Passive Syndication vs. Getting Hands On
Investor · Tampa, FL · Member since 2015 · 11 posts · 2 votes
Passive Syndication vs. Getting Hands On
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Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes
6yOriginally posted by @Michael Daharsh:
I recently read the book, “The Perfect Investment” by Paul Moore. Good Read. To sum it up in a sentence, Moore believe that investing in proven syndicators, with proven managers, in a growing market is the perfect investment. He makes a case that investing in multi-family units less than 100 is ultimately a waste of time and fast track to failure.
I understand this publication is effectively a passive advertisement for his own funds, but I want to understand if people in the BP community feel the same. He is pretty strong instating the working your way up by buying 10units and increasing more, does not work out.
I am wanting to transition careers into full-time real estate and I want to invest in large multi-family and build my experience in this area. I am focused on building a portfolio of Class C/B properties, value add, refinance, and expand/grow. This is what i want to do for the next 20 years...
What are your thoughts? Is it a fools errand? What is Moore missing?
Michael,
How are you man?
Here's my perspective:
1. 100-unit and larger apartment complexes is more efficient than smaller apartments because 100-units or larger can afford a full time PM and full time maintenance personnel. So I agree that 100 units is a good threshold when one syndicates an apartment deal
2. HOWEVER, since you have more competition for 100-units and above specially from institutional investors, the cap rates and profits from big apartment complexes like those are squeezed - you buy them at higher price per unit and therefore your cap rate and over-all profit tend to be smaller (or the profitability coming from the economies of scale is 'canceled out' in some cases)
In fact, what my partner Nate and I found is that we can buy better deals with apartments less than 100 units (but bigger than 29 units to achieve enough economies of scale - so we're getting great deals with apartments 30-90 units).
3. Do you have to start with 100-units + and just be passive if you can't? Not necessarily. It depends on your market, your goals, your skills and what resources you already have or can have access to.
For example, If you're a super busy brain surgeon making $1M a year in income, buying a 10-unit building is a waste of time. You're making $500/hour and if all you make on a 10-unit building is $2,000/month cashflow...and you have to spend 5 hours a month managing the manager of the building - you're actually losing money and it does not make sense.
In addition, you a busy brain surgeon might not even have that 5 hours a month. Hence, it makes sense for him to let his money make money for him. He invest $1M in a good deal backed by an experienced syndicator, he could easily make 12-15% IRR or $120K-$150K/yr without spending any of his time.
But, if you can devote 20 hours a week in active real estate investing, you have several hundred thousand in cash, great credit, good leadership and networking skills, sure do it yourself. That's especially true if you can find great deals with 10-unit apartments in your market.
4. To minimize risk with active investing like investing in apartments, it makes more sense to invest with OTHERS who are more experienced and are better capitalized than you. You want to minimize your risks by leveraging on other people's experience and network. They already know what mistakes to avoid as well as who are the right contractors, property managers, etc to hire. Moreover, successful apartment investors have more cash than you so if the deal needs more cash than anticipated, they can help infuse liquidity into the deal.
Makes sense?
43 Replies
- Apartment Syndicator · Charleston, SC · Member since 2017 · 519 posts · 631 votes6y
@Michael Daharsh There's no one size fits all solution, as it varies based upon each person's financial situation and financial goals. I know people that have started out small and worked their way up, but the key factor in most of those cases is the determination of those people.
Passive investing is a heck of a lot easier and less time consuming, as your work is limited to researching the syndicators that you're investing with and the markets that you're investing in and then keeping up with both.
As an operator, you'll have to be much more involved if you want a deal to be successful. If you're syndicating deals regularly, your time will largely be spent finding deals, finding investors, and managing any assets that you currently own. While you can definitely systematize these processes as you grow, you'll need to do it well to make sure that the assets perform. There's also a big sense of responsibility because you're raising money from investors and you're responsible for returning that money to them safely (and hopefully with the return that you promised them).
For people that prefer to start small (with a 10-unit multifamily property like you said) and then build up, it can be done. The challenge for many of these operators is that they're often managing the properties themselves, either due to wanting to save money by not hiring a property manager or simply believing that nobody can do it as well as they can. Managing a property can be very time consuming and is a lot more involved than simply managing an asset. So it'll take exceptional determination and grit for most of these operators to ever get to the point where they're operating larger multifamily properties, but it can be done.
In short, figure out how you want to spend your time, how involved you want to be with your investments, and what type of returns you're looking for. Then find the strategy that fits best for you.
- Investor · Indianapolis, IN · Member since 2017 · 62 posts · 38 votes6y
@Michael Daharsh
Paul’s book is a great read. In general I tend to agree with most of his concepts and philosophy. However I would have to disagree with the concept that buying anything less than 100 doors is a fools errand. First you have to ask yourself what is your end goal? Secondly what are your resources? Do you have loads of excess cash or do you have more time to invest than money? Do you want to be actively involved in real estate or do you just want to passively invest?
I know many people who have created significant wealth investing in single-family homes, small apartment buildings and other real estate assets. We personally were where you are 20 years ago and started with a duplex. We scaled into 15 and 30 unit assets to grow a very, very minimal initial into significant equity and cash flow over that period. We learned the business on a small scale that was manageable to us at the time.  That Initial duplex gave us the confidence to go out and acquire a fourplex. Which in turn gave us the confidence to acquire a 15 unit and so on. I don’t believe there is a right or wrong way to go about it. Bottom line what is your goal and what is your comfort level or risk tolerance? 
Happy investing,
Mike
- 6yBjorn AhlbladPro MemberInvestor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
@Michael Daharsh What you have described is not a fools errand at all. It sounds like a focused mission statement that can be made successful with knowhow and money. Moore is right for some people and wrong for others. Every day people make and lose money in every facet of REI you care to mention. Decide on your goals, make a plan, and learn to execute. All the best!
- Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes6y
Originally posted by @Michael Daharsh:
I recently read the book, “The Perfect Investment” by Paul Moore. Good Read. To sum it up in a sentence, Moore believe that investing in proven syndicators, with proven managers, in a growing market is the perfect investment. He makes a case that investing in multi-family units less than 100 is ultimately a waste of time and fast track to failure.
I understand this publication is effectively a passive advertisement for his own funds, but I want to understand if people in the BP community feel the same. He is pretty strong instating the working your way up by buying 10units and increasing more, does not work out.
I am wanting to transition careers into full-time real estate and I want to invest in large multi-family and build my experience in this area. I am focused on building a portfolio of Class C/B properties, value add, refinance, and expand/grow. This is what i want to do for the next 20 years...
What are your thoughts? Is it a fools errand? What is Moore missing?
Build and fly your own 747 from point A to point B or go down to the airport and buy a ticket, get on and let the stewardesses bring you some snacks while an experienced pilot handles the big bird.
Good Luck!
- 6yRoni E.Pro MemberSpecialist · Earth 2.0 · Member since 2019 · 598 posts · 271 votes
It all comes down to control, work load, and so forth. You can own 100% of 10 units deals or 2% of 400 unit complex. I would ready Joe Fairless book on apartment syndicaiton, get michael blank sda course and really immerse yourself in the space. I think after you do all of that you will have a better idea.
- Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes6y
Originally posted by @Michael Daharsh:
I recently read the book, “The Perfect Investment” by Paul Moore. Good Read. To sum it up in a sentence, Moore believe that investing in proven syndicators, with proven managers, in a growing market is the perfect investment. He makes a case that investing in multi-family units less than 100 is ultimately a waste of time and fast track to failure.
I understand this publication is effectively a passive advertisement for his own funds, but I want to understand if people in the BP community feel the same. He is pretty strong instating the working your way up by buying 10units and increasing more, does not work out.
I am wanting to transition careers into full-time real estate and I want to invest in large multi-family and build my experience in this area. I am focused on building a portfolio of Class C/B properties, value add, refinance, and expand/grow. This is what i want to do for the next 20 years...
What are your thoughts? Is it a fools errand? What is Moore missing?
Moore is missing a lot. There are lots ways to build wealth fast and compound cash in real estate. Investing passively in a Syndication is not one of them unless you have a lot of money to invest. Don’t misunderstand. These can be great investments with the right operator and you can earn good returns this way but that’s about it. It’s a cashflow game and It will take a long time to build any kind of wealth and compound your cash passively investing
You can start with any size property large or small. The only limit is your knowledge, experience and resources. All of which can be expend greatly and rapidly.
- Rental Property Investor · DFW TX · Member since 2018 · 179 posts · 260 votes6y
There are many avenues in RE. I recall seeing dozens of choices at various conventions where someone would train you to do this or that for a fee. Most may work, some may be scams, not sure. A lot has to do with what a person wants to do.
Personally, before Paul's book, I followed essentially his instructions. I have passively invested in many MF syndications since 2010 and done well. I did get lucky and start during a great time, but I still invest as I think now is a good time. I started knowing nothing about RE, but I fell in with a great mentor; I listened and learned and acted. My $0.02!
Regards,
Charles LeMaire
PS. Read the Fairless/Hicks Best Ever book to round out your understanding of MF syndications.
- Rental Property Investor · Dallas, TX · Member since 2015 · 501 posts · 504 votes6y
I haven't read his book. He says investing in a property with fewer than 100 units is a failure, and starting with a 10-plex and working your way up also doesn't work? So what is he advocating? Just investing in a fund (that he runs)?
By the way, of the two choices above, one of them is much less work than the other. It depends what your goals are.
- 6yRonan DonnellyPro MemberInvestor · New York City, NY · Member since 2012 · 332 posts · 385 votes
@Michael Daharsh, I am somewhat in agreement with Paul in that there are significant benefits to investing with a range of syndicators. I think that this is the optimal route in terms of return on time invested and risk reduction via diversification.
I do think however that if you are willing to dedicate yourself 100% to being the sponsor then you will make more money, at the expense of time and with more concentrated risk.
In summary, being the sponsor is the best option for the few and being a LP investor is likely the best outcome for the many.
For full disclosure I run a company that helps LP investors find the best sponsors in a given asset class or geography.
- Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes6y
Originally posted by @Michael Daharsh:
I recently read the book, “The Perfect Investment” by Paul Moore. Good Read. To sum it up in a sentence, Moore believe that investing in proven syndicators, with proven managers, in a growing market is the perfect investment. He makes a case that investing in multi-family units less than 100 is ultimately a waste of time and fast track to failure.
I understand this publication is effectively a passive advertisement for his own funds, but I want to understand if people in the BP community feel the same. He is pretty strong instating the working your way up by buying 10units and increasing more, does not work out.
I am wanting to transition careers into full-time real estate and I want to invest in large multi-family and build my experience in this area. I am focused on building a portfolio of Class C/B properties, value add, refinance, and expand/grow. This is what i want to do for the next 20 years...
What are your thoughts? Is it a fools errand? What is Moore missing?
Michael,
How are you man?
Here's my perspective:
1. 100-unit and larger apartment complexes is more efficient than smaller apartments because 100-units or larger can afford a full time PM and full time maintenance personnel. So I agree that 100 units is a good threshold when one syndicates an apartment deal
2. HOWEVER, since you have more competition for 100-units and above specially from institutional investors, the cap rates and profits from big apartment complexes like those are squeezed - you buy them at higher price per unit and therefore your cap rate and over-all profit tend to be smaller (or the profitability coming from the economies of scale is 'canceled out' in some cases)
In fact, what my partner Nate and I found is that we can buy better deals with apartments less than 100 units (but bigger than 29 units to achieve enough economies of scale - so we're getting great deals with apartments 30-90 units).
3. Do you have to start with 100-units + and just be passive if you can't? Not necessarily. It depends on your market, your goals, your skills and what resources you already have or can have access to.
For example, If you're a super busy brain surgeon making $1M a year in income, buying a 10-unit building is a waste of time. You're making $500/hour and if all you make on a 10-unit building is $2,000/month cashflow...and you have to spend 5 hours a month managing the manager of the building - you're actually losing money and it does not make sense.
In addition, you a busy brain surgeon might not even have that 5 hours a month. Hence, it makes sense for him to let his money make money for him. He invest $1M in a good deal backed by an experienced syndicator, he could easily make 12-15% IRR or $120K-$150K/yr without spending any of his time.
But, if you can devote 20 hours a week in active real estate investing, you have several hundred thousand in cash, great credit, good leadership and networking skills, sure do it yourself. That's especially true if you can find great deals with 10-unit apartments in your market.
4. To minimize risk with active investing like investing in apartments, it makes more sense to invest with OTHERS who are more experienced and are better capitalized than you. You want to minimize your risks by leveraging on other people's experience and network. They already know what mistakes to avoid as well as who are the right contractors, property managers, etc to hire. Moreover, successful apartment investors have more cash than you so if the deal needs more cash than anticipated, they can help infuse liquidity into the deal.
Makes sense?
- Rental Property Investor · Weehawken, NJ · Member since 2014 · 1k+ posts · 704 votes6y
I struggle a bit with the passive vs. active discussion, because I don't think it's always framed the right way. As a pure wealth building question, this should always be framed in terms of opportunity cost. So I will give you a story of two people. Both have equal abilities in active investment management:
Person A: Works hourly wage as a short-order chef. Income nets out to $55k in a good year. Very interested in real estate, knows how to run a project and raise money.
Person B: Pediatrician in a successful private practice. Income nets out to $350k in a good year. Very interested in real estate, knows how to run a project and raise money.
Person A should go active. Person B should find syndicators, lending opportunities and work with them. The biggest trade you make is time, not money. If your time is worth a lot, then you want to buy someone else's time at a discount to the cost of your own. If your time is worth less (and I am speaking in a pure, economic sense), then definitely use it do the work of building up the real estate, and push the value. This balance is particularly good, because it means that people with time can always raise money, and people with the high opportunity cost can always find good partners. We don't want a market too tilted to one side anyway, we need a market that still finds the competitive advantage for each individual participant.
The specifics of the analysis differ, but you should run it in your own case. Personally, I fall on the passive side. This was not my initial reaction when I got into real-estate, but it's been the best realization I have had since I started investing.
- Real Estate Agent · Scottsdale, AZ · Member since 2019 · 448 posts · 320 votes6y
Originally posted by @Paul B.:
I haven't read his book. He says investing in a property with fewer than 100 units is a failure, and starting with a 10-plex and working your way up also doesn't work? So what is he advocating? Just investing in a fund (that he runs)?
By the way, of the two choices above, one of them is much less work than the other. It depends what your goals are.
Last year I was meeting with a big multifamily builder to discuss a potential ground up development and he was adamant that new multifamily projects don't pencil if they are less than 100 units so he might be onto something there.
- Real Estate Agent · Scottsdale, AZ · Member since 2019 · 448 posts · 320 votes6y
Originally posted by @Michael Daharsh:
I recently read the book, “The Perfect Investment” by Paul Moore. Good Read. To sum it up in a sentence, Moore believe that investing in proven syndicators, with proven managers, in a growing market is the perfect investment. He makes a case that investing in multi-family units less than 100 is ultimately a waste of time and fast track to failure.
I understand this publication is effectively a passive advertisement for his own funds, but I want to understand if people in the BP community feel the same. He is pretty strong instating the working your way up by buying 10units and increasing more, does not work out.
I am wanting to transition careers into full-time real estate and I want to invest in large multi-family and build my experience in this area. I am focused on building a portfolio of Class C/B properties, value add, refinance, and expand/grow. This is what i want to do for the next 20 years...
What are your thoughts? Is it a fools errand? What is Moore missing?
I would advise exercising caution when dealing with syndicators. I've always been a bit skeptical of so-called passive investing. I'm sure there are good syndicators out there, but it's best to do one's homework on them first, especially if they are promising usurious rates of return.
I heard recently about one here in the Chicago area that got in trouble with the SEC for turning his fund into a giant ponzi scheme that defrauded more than 300 investors in 32 states out of at least $41.6 million Apparently he started out as a legitimate company, purchasing apartment buildings and promising 3%-12% returns, but at some point he got in trouble and couldn't cover his expenses so he started using new investor funds to pay interest and principal to earlier investors. Now he's looking at a federal lawsuit and probable jail time.
- Rental Property Investor · Dallas, TX · Member since 2015 · 501 posts · 504 votes6y
Originally posted by @Steven Lowe:
Originally posted by @Paul B.:
I haven't read his book. He says investing in a property with fewer than 100 units is a failure, and starting with a 10-plex and working your way up also doesn't work? So what is he advocating? Just investing in a fund (that he runs)?
By the way, of the two choices above, one of them is much less work than the other. It depends what your goals are.
Last year I was meeting with a big multifamily builder to discuss a potential ground up development and he was adamant that new multifamily projects don't pencil if they are less than 100 units so he might be onto something there.
Okay, but development is a totally different story. The conversation up till now was buying existing properties.
- Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes6y
I second what @Mike Montana and @Charles Seaman already stated. I have to admit that @Scott Mac has a great sense of humor and his joke as most has a little bit of joke in it, but it's mostly the truth!
When deciding on whether you want to be active or passive investor, you have to answer two main questions:
1) Do you have enough time to run another business, because that is what real estate investing is! If you only have let's say about 5 hours a week, my suggestion is to go passive.
2) Depending on how much time you have, decide on your "Why?" If this reason why is strong enough, it will help you to succeed through the challenges and obstacles on the way.
Here're some posts to give you the additional guidance:
https://www.biggerpockets.com/member-blogs/10850/86626-the-pros-and-cons-of-investing-via-real-estate-syndication
https://www.biggerpockets.com/member-blogs/10850/86621-six-steps-approach-to-getting-started-in-real-estatehttps://www.biggerpockets.com/member-blogs/10850/85351-nothing-will-work-until-you-do-maya-angelou
PM me if you have any further questions.
- 6yAndrew HoganPro MemberRental Property Investor · Indianapolis, IN · Member since 2016 · 559 posts · 463 votes
@Michael Daharsh ... Re-read the comment by @Trevor Ewen.
He hit the nail on the head! Opportunity Costs.
- 6yJohn FortesPro MemberMulti-Family Syndicator · Abington, MA · Member since 2017 · 603 posts · 347 votes
One person's experience can be completely different from another. Syndications aren't the end all be all. It's all a matter of what works for YOU, the individual. What ever your position, situation and circumstance is then only you know which path you will most likely to take. Just like there are investors of all sorts within this beautiful community, they all came to a point of what worked for them. Everything else is personal opinions shared through their personal experience. Happy investing!
- Investor · New York City, NY · Member since 2016 · 155 posts · 105 votes6y
If a person has never invested in real estate before, it would be very foolish to acquire 100 units all at once. That person wouldn't know what to look for. They wouldn't know how to manage the property properly.
Can you transition into RE full time and quit your job after 10-units? Probably not.
But when you learn how to properly acquire and manage 10 units, you accomplish the following:
-You've built your track record
-You've built your knowledge and expertise
-You've built your network
-You've learned the market and understand how to research new markets
-You understand how to manage tenants, expenses, improvements, etc.
-You've made mistakes on a SMALL scale (and fixed them without major setbacks)
And sure, maybe after 10 units you may be ready to jump to 100.
But I would advise just about everyone not to go super big on your first deal. ESPECIALLY if you are taking on other investors or leveraging other people's money to get that deal done.
When you start small, with your own money, you are able to make mistakes and learn.
When you start with 100 leveraged units that included a capital raise, one big mistake can mean game over.
With all that said, my opinions above are more related to the ACTIVE side of real estate investing.
If you are looking into passive investing, then it definitely makes sense to invest with syndicators who have proven track records and who are doing larger 100+ unit projects. But typically "transitioning into full-time real estate" means being an active investor.
I hope that helps some:) - Investor · Tampa, FL · Member since 2015 · 11 posts · 2 votes6y
@Mark A. Kenny
Thank you for your response! So many great points in everyone’s responses.
- Investor · Tampa, FL · Member since 2015 · 11 posts · 2 votes6y
@Trevor Ewen
Great Points! Thank you. I think this scenario is an interesting point, and it applies if we are only talking about ROI on time and money. It implies that in scenario B the person wants to keep doing what they do to earn $350k.
However, if one is trying to build an exit from the world in which they currently make $350k and wants to build a new path in which they can earn the $350k from Real Estate and continue to grow that business, does the same principle apply?
What about when one wants to build a second career from this?
- Investor · Tampa, FL · Member since 2015 · 11 posts · 2 votes6y
@Michael Ealy
Great insight, as always!
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes6y
Depends on your level. I know some investors with 50 to 100 million net worth. They invest with syndicators and developers and look at a spreadsheet each month.
They DO NOT need max yield. They are looking for equity multiples and IRR over time to outpace inflation with high quality assets.
Additionally I know very high income earners in the millions annually for their job or businesses. What these folks do not have is TIME. They want service and people to help them accomplish their goals whether that is owning directly or investing passively with a sponsor. Some do one or the other or BOTH with their portfolios.
If someone has 100k to invest you can't really live on 8,000 return. If you have 10 million to invest you can live pretty fat on just talking a partial amount of 700 to 800k each year so it's all relative. Hardest part is getting the first million and the going up from there. Some need an event like buying property low in the market and equity run up as a jumping off point to invest further. Example they make 100k a year at job and bought some properties bottom of the market and got lucky and now worth 1 million. To further their net worth the 100k job isn't really going to do that much more for them.
Now if someone is a surgeon pulling down 1 million a year they have lots of monthly regeneration of capital and cash flow to stack and compound investments. That small snowball turns into a medium snowball and then hopefully a giant one over time with the right investments.
What most investors eventually want to get away from is (working for yield) and more to (passive yields) example NNN single tenant assets or larger apartment buildings that have scale with more minimum involvement for A to B assets. You can still have scale with apartments and own C to D assets and work your butt off trying to keep them going so scale alone by itself does not guarantee being passive. From talking with thousands of investors over the years at all different points and net worth in life I have come to understand the thinking changes at the various levels of age, their investing point in their life cycle, how much return is enough for them, etc.
People might call me crazy but I do not think about money much. I think about TIME. I only have so much time everyday. Whether someone is worth 1 dollar or 100 million you make choices daily with time. Now if you have more money then typically you can leverage more people in the same 24hrs to get more done than you can individually with various specialty areas of expertise.
- Olathe, KS · Member since 2018 · 148 posts · 207 votes6y
Originally posted by @Michael Daharsh:
I recently read the book, “The Perfect Investment” by Paul Moore. Good Read. To sum it up in a sentence, Moore believe that investing in proven syndicators, with proven managers, in a growing market is the perfect investment. He makes a case that investing in multi-family units less than 100 is ultimately a waste of time and fast track to failure.
I understand this publication is effectively a passive advertisement for his own funds, but I want to understand if people in the BP community feel the same. He is pretty strong instating the working your way up by buying 10units and increasing more, does not work out.
I am wanting to transition careers into full-time real estate and I want to invest in large multi-family and build my experience in this area. I am focused on building a portfolio of Class C/B properties, value add, refinance, and expand/grow. This is what i want to do for the next 20 years...
What are your thoughts? Is it a fools errand? What is Moore missing?
It might be true, it may not be true, but when it comes down to it you really can't take the opinion of someone who gains from that opinion (as the author is a syndicator). It's like getting car buying advice from a car salesman, whenever the person you're asking has a financial gain at stake you really can't use their opinion as guidance.
Right now you have to be a little careful with some books as instead of just being educational, they're being used as a lead magnet/funnel to help with their money raising. Podcasts are being used the same way. That doesn't mean that the people doing them aren't good syndicators, just try and realize that a lot of it is marketing.
In my opinion, an active investor who can source good deals is going to beat most syndications, plus you have way more control of the situation. But it requires a lot more work and effort, and that may not be worth it. I've done both and so far have been happier with my active stuff. That may change over time though.
Good luck to whatever you choose. Research and education is key either way.
- Rental Property Investor · Los Angeles · Member since 2018 · 844 posts · 1k+ votes6y
Originally posted by @Aaron Taylor:
Originally posted by @Michael Daharsh:
I recently read the book, “The Perfect Investment” by Paul Moore. Good Read. To sum it up in a sentence, Moore believe that investing in proven syndicators, with proven managers, in a growing market is the perfect investment. He makes a case that investing in multi-family units less than 100 is ultimately a waste of time and fast track to failure.
I understand this publication is effectively a passive advertisement for his own funds, but I want to understand if people in the BP community feel the same. He is pretty strong instating the working your way up by buying 10units and increasing more, does not work out.
I am wanting to transition careers into full-time real estate and I want to invest in large multi-family and build my experience in this area. I am focused on building a portfolio of Class C/B properties, value add, refinance, and expand/grow. This is what i want to do for the next 20 years...
What are your thoughts? Is it a fools errand? What is Moore missing?
It might be true, it may not be true, but when it comes down to it you really can't take the opinion of someone who gains from that opinion (as the author is a syndicator). It's like getting car buying advice from a car salesman, whenever the person you're asking has a financial gain at stake you really can't use their opinion as guidance.
Right now you have to be a little careful with some books as instead of just being educational, they're being used as a lead magnet/funnel to help with their money raising. Podcasts are being used the same way. That doesn't mean that the people doing them aren't good syndicators, just try and realize that a lot of it is marketing.
In my opinion, an active investor who can source good deals is going to beat most syndications, plus you have way more control of the situation. But it requires a lot more work and effort, and that may not be worth it. I've done both and so far have been happier with my active stuff. That may change over time though.
Good luck to whatever you choose. Research and education is key either way.
Agree completely!
I'm in several syndicated investments and I spend a lot of time looking at other potential syndicated investments. The monthly funds coming into our account are really nice and convenient, but looking at it from 20,000 feet in the air, I have a hard time seeing how syndicated investments can be the type of life-changers that direct ownership can be. I think @Joel Owens described syndicated investments perfectly when he said they bring decent equity multiples and IRR over time.
As someone like me who works in a traditional W-2 job and does not have a lot of time, the real struggle for me is syndicated investments vs. long-term buy and hold.
- Rental Property Investor · Weehawken, NJ · Member since 2014 · 1k+ posts · 704 votes6y
It's a good question. I still think they may get to their goals faster if they continue earning the same wage and invest in other projects. After all, they will be making (typically) 70% on the equity split in a lot of commercial syndications.
If their goal is truly to 'work' in real-estate, as in actual sweat equity & time, then I suppose there is no substitute. I would just have a long & hard think about what you want to spend your time doing and how much time.
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