Curious about syndication?

[Christine Bellish]

Hi all - my husband and I transitioned from investing locally in small multifamily properties to participating in large multifamily and net lease syndications, both passively on the LP side and actively on the GP side. Still seems like a lot of people aren't aware about these opportunities or how they work, so I'd love to share our experience to help others. Please reach out if you have any questions about syndication!! 

[Charles LeMaire]

I started in 2010 and am a serial serial passive investor in MF syndications, just invested in #61, 26 have gone full cycle.  I was the other fellow with Kenny in the cabal to replace the sponsor mentioned above.  Both Kenny and I were trained by Brad Sumrok and I have invested with Kenny in 10 of his deals.  And yes MF has been very, very good to me!  

@Steven Le and  @Alex Le, DFW is a hot bed of meet-ups; go, meet folks doing this, ask & learn; most folks are helpful.  The Hand-Off Investor is a good book for passive investors.  Also consider Paul Moore's The Prefect Investment which is a quick read and a great primer.

This asset class has been very profitable, but I offer a couple comments.  

#1. One can use a SD IRA or a Solo 401K, but learn how they work! Do the math! All IRA gains are subject to UDFI; Solo 401Ks are not. All trad (non-Roth) retirements will add to your bucket that will come to you as ordinary income and forcible so when your RMDs start. If you are of the rich mindset, you will be paying taxes at a higher rate, RE pros possibly excepted. Also, neither IRAs or 401Ks enjoy the "step-up-in basis".

#2.  For the first time non-RE Pro investor today, you will not likely see any, perhaps minimal, benefit to all the hoop-la about Bonus Depreciation.  Yes, you will carry it forward to the sale of the property, but on your first deal, that works out to being about the same as not having it.  The benefit would be when you sell and buy the Bonus Depreciation on the purchase then will off-set your gain.  But by that time BD will likely be gone.  Sorry!  

#3. An investment in a syndication is not open to a 1031 exchange. Technically. it can be done, but practically not likely.  I've seen only one. 

With that said, I do not want to sound sour on this asset class, I've made big gains, I just want you to understand so that you are not over sold. 

Be sophisticated (learn how it works and know what you are doing).

Regards,

Charles LeMaire