When it comes to investment, real estate is usually a good option. It is a way to generate passive income and can lead to additional wealth in the future. It’s also quite challenging. Whether you’re a seasoned real estate investor or just looking to take a leap into the exciting world of real estate investment, taking advantage of real estate syndication can work for you. In this article, we look at real estate syndication and how to make it work for you.
Getting started with real estate syndication
Investing in real estate can be a costly venture as it takes generous capital to get started. And it doesn’t stop there; you need to maintain and develop your property over time, especially if you rent it out. There may be a gap between tenants or necessary repairs. Either way, investing in real estate is kind of a long game – including house flipping. Research and planning will get you started – there are plenty planning tools and calculators online – and it’s always a good idea to start with something small or medium and work your way up. That’s where something like real estate syndication comes into play. By pooling your money with other investors, you can share some of the responsibility and costs of the investment while reaping the rewards later.
What is real estate syndication?
When it comes to investing in real estate, getting started can be difficult. Real estate syndication is one way to simplify the process. In real estate syndication, two or more investors combine their skills and capital to make medium or high level investments. Partnering with another investor can open up a realm of investment opportunities that might otherwise not have been available to a single person. In real estate syndication, two or more parties pool their money to invest in real estate that would otherwise have been outside their respective price ranges. There is a sponsor (the syndicator) who scouts the property and invests about 20%. The other investors pool the remaining capital. Syndicators may also occasionally charge an upfront acquisition fee. Later, investors receive a return on the investment (from sales, rental income and other aspects of the investment) and it is largely up to the syndicator to make sure everything runs smoothly to maximize ROI. The whole process is simple and allows all parties to invest in larger properties and ultimately receive better benefits and returns.
Online investment opportunities
Not so long ago, there was a time when investing in a remote real estate property required a lot more work than it does now. Thanks to modern investment firms that have decided to use the power of online tools to handle investments, it is easier and more convenient to expand your options within the real estate market in general. Using a company that has these capabilities will allow you to track your investment in real time and find new investment opportunities with ease. It’s a great way to easily get a wealth of information about your past and current investments, while also giving you the ability to manage everything securely online.
Types of investments
Real estate investments offer a lot of variety. Depending on your investment goals, amount of available capital and future plans, it is possible to use real estate investments as a way to build wealth and diversify your portfolio well into the future. Here are some of the most valuable investments to consider:
- Luxury Homes – these long-term investments concern investments in the purchase or construction of luxury homes.
- Flipping at home – a short-term investment where you renovate a house and sell it for a profit.
- single-family home – rental housing for a single-family home.
- Rental for several families – rental housing (such as condominiums and apartments). Rental housing is generally a bit more stable, but may require some work.
- Multi-family developments – a medium or long-term investment in which a single-family home is purchased, demolished and replaced by multi-family homes.
Each has its own pros and cons, as well as its own investment costs, so be sure to do your research, understand what you’re getting into, plan ahead, and build partnerships that will last before committing to anything.
How do I start?
Now the difficult question: how and where do you start? There are actually several ways to get the investment ball rolling. Some investors may start with real estate investment trusts. You can also move into rental properties or decide to buy a property in order to fix it up and sell it for a profit (this is known as house flipping). They are all excellent ways to get started. Through an accredited real estate investment firm such as Los Angeles based Gatsby Investment is another good option to invest in real estate. They can help investors get started on their next investment with any amount of capital. Everything is mostly online, so it’s easy to access and see (in real time) exactly what your investments and returns look like. Most companies also have a team of specialists who can assist with the entire process, from securing and scouting properties to making investments and helping contractors draft potential renovations.
Understand minimum investments
As with any investment opportunity that arises in our lives, real estate investing has minimum investment requirements. Traditionally, the minimum investment differs per type of property. It can start as low as $500 in some cases. Typically, the minimum amount for most real estate syndicates is $10,000 and depends on the type of investment you are making. House flips will have different initial investment costs compared to, say, multi-family developments. Commercial real estate such as office buildings and similar structures may require as little as a $25,000 investment to get started. It ultimately depends on the type of property you are interested in and the type of return you are looking for. Either way, investing is a good way to diversify a portfolio and increase passive income over time.