Investors who want to succeed in real estate usually go for larger projects such as commercial real estate properties. They look for commercial properties that can be used as retail spaces, office spaces, spaces for lease, or spaces for rent.

Investing in commercial real estate involves purchasing a piece of land or a building that is leased to businesses as tenants. These properties are typically large enough to be run as commercial enterprises. One example would be a large scale apartment complex. Commercial real estate can be divided into five main categories: residential, office, industrial, retail, and hospitality. [1]

These properties are generally larger and more expensive. Therefore it is not easy for sole investors to purchase these properties on their own. It is possible, but doing so comes with plenty of risks. For investors who want to go into commercial real estate investing without getting exposed to too much risk, BAM Capital offers a solid solution in the form of multifamily syndication.

Large Scale Commercial Apartment Complex Investing​

Investing in large scale commercial apartment complexes is a serious endeavor. But there is an easier and safer way to invest in these larger properties: multifamily syndication.

In real estate, syndication is when a group of investors pool their resources together to build or purchase a single property. When the money is used to buy a multifamily property such as an apartment complex or condominium, this is called multifamily syndication. Other types of real estate syndications focus on student housing, manufactured home parks, hotels, self-storage, warehouses, land development, and more. [2]

In a multifamily syndication, a sponsor locates the property and puts the deal together. They play a vital role in the investment process because they are in charge of finding the deal, securing financing, negotiating with the seller, completing due diligence, finding investors, and managing the property.

The investors provide most of the capital for the syndication deal. Because of this setup, investors enjoy a passive investment that usually brings a monthly or quarterly income from the cash flow. Multifamily properties tend to generate a continuous stream of income because tenants pay rent continuously. And because the sponsor is in charge of managing the property, investors don’t have to take up the responsibility of being a landlord.

With multifamily syndication, you can enjoy a passive investment without having to deal with tenants or emergencies. Either the sponsor will manage the property themselves or they will hire a third party property management team. In any case, the investors don’t have to worry about repairs.

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.

Real estate syndication is usually limited to ‘accredited investors’. An accredited investor, according to the US Securities and Exchange Commission (SEC) is a person who has an annual income of at least $200,000 or a net worth of no less than $1 million. [2]

Ready to Buy Multifamily Real Estate? Work with BAM Capital​

For investors who want to try multifamily syndication, BAM Capital is the best option. BAM Capital prioritizes Class A, A-, and B++ multifamily properties in the Midwest because it values low risk investments for passive investors. BAM Capital’s clients love its vertical integration model that is designed to mitigate investor risk. [3]

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.

How to Determine Asset Class Rating​

Commercial properties may have a certain class rating based on their age, condition, location, and number of amenities provided. Certain assets may be described as Class A, B, C, or even D, depending on its quality. High quality real estate properties may fall under Class A, while those that are a bit older and in need of repairs are Class B. Class C and D real estate properties may be poorly located or old. [4]

Class A properties are new constructions located in good neighborhoods. They also offer plenty of amenities. Industrial properties in Class A neighborhoods are typically apartment buildings that are close to school districts, malls, shopping centers, transportation, etc.

Class B properties are slightly older properties that are not as well-located or offer fewer amenities. They can be taken to a higher class rating with a few upgrades.

While these class ratings are not meant to determine the actual value of the property, they are meant to quickly communicate its quality to investors. A Class B property, for example, may not be as good as a Class A property, but it can still be renovated and improved.

With that in mind, class ratings may change if repairs or renovations are made to the real estate property. There are no strict rules when it comes to determining a property’s classification. There is also no specific process that dictates which asset class rating should be assigned to a property.[4]

Some investors have their preferences when it comes to property classes. For example, BAM Capital focuses on Class A, A-, and B++ properties because these are considered safe investments for multifamily syndication. However, there are also investors who focus on investing in Class B and C properties with the intention of renovating these properties to a higher class than when acquired. Schedule a call with BAM Capital and invest today.

Sources:

[1]: https://medium.datadriveninvestor.com/abcs-of-multifamily-investment-classifications-2fa557cef63f
[2]: https://trionproperties.com/real-estate-investment-education/articles/commercial-vs-residential-real-estate-investing/
[3]:https://gowercrowd.com/real-estate-investing/class-a-b-c-properties
[4]: https://www.mashvisor.com/blog/multifamily-syndication-beginner-investors-guide/
[5]:https://capital.thebamcompanies.com/
[6]: https://gowercrowd.com/real-estate-investing/class-a-b-c-properties
[7]: https://capital.thebamcompanies.com/