Brand new to BP, just getting started with RE investment and am looking to invest in multifamily, duplex/triplex eventually once I have solid understanding of it. In the meantime, I would like to have some passive investment going on to generate cash flow. I am considering investing in syndication deals and some into REITs (for dividends) . Is it a good strategy to diversify?
Also, how would one vet for the sponsors running syndication with good returns?
Any thoughts or insights would be greatly appreciated.
Realtor · Columbus, OH · Member since 2016 · 170 posts · 227 votes
5y
It depends on what returns you hope to see. I will never invest in REITs because the returns are abysmal compared to what I can make full time or even part time investing in rental property here in columbus ohio. Syndications are great for someone that wants to remain a passive investor or has too much money and needs to invest in bigger assets that they can't handle with their team. I like control of my money therefore I won't give it to a GP to manage in a syndication. However if you lack time either of these options are better than not investing in real estate at all :)
@Taylor L. Great point on the liquidity and volatility with REITs. I like your analysis on how liquidity can sometimes be a bad thing. Great insight, thank you!
Thank you @Ian Ippolito for such a helpful response. That's a whole lot of information for someone like me to get started. It may take a while to do this level of DD for me but I think that's the way to go. I will definitely reach out to you once I re-read your analysis for the deal that I was considering. Thanks again, much appreciated!
Real Estate Syndicator · Portland, OR · Member since 2014 · 453 posts · 312 votes
5y
Welcome to BP! I think investing some in REITs is a good place to keep your money while you look for syndication (probably not ones with a lot of retail commerical right now....). When it comes to passive income investments, syndication is a great deal since cash flow is fairly predictable. When it comes to vetting a sponsor, it is always best to know if they have a solid reputation, a strong track record, and the right debt and equity relationships, and all other skills needed to manage the project successfully. Brian Burkes book the handsoff investor is a great read on how to vet deals and syndcators, so suggest picking that up ASAP.