Table of Contents
For investors who want to diversify their portfolio and build their wealth, real estate investing may be the right path. Real estate is known for its potential for strong returns, and there are many different ways to participate in it. Some investors go for commercial real estate projects while others try their hand at apartment investing.
But if you are an accredited investor, you may be aware of another option, which is real estate syndication.
Real estate syndications can be a great way to earn from real estate investing without fully committing all your time and energy into being a landlord. Participating in syndication deals by working with real estate syndication firms can make you a passive real estate investor.
It is also necessary when investing in a syndication deal that you look into some of the best companies in the real estate syndication industry so you can find a trustworthy syndicator. As you may already know, investing in real estate is not a one person job. It requires a lot of time and resources. But working with a reliable syndicator takes one thing off your plate, allowing you to become a true passive investor.
A real estate syndication deal, specifically a multifamily syndication investment, is a good source of strong and consistent cash flow. Here we will talk about multifamily syndication and what to look for in a syndicator so you can find the best real estate investment opportunities.
Real Estate Investing: What is Multifamily Syndication?
Investing in real estate can be lucrative, but most investors know that it takes a huge time investment—not to mention an equally huge capital. But real estate syndication helps you avoid all the usual headaches that come with owning a real estate property, like playing the role of landlord when you don’t have experience in that department.
Instead of spending all your time running an apartment complex and trying to make it profitable, an accredited investor can choose to look for multifamily syndication deals in real estate syndication platforms. Better yet, they can look for the best real estate investment companies that offer syndication opportunities.
But before we get into that, let’s have a brief overview of real estate syndication and how it works.
A real estate syndication deal is an investment strategy wherein multiple investors contribute money in order to buy and manage a single real estate property. A syndicator, also known as the sponsor, puts the deal together and coordinates the transaction. They are also responsible for managing the investment once the deal is in place. [1]
While this type of deal can be done with any type of real estate investment, multifamily properties are the most popular among investors because of the strong and reliable cash flow. Multifamily syndication allows individual investors to participate in larger, more lucrative investment opportunities that they may not pursue on their own. [1]
It’s no secret that large apartment complexes and other multifamily properties can cost millions, and that’s something a lone investor may not want to participate in. Even accredited investors may not think this is a smart idea because of the huge risks.
But in a syndication deal, multiple investors provide the capital for a large real estate property in exchange for a share of the monthly cash flow from rental income. Because they own a piece of the property, they get monthly (or quarterly) passive income distributions from the real estate asset.
Real estate syndicators, also known as the general partners (GPs) operate the syndication, underwrite the deal, perform due diligence on the property, negotiate with the seller, and even handle property management. [2]
Investors can just sit back and enjoy their cash flow without worrying about vacancies affecting their income. Multifamily properties are not disrupted by a handful of vacancies. The syndicator can look for new tenants while the remaining units continue to produce cash flow. And people always need somewhere to live, so there is always a demand for it.
This is why multifamily syndication is considered one of the safest forms of investments in real estate. It allows accredited investors to participate in deals that they normally wouldn’t pursue on their own, and even splits the risk among multiple investors. In a syndication deal, you only have to worry about the risk associated with your share of the capital, unlike when you purchase an apartment complex alone in which you will bear all of the risk by yourself.
Depending on the deal structure, investors may also earn a percentage of the equity upon resale. However, keep in mind that every syndication deal is unique. The syndication agreement should detail how profits will be split before you decide to join the syndication. [3]
For those who want to invest in real estate but do not have the time or energy to run an apartment complex, a syndication deal may be the right investment opportunity for you. You can even enjoy the benefits of owning a real estate investment property like appreciation, tax benefits, and cash flow without having to worry about tenant concerns or rent collection. [2]
On top of all their responsibilities, the syndicator will also provide regular updates and financial reports to the investors, keeping them informed about the property’s performance.
Beyond the initial investment, there’s no need for additional input from the investors. They can spend their time on other investments or priorities like spending time with their family. This makes real estate syndication a true passive investment. [2]
Multifamily syndication deals are typically structured as limited liability companies (LLCs) or limited partnerships (LPs).
These real estate syndication deals are usually exclusive to accredited investors. However, if you do qualify as an accredited investor, then multifamily syndication offers a strong and reliable cash flow. Accredited investors consider this one of the most reliable real estate investments. It is perfect for investors who are looking for a real estate investment that does not require a hands-on approach.
What to Look for in a Real Estate Syndication Company
Because investors have very little control over property decisions, the most important step is choosing the right syndicator to work with. The success of the syndication deal depends largely on the syndicator’s business plan, investment strategy, and decisions, so you need to conduct your research and due diligence. [4]
When choosing a real estate syndicator, you need to consider their level of experience. Choose a syndicator with a proven track record in real estate syndication. If possible, choose a real estate syndication company that specializes in the type of property and location you are interested in.
The syndicator shouldn’t just be experienced in buying properties, but also in managing them effectively. A vertically integrated company like BAM Capital is what you should be looking for.
Aside from experience, you can also base your decision on their reputation. Look at online reviews, references, and testimonials from past investors. You can even look into any existing lawsuits or complaints against the company. A syndicator should have a solid reputation in the industry. [4]
Once you have a few choices, you can narrow it down further by looking into their business model, deal structure, and investment strategy. The deal’s compensation structure should be designed so that investors will get to maximize their returns. Their profitability should be tied to the investment’s success. A syndication deal needs to be a symbiotic relationship where everyone’s success is intertwined.
Look closely into how the investment will be managed and how profits will be distributed. Look into the syndicator’s exit strategy as well. The deal structure should be able to balance both risk and reward.
By partnering with the right syndicator, you can maximize your profits while participating in a passive real estate investment through syndication.
What Are the Most Successful Real Estate Syndication Companies?
Before we talk about the syndicator that you actually should be working with, let’s talk about a few other companies that are also popular and well-established in the real estate syndication industry. There are companies such as Fundrise, CrowdStreet, EquityMultiple, and RealtyMogul that may also sound familiar if you have done your research on real estate syndications.
Fundrise is an investment platform that helps investors invest in private real estate deals. It was founded in 2012, and offers various investment opportunities ranging from eFunds to private placements. [5]
CrowdStreet is a real estate crowdfunding platform that lets accredited investors find institutional-quality real estate deals. Founded in 2013, CrowdStreet offers a range of investment opportunities, including individual deals, funds, and managed accounts.
EquityMultiple is another platform that gives investors access to commercial real estate deals. It offers preferred equity, mezzanine debt, and equity investments, among other investment opportunities. [5]
Finally, RealtyMogul is a crowdfunding platform that gives access to commercial real estate deals. It was founded in 2013 and offers investment opportunities such as equity and debt investments.
But if you are looking for a real estate investment syndicator that has a proven track record and a great reputation among accredited investors, work with BAM Capital.
Work with BAM Capital for Multifamily Real Estate Syndication
BAM Capital is a vertically integrated syndicator that is trusted by accredited investors all over the country. It is an Indianapolis-based company that is now considered an industry leader in the world of multifamily syndication.
BAM Capital has a strong Midwest multifamily syndication focus, prioritizing properties that are Class A, A-, and B++. As a vertically integrated company, BAM Capital can handle every step of the syndication process. They prioritize high quality multifamily properties that have in-place cash flow and proven upside potential. They then handle every step of the syndication process, from acquiring the property to managing it. This syndicator will guide you every step of the way. [6]
BAM Capital’s award-winning strategy helps mitigate investor risk while also creating forced appreciation. In fact, BAM Capital now has over $700 million AUM and 5,000+ units. [6]
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.
