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I’m sure you’ve noticed your home value skyrocketing over the past several years. Witnessing this, you may have started dreaming about how fantastic it would be to own a few extra rental properties and bask in all that appreciation.
But let me share a different perspective before you jump into a potential nightmare. My journey started with a single duplex in 2018 and I fell for real estate investing immediately.
What truly made my journey extraordinary was the realization that not everyone loved the challenges I navigated as a landlord and asset manager of my portfolio. I described the process to friends only to hear them say, “I’ll never be able to invest in real estate because I’m not interested in being a landlord.”
Then, it clicked.
I discovered that I could help these friends access the benefits of growing their money in real estate without having to do any of the heavy lifting. This way, they could leverage my expertise and passion while protecting their most valuable resource: time.
Investing in residential real estate can be quite challenging. Typically, as the investor, you wear numerous hats throughout what feels like an unending process. Your responsibilities encompass finding the property, securing financing, overseeing renovations, interviewing tenants, and handling maintenance.
The challenge doesn’t end there; you often have to go through most of the process again when your tenant’s lease expires.
It’s important to know which type of real estate investing is right for you. It’s also vital that everyone realize that they don’t have to be a landlord to get into real estate.
In this article, I draw inspiration from my journey, which led me to leverage my passion and expertise as an active real estate investor to help others invest passively in commercial real estate syndications. Discover how you can harness the power of passive investing to unlock your wealth-building potential and regain control of your precious time.
Join me to see if you could use a reset of your wealth building goals within the world of passive real estate investing, and let’s uncover a path to financial abundance that aligns perfectly with your dreams and aspirations.
Single-family rentals can provide monthly cash flow and even appreciate over time. However, with a single income source (a tenant), these investments can be incredibly vulnerable to any interruption in market conditions.
This type of rental property also requires management, but isn’t at the scale where hiring a property manager makes sense. Even if a property manager can take some of the monthly workload off your hands, they also need to be monitored and managed.
Small multifamily rentals have some advantages over single-family homes. For example, if one tenant moves out, the tenants in the other units are still there to help cover the mortgage. Plus, it’s much easier to manage one property with multiple tenants than to manage multiple properties with one tenant each.
But, even with a property manager on board to help with your rentals, bookkeeping, strategic decisions, and maintenance/repair, costs are still in your court. You’re basically running a small business, which can be challenging if you’re working a full-time job.
On the flip side, there are fully passive investments for people like you in commercial real estate. These are professionally managed and operated investments so you don’t have to deal with any of the three scary T’s – Tenants, Toilets, and Termites. Oh my!
There are people – like me – who love the systems and processes that go into putting together and managing real estate investments. When you join Investor Groups, you gain access and can participate in investment opportunities that are put together by the experts.
According to Forbes, once investors begin to understand passive commercial real estate investments, it’s common for them to move their investments toward syndications. Here’s why:
Have you heard the phrase “set it and forget it”? In a syndication deal, you put money in, collect cash flow during the hold period, and receive profits upon the sale of the property.
You won’t be fixing toilets, screening tenants, or handling maintenance. The sponsor team (that’s me!) and the property management team expertly attend to those things so you can sit back, enjoy the returns, and focus on living life.
It would be unreasonable for anyone to attempt to become an expert in every phase of the property investment process, and even more so when it comes to different markets.
By investing with experienced deal sponsors, you can easily diversify into various markets and asset classes (like multifamily apartment buildings, retail or industrial properties, and more) while resting assured that the professionals are taking care of business. This allows you to quickly and easily scale your portfolio while also mitigating risk.
Similar to personally owned rentals, you get pass-through tax benefits when investing in real estate syndications. You’ll be able to write off most of the quarterly payouts, which means you basically get tax-free passive income throughout the holding period. Score!
You will, however, likely owe taxes on the appreciation income you earn upon the sale of the property. (Always check with your own CPA on your personal situation.)
When you invest passively through real estate syndications, your liability is limited to the amount of your investment. If you were to invest $50,000, your biggest risk would be losing that $50,000. You wouldn’t be on the hook for the entire value of the property, and none of your other assets would be at risk.
With personal investments, you make a difference in two to four families’ lives, which is wonderful. But with real estate syndications, you have the chance to change the lives of hundreds of families and whole communities with just one deal.
Each syndication creates a cleaner, safer, and nicer place for people to live and impacts the community and the environment positively. And that’s something you just can’t gain from stocks and mutual funds.
If you’re on the fence between active and passive real estate investments, the experience you gain from owning small rentals is irreplaceable. However, personally owning rental properties is not a prerequisite to commercial real estate syndications.
Either way, investing in real estate is a great way to diversify your portfolio and mitigate risk. It gives you an opportunity to have a positive impact on the families who will live in your units, as well as a positive impact on the environment and community.
Here at Wise Stream Investments we provide multiple ways to leverage the power of real estate syndications in your investment portfolio so you can take advantage of real estate’s cash flow, equity, appreciation, and tax benefits.
If you’re accredited and looking to deploy capital, we invite you to sign up for our Wise Investor Club to get access to our current or upcoming opportunities.
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