For those who do not participate in the real estate market, Real estate syndications are not widely known. Even some folks who actively purchase real estate are not familiar with them.
As we continue to educate you, the First Gen Investor on different avenues of placing your capital, we want to make sure that you have a working knowledge of this type of offering and if it is a way for you to invest.
Before making a real estate syndication investment, you must consider your objectives
Do you invest for:
- Current cash flow
- Future cash flow
- Capital gains
- Tax benefits
- A combination of all of these
These factors have the potential to occur during a real estate syndication. This might not be for you if:
- You need liquidity of capital
- You have a low risk tolerance
- Want complete control over the investment
- Feel uneasy about the thought of participating with other investors.
Before investing, you should carefully examine the management team. A real estate syndication is only as effective as its General Partners (GPs). Make sure the sponsor team you are investing with has a good track record and experience implementing “value-add” real estate strategies. Make sure you not only agree with the way they communicate, but the frequency of their communication.
Due diligence is key. Spend time up front doing your homework and understanding the hazards associated with real estate syndications, and if a truly passive investment is what you are looking for.
Real estate syndications can be a terrific strategy to expand your real estate portfolio once you’re at ease with the risks and appreciate the thought of teaming up with knowledgeable real estate experts. You may rapidly and simply diversify into various asset classes and markets using real estate syndication without putting in a lot of work.
Be aware…you won’t have as much control as you would if you were to invest in a rental property by yourself or a joint venture.
Remember that real estate syndications are long-term investments. After the asset has been fully repaired and stabilized, there is a holding phase which can take years. So if what you are looking for is a flip or a way to make some quick cash they are not for you.
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President and Co-Founder, First Gen Foundations
Proud to be a First Gen Investor