Real Estate Investing / Syndications

[Ryan Foster]

Hi,

Seeking advice from seasoned real estate investors.

1) I own an investment property that cash flows 800 per month. I'd like to extract some of the equity out of it via a heloan to expand my real estate portfolio. I am looking to get 50k.

2) I am also looking to move 50k in my 401k to a self directed 401k and use this to also invest in real estate.

Ultimate goal in all this is to expand my real estate portfolio while using some leverage in equity that I currently have in my investment property while also giving my 401k some exposure to a different asset class than the stock market. Ultimately, I would like to then continue to leverage this to expand my real estate portfolio and continue using the funds returned on these investments and grow.

I should mention I am interested in loan syndications as I like the idea of exposure to real estate but not having to be as hands-on but can be if required.

Am I thinking about this correctly? / would others think this is an okay strategy to expand my portfolio or is it too risky?

Thanks in advance looking for some feedback here!

[Jason Malabute]

Yeah, good points in that thread. You just have to be careful when investing in syndications. Right now, he’s getting $800 a month from his own property, but once you start putting money into syndications—especially C-class properties—you usually don’t get that steady cash flow anymore. Most of the returns come later when the deal sells, not month-to-month like a direct rental.

Also, keep in mind that with syndications you’re not the only decision-maker. You’re now in a deal with multiple partners and operators, which can come with its own set of headaches and communication challenges.

And from a tax perspective, here’s where a lot of investors get caught off guard: even if you qualify as a Real Estate Professional (REPS), you generally can’t use losses from syndications to offset your active income in a lot of cases