Best Vehicle to invest in a syndicate syndication K-1

[DongHui Patel]

I am evaluating the best methods to invest in syndications, wondering if there are any tips / pointers.

A single member LLC, a Solo 401k (tax advantages) or any other type of investment entity and pros/cons?

[Jim Pfeifer]

As others have said, if you are investing in a syndication you will be an LP member of an LLC so you already have some liability protection. If you have an LLC that you can invest out of that adds maybe more protection and possibly some anonymity.

Regarding taxes, however, I think a typical multifamily, self-storage or mobile home park syndication would perform much better outside of a qualified retirement account.  Those accounts are already tax sheltered and you don't get the benefit of depreciation and cost segregation in your retirement accounts.  If you do it right, you can defer or offset most or all of your tax from a syndication.  By putting that syndication in a qualified account, you lose out on a major benefit of real estate investing.

I have a self directed 401k and I typically use it for private lending, note investing, life settlements and other opportunities that don't have tax benefits like depreciation.  That said, if I don't have capital available outside of my retirement accounts, I would consider investing in a real estate syndication with my qualified money rather than putting it in the stock market or other paper assets.