors enjoy the benefits that are usually afforded to the actual owner, including appreciation and tax benefits. Syndication can serve as a form of tax shelter since a lot of the income coming from multifamily syndication is tax-free. [2]
Passive Real Estate Income for Entrepreneurs
Multifamily syndication is the perfect real estate investment for business owners because of its passive nature. Investors receive a check usually monthly or quarterly for the duration of the deal, depending on the deal structure.
For entrepreneurs, developing alternative income streams is an empowering experience. With multiple revenue streams, you free up time to do what you want to do, when you want to. This can help reduce burnout which is common in any industry, but especially common among entrepreneurs.
A lot of business owners do not have formal company pension and benefits like employees of larger companies. Because of this lack of designated pension funds, investing in the future is essential for entrepreneurs. Although the goal is to retire early, this goal becomes more achievable by having an investment property. [3]
Aside from securing the future, it also helps fulfill the goal that many entrepreneurs have—and that is making money while they sleep. No need to rely on one source of income when you can have a multifamily unit that generates money on its own. The investors themselves don’t have to put in much effort. What sets multifamily syndication apart from other real estate investments is that investors don’t have to take on the role of landlord.
Less Headache for Real Estate Investors: Choose Multifamily Syndication
Multifamily syndication is a form of group investment that helps investors purchase assets that are normally out of reach. A syndicator, or sponsor, locates a multifamily property, puts the deal together, and looks for investors who will provide most of the capital. This is a lot lower risk than purchasing the real estate property on your own. [4]
Once the property has been purchased, the sponsor takes charge of managing the property—taking a lot of weight off of their investors’ shoulders. Investors don’t have to take care of tenants, deal with emergencies, or repair the property. Sometimes the sponsor hires a third party organization to manage the property on their behalf, but other sponsors do it themselves. Either way, it is no longer the responsibility of the investors.
Entrepreneurs can earn money from cash flow as well as the equity upon resale once the deal is over, depending on the deal structure. You can invest your money and enjoy the passive income without worrying about the property itself. No need for your direct involvement. This also means you get to focus on growing your business.
For their role in the deal, the sponsor typically receives fees and/or a percentage of the “distributable cash” left after all the expenses and loan obligations have been paid.
Why Work with BAM Capital for Multifamily Syndication
For business owners who want to try multifamily syndication, BAM Capital is an option because of its vertical integration model that mitigates risk for investors.
BAM Capital prioritizes Class A multifamily properties because it values low risk investments for passive investors. It also has a strong Midwest focus, prioritizing Class A, A-, and B++ multifamily real estate properties in that area. [5]
BAM Capital will arrange the syndication deal so there is no need to purchase an asset on your own. BAM Capital will also handle property management.
BAM Capital works with accredited investors and negotiates the purchasing and financing of high quality multifamily real estate properties on their behalf. This Indianapolis-based company currently has over $700M AUM and 5,000+ units. Schedule a call with BAM Capital and invest today.
BAM Multifamily Growth & Income
Fund IV
Fund IV
The BAM Multifamily Growth & Income Fund IV, a private real estate fund, seeks to balance cash flow stability, capital preservation, and long-term capital appreciation while providing superior risk-adjusted returns to investors.
Benefits of Multifamily Investing:
- INFLATION HEDGE: ability to raise rents on short-term leases to mitigate rising costs
- TANGIBLE ASSETS WITH CASH FLOW STABILITY: a consistent income stream that is not impacted by the ups and downs of the stock market
- ACCELERATED TAX BENEFITS: performing a cost segregation analysis and accelerating the allowable depreciation can lead to major tax savings
- SUPPLY & DEMAND IMBALANCE: there is not enough housing supply in most US markets to keep up with the demand
- CAPITAL PRESERVATION & APPRECIATION: typically low-risk investments that should produce optimal risk-adjusted returns.
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Sources:
[1]: https://www.mashvisor.com/blog/multifamily-syndication-beginner-investors-guide/
[2]: https://engagedscholarship.csuohio.edu/cgi/viewcontent.cgi?article=2290&context=clevstlrev
[3]: https://www.entrepreneurshiplife.com/why-entrepreneurs-should-be-investing-in-property/
[4]: https://www.activedutypassiveincome.com/blog/what-is-multifamily-syndication/
