Oftentimes a question begets more questions. Such is the case when asking if investing in syndicated multi-family real estate is the right investment for you.
First and foremost, you must be vetted by the syndicator to make sure you qualify to invest in a syndicated investment. You may need to be an accredited investor (506 C), or a sophisticated and accredited investor (506B) to invest in syndicated private equity investments. This is a S.E.C. rule and is there to protect investors from putting funds in something that could be inappropriate for them. For example – to be an accredited investor one must have a net worth of $1,000,000 (not counting their primary residence), or an annual income of $200,000 per year for individuals, or $300,000 with spouse. As you can see, you need to speak to the syndicator to see if a syndicated investment is something that is a fit for you, and if you meet the syndicators criteria as an investor. If you do qualify as an investor it is time to ask yourself a few questions.
Do you need current income? If so then an investment in syndicated multi-family real estate can consistently provide cash flow exceeding most stocks and bonds. Multi-family real estate is a cash generating machine.
Do you need to protect your assets from inflation? We all need to protect ourselves from the insidious erosion of wealth caused by inflation. Especially when the rate of inflation is at the high rates we have experienced lately. Real estate has long been considered one of the best investments for inflation protection. Rising real estate prices, and the ability to raise rent give you protection not available in stocks and bonds.
Could you use more tax deductions? How about tax free income? One of the perks of syndicated multi-family real estate investing is the depreciation is passed out to the partners on a pro-rata basis. Oftentimes a cost-segregation study is done on the property and each element of the property is split into different categories with different depreciation schedules. Instead of depreciating the whole property over 27.5 years, things like the HVAC systems, parking area, sidewalks, and appliances can be depreciated on a shorter schedule. This can potentially offset much of the income the investor receives from the property.
Do you want less volatility in your investment portfolio? If the ups and downs of the market has you on edge then you may want to consider putting part of your portfolio in real estate. Historically, real estate has produced higher investment returns when compared to other major asset classes, and has done so with less volatility. Most savvy investment advisors suggest allocating some of your investment dollars to real estate for this reason.
Do you want to reap the benefits of investing in real estate, but don’t have the time, expertise, or inclination to manage properties? If the answer is yes – then investing in real estate with a company like Mission Bay Capital Partners is perfect for you. They do all the heavy lifting. They have the expertise, systems, and experience to make investing in multi-family real estate easy.
Watch our webinar series to learn more about multi-family real estate syndication.
