Skip to content
Multi-Family and Apartment Investing

User Stats

263
Posts
253
Votes
Jorge Abreu
Pro Member
  • Rental Property Investor
  • Dallas, TX
253
Votes |
263
Posts

The Five-Step Guide to Prime Investors

Jorge Abreu
Pro Member
  • Rental Property Investor
  • Dallas, TX
Posted Feb 8 2024, 11:40

I've been in the real estate game long enough to know that understanding investors' objectives is like receiving a treasure map to profitable deals. Every investor has different motivations, whether it's wealth creation or cash flow. To help new investors, I've produced a five-step guide that summarizes the primary reasons for investing in real estate.

Step One: Identifying Goals
The first stage is to help investors clearly define their objectives. By asking the proper questions and listening carefully, I help them decide if they want wealth multiplication or regular cash flow. Understanding their objectives is critical since it influences the whole investment plan. How much money do they currently have put aside for investing? How soon do they intend to place those funds? Everything weighs in.

Step 2: Highlighting the Tax Benefits
Tax breaks are a big inducement for many investors. I've found that some people invest with us particularly to decrease their tax liability. By clarifying how assets are depreciated, we may provide considerable tax benefits to our investors. They'd rather invest that money in one of our deals and receive the depreciation than have to pay it to the government.

Step 3: Depreciation and Tax Reduction
The next stage is to educate investors on the depreciation process and how it decreases their tax burden. There are several depreciation schemes accessible in real estate, particularly for multifamily structures. We make sure our investors understand the possible benefits and how to maximize them.You invest $100,000 and receive a K1 for a negative $100,000. Now, whether you may claim the full amount of depreciation depends on your status, but you can often recover a significant chunk of it.

Step 4: Create an Investment Guide
To help potential investors navigate the investment process, I give a complete guide. This document summarizes the primary goals of investment, discusses tax benefits, and examines the potential returns and hazards. It is a significant resource for investors, allowing them to make sound decisions.

Step 5: Developing Trust and Credibility.
Building reputation and trust is critical when attracting investors. While some investors are ready to get on board, others take the time to watch and evaluate the investment potential. It is critical to cultivate relationships and achieve constant success.
It took several years for my friends and family to believe in me. However, as they witnessed success, they began to trust and invest.

By using this five-step strategy, I was able to attract top investors who share our investment objectives. Understanding their goals, emphasizing tax benefits, and explaining the depreciation process have all been critical in forming effective relationships. Remember that each investor is unique, and tailoring to their personal needs is the key to real estate investing success.💥

User Stats

737
Posts
510
Votes
Melanie P.
Pro Member
  • Rental Property Investor
510
Votes |
737
Posts
Melanie P.
Pro Member
  • Rental Property Investor
Replied Feb 9 2024, 04:55

Anyone considering sending money to a syndicator should have their head examined by a medical doctor for signs of life. 

This one has an incorrect definition of accredited investor on their website and admits the ownership of the syndicator also owns the construction company that does their rehabs. This is another avenue for the person touting the investment to drain money from the LPs. 

If you have money to invest in real estate, invest in real estate. Syndicators are the chance to buy into someone's idea and invest in them (or more specifically their website and sales guy). Investing in a syndicator is NOT real estate investing. These forums are littered with tales of distributions being paused and entire investments lost at various syndicators. Be careful out there.

User Stats

263
Posts
253
Votes
Jorge Abreu
Pro Member
  • Rental Property Investor
  • Dallas, TX
253
Votes |
263
Posts
Jorge Abreu
Pro Member
  • Rental Property Investor
  • Dallas, TX
Replied Feb 13 2024, 08:06
Quote from @Melanie P.:

Anyone considering sending money to a syndicator should have their head examined by a medical doctor for signs of life. 

This one has an incorrect definition of accredited investor on their website and admits the ownership of the syndicator also owns the construction company that does their rehabs. This is another avenue for the person touting the investment to drain money from the LPs. 

If you have money to invest in real estate, invest in real estate. Syndicators are the chance to buy into someone's idea and invest in them (or more specifically their website and sales guy). Investing in a syndicator is NOT real estate investing. These forums are littered with tales of distributions being paused and entire investments lost at various syndicators. Be careful out there.

It's understandable to have concerns about entrusting your hard-earned money to a syndicator, especially given the stories circulating about questionable practices in the industry. However, it's crucial to address some misconceptions and offer a more nuanced perspective on syndication as a viable investment option.

Firstly, let's clarify the role of syndicators in real estate investment. Syndicators, when operating ethically and transparently, serve as facilitators who bring together investors to pool their resources and collectively invest in real estate opportunities that may otherwise be inaccessible to individual investors. By leveraging their expertise, network, and resources, syndicators can identify, acquire, and manage properties with the potential for attractive returns.

Regarding the concern about the definition of accredited investors on our website, if you would like to point this out, as I don't even see the definition on our site. Then, as far as potential conflicts of interest, it's imperative for syndicators to adhere to regulatory standards and maintain transparency in their operations. Any discrepancies in the definition of accredited investors should be addressed promptly and rectified to ensure compliance and foster trust among investors. Additionally, while it's not uncommon for syndicators to have affiliations with related businesses such as construction companies, proper disclosure and management of potential conflicts of interest are essential to safeguard investors' interests.

Investing in syndications does involve a level of trust in the syndicator's expertise and integrity. However, this doesn't mean it's inherently inferior to direct real estate investment. Syndication offers several benefits, including diversification, access to professional management, the ability to passively invest and the opportunity to participate in larger deals with potentially higher returns.

That said, it's crucial for investors to conduct thorough due diligence, carefully evaluate the track record and reputation of syndicators, and assess the risk-return profile of each investment opportunity. While there are indeed risks associated with syndication investments, prudent investors can mitigate these risks through proper research, diversification, and working with reputable syndicators who prioritize transparency and alignment of interests with their investors.

Ultimately, while syndication may not be the right fit for every investor, dismissing it outright as not "real estate investing" oversimplifies a complex investment strategy and overlooks its potential benefits when executed responsibly. As with any investment decision, caution and diligence are paramount, but ruling out syndication entirely may mean missing out on valuable opportunities for portfolio diversification and wealth accumulation in the real estate market.
BiggerPockets logo
BiggerPockets
|
Sponsored
Find an investor-friendly agent in your market TODAY Get matched with our network of trusted, local, investor friendly agents in under 2 minutes

User Stats

99
Posts
81
Votes
Joe Archbold
  • Investor
  • Batavia, IL
81
Votes |
99
Posts
Joe Archbold
  • Investor
  • Batavia, IL
Replied Feb 14 2024, 13:37
Quote from @Jorge Abreu:
Quote from @Melanie P.:

Anyone considering sending money to a syndicator should have their head examined by a medical doctor for signs of life. 

This one has an incorrect definition of accredited investor on their website and admits the ownership of the syndicator also owns the construction company that does their rehabs. This is another avenue for the person touting the investment to drain money from the LPs. 

If you have money to invest in real estate, invest in real estate. Syndicators are the chance to buy into someone's idea and invest in them (or more specifically their website and sales guy). Investing in a syndicator is NOT real estate investing. These forums are littered with tales of distributions being paused and entire investments lost at various syndicators. Be careful out there.

It's understandable to have concerns about entrusting your hard-earned money to a syndicator, especially given the stories circulating about questionable practices in the industry. However, it's crucial to address some misconceptions and offer a more nuanced perspective on syndication as a viable investment option.

Firstly, let's clarify the role of syndicators in real estate investment. Syndicators, when operating ethically and transparently, serve as facilitators who bring together investors to pool their resources and collectively invest in real estate opportunities that may otherwise be inaccessible to individual investors. By leveraging their expertise, network, and resources, syndicators can identify, acquire, and manage properties with the potential for attractive returns.

Regarding the concern about the definition of accredited investors on our website, if you would like to point this out, as I don't even see the definition on our site. Then, as far as potential conflicts of interest, it's imperative for syndicators to adhere to regulatory standards and maintain transparency in their operations. Any discrepancies in the definition of accredited investors should be addressed promptly and rectified to ensure compliance and foster trust among investors. Additionally, while it's not uncommon for syndicators to have affiliations with related businesses such as construction companies, proper disclosure and management of potential conflicts of interest are essential to safeguard investors' interests.

Investing in syndications does involve a level of trust in the syndicator's expertise and integrity. However, this doesn't mean it's inherently inferior to direct real estate investment. Syndication offers several benefits, including diversification, access to professional management, the ability to passively invest and the opportunity to participate in larger deals with potentially higher returns.

That said, it's crucial for investors to conduct thorough due diligence, carefully evaluate the track record and reputation of syndicators, and assess the risk-return profile of each investment opportunity. While there are indeed risks associated with syndication investments, prudent investors can mitigate these risks through proper research, diversification, and working with reputable syndicators who prioritize transparency and alignment of interests with their investors.

Ultimately, while syndication may not be the right fit for every investor, dismissing it outright as not "real estate investing" oversimplifies a complex investment strategy and overlooks its potential benefits when executed responsibly. As with any investment decision, caution and diligence are paramount, but ruling out syndication entirely may mean missing out on valuable opportunities for portfolio diversification and wealth accumulation in the real estate market.

 Jorge,

Great post. There is lots of negative sentiment towards syndications currently. But there is also a ton of dry powder waiting for opportunity in multi-family. Investors have a choice they can either go and try to acquire an asset and manage it themselves, find another asset class, or they can do some homework and join a syndication. The interest rates hurt a lot of deals we will not see that rate of rise again for some time..

User Stats

263
Posts
253
Votes
Jorge Abreu
Pro Member
  • Rental Property Investor
  • Dallas, TX
253
Votes |
263
Posts
Jorge Abreu
Pro Member
  • Rental Property Investor
  • Dallas, TX
Replied Feb 15 2024, 08:45

@Joe Archbold thank you! There may be some negative feelings about syndications right now, but as you said, there is also a lot of interest and money looking for opportunities in multi-family. It's important for investors to do their homework and make choices based on their goals and how much risk they are willing to take. 

User Stats

99
Posts
81
Votes
Joe Archbold
  • Investor
  • Batavia, IL
81
Votes |
99
Posts
Joe Archbold
  • Investor
  • Batavia, IL
Replied Feb 15 2024, 09:53

Unfortunately, this should be a place where active investors can share/grow/ learn from each other. For the #1 contributor to the Syndication and Fundraising space to post-
 "Anyone considering sending money to a syndicator should have their head examined by a medical doctor for signs of life.
And then go on to attack a real investor over a misspelling on his website? Whats the value in this?

To the contrary, Investors should wisely consider their portfolio and determine what if any portion they want to deploy and determine their best approach based on their goals. If the benefits of adding real estate make sense, great, then connect with guys like Jorge here on bigger pockets and network to find your investment niche.

User Stats

263
Posts
253
Votes
Jorge Abreu
Pro Member
  • Rental Property Investor
  • Dallas, TX
253
Votes |
263
Posts
Jorge Abreu
Pro Member
  • Rental Property Investor
  • Dallas, TX
Replied Feb 16 2024, 07:55

Agreed! This platform should fulfill its stated aim of delivering education, networking opportunities, and connecting with those looking for knowledge on real estate investing. As far as #1 I am wondering if she is a bot...

User Stats

737
Posts
510
Votes
Melanie P.
Pro Member
  • Rental Property Investor
510
Votes |
737
Posts
Melanie P.
Pro Member
  • Rental Property Investor
Replied Feb 16 2024, 17:09

When someone invests in a syndicator you are investing in an investment promoter, not in real estate. Buying a share of a REIT or a share in Invitation Homes also does not make one a real estate investor.

User Stats

14,713
Posts
12,106
Votes
Chris Seveney
Pro Member
#2 All Forums Contributor
  • Investor
  • Virginia
12,106
Votes |
14,713
Posts
Chris Seveney
Pro Member
#2 All Forums Contributor
  • Investor
  • Virginia
Replied Feb 16 2024, 18:15

@Melanie P.

I disagree - why

Time > Money.

If I can give a syndicator or anyone money that earns me 8-12% versus me having to do it and spend hours on something I am not good at why not?

Do you service your own car?

Replace your own roof?

No.

You pay someone to do that and investing in anything is the same, of course you can do it cheaper but can you do it better? 99% of population cannot invest better in real estate than a syndicator / fund manager.

Not only that but I would rather spend my time doing something else

User Stats

2,965
Posts
3,619
Votes
Todd Dexheimer#2 Multi-Family and Apartment Investing Contributor
  • Rental Property Investor
  • St. Paul, MN
3,619
Votes |
2,965
Posts
Todd Dexheimer#2 Multi-Family and Apartment Investing Contributor
  • Rental Property Investor
  • St. Paul, MN
Replied Feb 16 2024, 18:57
Quote from @Melanie P.:

When someone invests in a syndicator you are investing in an investment promoter, not in real estate. Buying a share of a REIT or a share in Invitation Homes also does not make one a real estate investor.


I would say that investing in syndication is the definition of a real estate investor. Purchasing your own deal would make you a business owner and a real estate operator, but not an investor. 

User Stats

263
Posts
253
Votes
Jorge Abreu
Pro Member
  • Rental Property Investor
  • Dallas, TX
253
Votes |
263
Posts
Jorge Abreu
Pro Member
  • Rental Property Investor
  • Dallas, TX
Replied Feb 16 2024, 18:58

I agree with you 100% @Chris Seveney 

What Melanie is not taking into account is that not everyone is looking to be an active real estate investor. There are people who enjoy what they do, make a good living, or just have funds that they are looking to put to work for them passively. And the facts are that investing in syndications is a good way to earn higher returns than savings accounts, 401ks, or stocks. Like any other investment, it does come with risk, and you should do your due diligence before giving anyone your hard earned money. 

User Stats

263
Posts
253
Votes
Jorge Abreu
Pro Member
  • Rental Property Investor
  • Dallas, TX
253
Votes |
263
Posts
Jorge Abreu
Pro Member
  • Rental Property Investor
  • Dallas, TX
Replied Feb 16 2024, 19:00
Quote from @Todd Dexheimer:

I would say that investing in syndication is the definition of a real estate investor. Purchasing your own deal would make you a business owner and a real estate operator, but not an investor. 


Todd is dropping bombs. Well said, brother!

User Stats

737
Posts
510
Votes
Melanie P.
Pro Member
  • Rental Property Investor
510
Votes |
737
Posts
Melanie P.
Pro Member
  • Rental Property Investor
Replied Feb 16 2024, 20:03
Quote from @Todd Dexheimer:
Quote from @Melanie P.:

When someone invests in a syndicator you are investing in an investment promoter, not in real estate. Buying a share of a REIT or a share in Invitation Homes also does not make one a real estate investor.


I would say that investing in syndication is the definition of a real estate investor. Purchasing your own deal would make you a business owner and a real estate operator, but not an investor. 


 Respectfully disagree. Receiving title to and having the ability to exert operational control over the investment are key features that make real estate a safe and reliable long-term investment. 

Key features that do not exist when sending money to touts/promoters/sponsors/syndicators. The day you send money you lose control of your principal, receive title to nothing, you're at the whim of the promoter as to whether and how long you will receive any distributions and even when the deal you invested in is supposedly "successful" you're at the whim of waiting for the GP to decide to sell and return your capital plus profits. Otherwise you have no way of monetizing the "paper profits" the promoter claims are there. There is an extremely narrow band of investors who are actually "suited" to take the risks of investing in ventures like these. Most of those are not coming here to "learn about real estate investing."

BiggerPockets logo
Find, Vet and Invest in Syndications
|
BiggerPockets
PassivePockets will help you find sponsors, evaluate deals, and learn how to invest with confidence.