Alternative Investment Ideas for Fee-Based Financial Planners: Apartment Complex Investing

by | Aug 9, 2023 | Accredited Investor, Blog, Real Estate Investing | 0 comments

When it comes to personal finance, there are two types of financial advisors that you can work with: a commission-based financial advisor and a fee-based financial advisor, the latter of which is also referred to as fee-only.

With a commission-based financial advisor, the method of compensation may influence the type of advice they give to their clients because some investment vehicles will not earn them a commission. So if you are an accredited investor looking for sound investment advice, there may be a little conflict of interest.

For example, while real estate is known for being one of the most lucrative investment strategies, not many financial advisors will actually recommend it because they cannot earn commission from real estate investments.

On the other hand, fee-based financial advisors do not rely on commissions so they can give you the best financial advice without any conflict of interest weighing them down. They can help you reach your financial milestones, create budgets, help plan your retirement, etc. [1]

Aside from there being no commissions, there are also no hidden costs, kickbacks, and referral fees. Clients only have to pay financial advisor fees, which is the preferable payment structure for most investors.

With all the benefits of working with a fee-only financial advisor, it is worth exploring why they recommend investing in multifamily real estate syndication over traditional investments.

Fee Based Advisors Love Multifamily Real Estate Investing for Clients

A fee-based financial planner is the opposite of a commission-based advisor. Instead of earning through commissions on the products that they sell or trade, they get paid a set rate for the services they provide for their clients. [1]

Services offered by a flat fee financial advisor may include: comprehensive financial planning, retirement planning, tax planning, estate planning, and giving investment advice. These services may vary from one financial advisor to another. Investors can receive personalized advice that is based on their financial goals and circumstances.

The only major downside is that they tend to be more expensive than commission-based financial advisors.

Fee-only financial planners may charge clients a certain percentage of their assets under management (AUM), but some charge an hourly or monthly rate. The exact cost will depend on the financial planner’s preferred fee structure, as well as their experience level, the client’s location, and the services they require. [2]

If you are an investor looking for an alternative to your mutual fund, there are many alternative investments to choose from. Investors may work with private equity firms, look into hedge funds, private equity funds or venture capital, or even explore alternative mutual funds. Your fee-based financial advisor can give you the best recommendations.

Whether it’s real estate investment trusts or private equity investments, alternative investments differ from traditional investments because they often employ more complex strategies and may involve both long and short positions, leverage, or derivative instrument, making them perfect for building a diversified portfolio.

Because they don’t rely on commissions, fee-based advisors tend to favor investment strategies that can give their clients the biggest benefits. That is why they love recommending multifamily real estate investing.

Multifamily properties like apartment buildings and condominiums are tangible assets that generate consistent rental income from multiple units, providing a steady and reliable cash flow stream. This stability appeals to investors seeking regular income, such as retirees or those looking to diversify their investment portfolios.

Multifamily real estate investments also have the potential for long-term appreciation. As the property value increases over time, investors can benefit from capital gains when selling the property. This combination of rental income and property appreciation can result in attractive returns.

Investing in multifamily properties offers diversification benefits compared to other asset classes like stocks or bonds. Real estate investments can even provide a hedge against market volatility, reducing the overall risk for investors.

There is also a constant demand for housing. People always need a place to live. Factors like urbanization, changing lifestyles, and population growth contribute to this demand.

Finally, real estate investments offer various tax benefits that can enhance your returns. These may include deductions for mortgage interest, property depreciation, operating expenses, and property taxes.

Working with a fee-based financial advisor will help you find the right multifamily real estate property for you. They can provide their knowledge and expertise so that investors can navigate the complexities of real estate investing.

What is Multifamily Syndication Real Estate?

For accredited investors and high net worth individuals (HNWIs), their financial advisor may present them with an even better alternative: multifamily real estate syndication.

Multifamily syndication deals provide all the benefits of multifamily investing, but with several significant advantages that may prove appealing to investors. However, these deals are often exclusive to accredited investors and HNWIs. This is an alternative investment that is beyond the usual Wall Street options. [3]

Real estate syndication is a good way to diversify an accredited investor’s portfolio while generating passive income from real estate. With multifamily syndication, investors pool their resources to purchase a single multifamily property. This deal is organized by a syndicator who locates the real estate deal and then puts everything together before finding investors who will provide most of the capital needed to buy the large multifamily real estate. [3]

Multifamily properties like apartment complexes are known to generate a strong cash flow, but they are also generally more expensive. Because they are difficult to obtain for the lone investor, a syndication deal is ideal.

In a syndication deal, the passive investors are Limited Partners (LP) while the syndicator serves as the General Partner (GP). This means investors don’t necessarily need experience when it comes to handling and managing a multifamily project. There is no need to play the role of landlord.

The syndicator does everything—including property management. For accredited investors, this means there is no need to handle tenants or deal with emergencies.

Investors earn from their share of the monthly cash flow and a share of the appreciation upon resale, depending on the deal structure. Every syndication deal is different.

Investors get to focus their time and energy doing other things instead of running an apartment complex. This is what sets multifamily real estate syndication apart from other investment strategies.

Why Choose Syndication Instead of Purchasing Your Own Multifamily Property

There are several reasons why someone might choose syndication instead of purchasing their own multifamily property.

Investing in a syndication provides the opportunity to diversify your real estate portfolio. Instead of investing all your capital in a single property, you can spread your investment across multiple properties, locations, or asset classes. This diversification can help mitigate risk and enhance potential returns.

When joining a syndication deal, it involves partnering with experienced real estate professionals, such as syndicators and property management teams, who have a track record of success.

Syndicators may even have an established network and access to a broader range of real estate opportunities. They can identify and evaluate potential investment properties that are not available to individual investors. By participating in a syndication, you gain access to these deals that are otherwise inaccessible

These professionals bring their expertise in property acquisition, management, and operations, increasing the likelihood of a successful investment outcome. For individuals without extensive real estate knowledge, syndication provides access to this expertise. If you purchase your own real estate, you will have to rely on your own instincts and knowledge to make sure the property is profitable. Not to mention it will take hundreds of hours of work to get it running.

With syndication, you can enjoy a passive stream of income. While you still participate in the financial gains and losses of the project, you are not responsible for the day-to-day operations of the apartment complex. You don’t need to make management decisions.

This can be appealing to individuals who want to invest in real estate but prefer not to be involved in the active management of a property.

Even the risk and liability associated with the investment are shared among multiple investors. This provides a level of protection, which is especially comforting compared to owning a property outright, where you would bear the entire risk and liability on your own.

A lot of investors consider real estate as one of the best long term investment opportunities, even ahead of stock and bond markets. And multifamily investing is one of the best strategies for accredited investors if you are interested in real estate investments.

Instead of dealing with all the hassles of tenant emergencies, rent collection, and property management, investors can leave it to the pros. Syndication deals allow investors to enjoy the benefits of owning real estate without actually putting in as much time and effort into the investment. Now they can spend their time doing more important things like running their business or spending time with their family. [4]

Why Professional Investment Advisors Love BAM Capital

Multifamily syndication is one of the best alternative investments for accredited investors since it allows them to just sit back, relax, and collect their checks. But just like other alternative investments, even multifamily syndication carries risks, so investors need to carefully evaluate each syndication opportunity before making any decisions. You still need to do your due diligence and look for a trustworthy real estate syndicator.

When it comes to multifamily syndication, it is important to work with a syndicator that you trust. And professional investment advisors trust BAM Capital.

BAM Capital is an Indianapolis-based syndicator with a great track record, great staff, and great historical returns. This syndicator has a strong Midwest focus and prioritizes Class A, A-, and B++ multifamily properties with in-place cash flow and proven upside potential. [5]

Thanks to their award-winning investment strategy and commitment to finding high quality multifamily properties for accredited investors, BAM Capital now has over $700 million AUM and 5,000+ units. BAM Capital mitigates investor risk while creating forced appreciation.

Because BAM Capital is a vertically integrated real estate syndicator, they can guide investors through each step of the syndication deal. They can handle each step from start to finish: from acquiring and purchasing the multifamily property to renovating and managing it. [5]

If you are looking for a syndicator with a proven track record and an award-winning investment strategy, look no further than BAM Capital.

No investment is without risk. Make sure to consult your investment advisor or speak to a BAM Capital investment team member before making any financial decisions.

For accredited investors who want to enjoy the passive income and all the other benefits of being in a multifamily syndication, schedule a call with BAM Capital and invest today.