All Forum Posts by: Steve S.

Quote from @Trevor Oldham:

This is great advice Jorge! I've been looking to invest in my first syndication as an LP. 

I would recommend getting involved with an online community of like-minded passive investors. I wish I had known other LPs when I got started 6 years ago. It would have saved me a lot of time and money. Passive investing is the way to go IMO if you are busy with your job and family.

@James Smith I would advise that you join a community that deals specifically with passive investments. I'll DM you some syndicators who take non-accredited investors. There was a comment about becoming accredited if you pass the series 65 test. I thought that the requirement also involved being an advisor in a financial firm.

@Dylan Brown I am not a CPA but have invested in a number of real estate and business syndications as a passive investor. Each year you will receive a K-1 showing if you had passive losses or gains. On line item 2 in Part III of the K-1, it will show the "Net rental real estate income (loss)" for that year. If it is a non-real estate syndication, that number will be in line item 1 of Part III - "Ordinary business income (loss)". Upon sale of the asset, the final K-1 will show the gain (or hopefully not a loss) on line items 9 and/or 10 in Part III. The Tax Smart Real Estate Podcast has a series of episodes teaching about these types of passive losses.

The tax shelter from these passive losses can be substantial - sometimes 100% of your investment in year one because of bonus depreciation. As mentioned by others, passive losses will only offset passive gains (unless you are a REP), not W-2 income, 1099 income, or capital gains.  This year is the last year to obtain 100% bonus depreciation. Next year it starts to go down by 20% each year. Any losses not used in a given year are carried over indefinitely until they are used up. You can keep track of these suspended passive losses on form 8582 in your 1040.

Even if you do a cost segregation study on your direct rentals, you probably won't come close to the amount of bonus depreciation you can get from passive syndication investing in multifamily or business equipment funds like ATMs. In my experience, self-storage, office, development, and retail syndications may not give you a comparable amount of bonus depreciation in year 1 compared with multifamily. Ask the sponsor how much bonus depreciation to expect in year 1. But whatever avenue you decide to go down, do not let the tax tail wag the dog. Make sure you are investing in a solid, cashflowing asset.

Private, commercial real estate syndication investing can be a great way to make passive income and to participate in your share of the depreciation and appreciation. After reading Brian Burke's excellent book, listen to podcasts like the Passive Wealth Strategy Show, The Real Estate Syndication Show, and Passive Investing From Left Field. Since the sponsor/syndicator is the most important piece of the puzzle, make sure you ask the right things by getting a list of questions that can be found on many websites. Lastly, get involved in a virtual community of passive R.E. investors where you can bounce questions off of one another and learn from others' experiences with syndicators.

I think you should look into passively investing in private real estate syndications. As an LP investor, you would be taking part in using leverage to obtain commercial properties, getting the full benefits of bonus depreciation, and diversifying into several asset classes in different regions and with several sponsors. All of the work would be done on the front end to vet the sponsors and the assets. After that, it's all passive. You can expect 6-8% COC returns initially and then expect a return of your capital with appreciation after 2-5 years when the asset sells to get you 20+% annualized returns. As the deals go full cycle, find more syndications and re-invest. 

In the syndication space as a passive LP investor, I have found that the multifamily assets garner the greatest amount of bonus depreciation. I have had these investments give me 80-100% bonus depreciation in year 1.

@Joseph Guidry Check out Tribevest. They are a platform for doing exactly what you want. They have helped thousands do group investing through LLCs.

@Jonathan Van Dyke @Andrea Ragan Check out Accountable Equity, a syndication group that specializes in resorts and hospitality. The founder, Josh McCallan, turns around underperforming resorts. He is not a fan of investing in hotels unless it is a destination place. He has done a great job with the Renault Winery Resort, which has multiple streams of income - winery, golf course, ice skating rink (in the winter), and weddings. They have sold over 400 weddings this year alone. Josh is also the host of the Capital Hacking podcast.

There are a lot of posts about syndication investing in these forums. I first learned about passive investing in syndications through podcasts and books. Some good podcasts geared toward passive investors include: Passive Wealth Strategies for Busy Professionals, Real Estate Syndication Show, Real Estate Guys Radio, Passive Investing from Left Field, Wealth Formula Podcast, and Capital Hacking. Here are some informative books on the topic: The Hands-Off Investor (Brian Burke) and Passive Investing in Commerical Real Estate (James Kandasamy).

@Ari Bachrach There was a recent thread about offsetting depreciation recapture and capital gains from syndications that may be of interest to you. 

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