Main Content

Home » Blog » Benefits of Investing in Syndications

Benefits of Investing in Syndications

How to Make Your Passive Income Truly Passive
Benefits of Investing in Syndications

As the saying goes, it’s better to work smarter, not harder. While investments in passive income may take some hard work in the beginning, they are all about the end-goal payout. If done correctly, adding these investments to your financial portfolio can help greatly boost your net worth.

So, how do you begin to invest in opportunities to build up your passive income? And how do you choose which one is right for you? I, personally, believe that investing in Real Estate syndications can be one of the easiest and smartest steps to make towards passive income.

Understanding a Syndication

To keep a long story short, a real estate syndication is a large group of investors each pooling a small amount of money together to invest in a large property. Most of the major commercial properties we see every day were initially invested in through some sort of syndication group.

Investing in real estate allows you to get into something solid, long-standing, and something you know everyone is going to need at some point. However, because properties can range from $50,000 investments to well into the millions, joining a group of investors like syndication can make it easier to invest in things like multi-family properties (apartment buildings). It also keeps you from putting all of your proverbial eggs in one basket.

Percent Risk

For example, when you put all of the money you have into investing in one property, the risk factor is significantly higher. Let’s say that property becomes vacant for a month. That would mean for one month you would lose 100% of your profit. However, if you put 10% of your investment money into ten different things, you have a significantly higher chance of a beneficial pay-out. That way, if one of the properties you have an investment in is vacant for a month, you only lose 10% of your profit for that month.

Taxes

One of the main reasons most people avoid investing in passive-income opportunities is the complication in their taxes. While it may sometimes feel like people talking about taxes are speaking another language. You most likely will not have to pay taxes on your gains until the property is sold. This gives you an incredible opportunity to stack up your profit in what could essentially be seen as a glorified savings account. That return will give you an excellent opportunity to invest in something larger and continuously larger until you are investing in million-dollar properties. Talk about a retirement fund.

Credit

But how can something so good, possibly be true? Low risk, low cost, easy-to-grow investments have to have some sort of downside. Don’t they? Well as far as your credit goes, this is a low-risk investment there as well.

The investors in the syndication are only one side of the coin it takes to make syndications work. The other side, or the managing side, usually absorbs the majority of the risk it takes to run these buildings. For example, if a bank is going to give a loan to an investment group to purchase commercial property, they are going to need a living, breathing person to put their credit on the line to honor that loan. Again, this management person is most likely not going to be you. Because this person is responsible for the operations taking place inside the commercial property, they are responsible for making it a success.

Liability

Another benefit of not being the operations or business manager for the commercial property is a liability. In general, as a limited partner in syndication, your liability would only be up to your investment in the property. . A limited partner should not have any other liability related to the project. This is another major risk factor that is minimized by maintaining investor status in real-estate syndication.

Getting Started

In summation, without major risk to your credit, assets, and investment money, a real estate syndication may be the easiest and best way to start bringing in passive income. Anyone looking to build up a retirement fund, ensure a legacy is left behind for their family, or simply increase the money they are bringing in month-to-month should begin their consultations with a commercial real estate agent.

Commercial real estate agents, such as myself, typically have their finger on the pulse of the commercial real estate market. I myself am invested in many syndications. If you have any questions on how to get started, you can contact me, Melissa Donnahoe, at melissadonnahoerealtor@gmail.com. Let’s invest in your future, today!

Questions?Contact Me

Fill out the form below and I will get to you.

    Melissa Donnahoe