Anatomy Of A Real Estate Syndication Investment Summary: What To Look For And How To Tell When A Deal Is “Good”

Ah, investment summaries. They’re the all-in-one marketing package / business plan / underwriting explainer / photo gallery / why-you-should-invest-in-this-deal packet for every commercial real estate syndication deal that everyone loves and hates.

Often, when deal sponsors are raising money for their deals, they’ll put together investment summaries to explain to potential investors why the deal is so great, what they plan to do with it, and how much the investors stand to gain from participating in the investment.

Investment summaries are like snowflakes. No two are the same.

Some investment summaries consist of gorgeous graphics and iconography, professional photos and clear tables. Others are written like textbooks and include haphazard low resolution phone pictures someone probably threw in at the last minute. Sigh.

But here’s the thing. Regardless of what an investment summary looks like, you have to be able to swallow your initial impressions (good or bad) and look at the numbers and business plan for what they really are.

If you decide to invest because the investment summary looks pretty, you may be putting yourself at risk, if you haven’t done proper due diligence on the deal and the team.

Likewise, if you write off a deal because the investment summary looks like your Aunt Ida’s tax returns from last year and causes your eyes to glaze over, you might be missing out on a great opportunity.

So what exactly should you look for? Good question.

Let’s take a look at a sample investment summary. I’ll walk through my thought process when I first look through an investment summary, so you’ll know what to look for the next time one lands in your inbox.

Please note: For simplicity’s sake, I’m using a one-page executive summary for this example, rather than a full-blown investment summary, which could be dozens of pages long.

Investment Summary At A Glance

Even though every investment summary is different, there are some basic elements that are pretty common across all multifamily real estate syndication investment summaries:

  • Project name (often the name of the apartment complex)
  • Photos of the property and area
  • Overview of the submarket
  • Overview of the deal
  • Details of the business plan
  • Projected returns and exit strategies
  • Detailed numbers and analyses
  • Team bios

In a one-page executive summary, you get bits and pieces of each of these elements, though you would need the full investment summary to get all the details.

If this executive summary landed in my inbox, here’s what I would do. I’d start by skimming through the whole thing.

In skimming this executive summary, here are the things that would jump out at me:

  • Off-market
  • Value-add
  • Track record
  • Strong submarket
  • Proven model
  • Equity multiple
  • Unit count

Off-Market

When an asset is acquired off-market, it means that the seller chose not to list the asset publicly. Maybe the seller didn’t want the tenants to know that the building was being sold (this is quite common). Maybe the seller needed to sell within a set timeline. Or maybe the seller already had a buyer in mind.

Regardless, off-market is almost always a good thing. This means the deal sponsor team did not have to compete with other potential buyers on price. Thus, there’s a good chance that the purchase price is low, or at least very reasonable.

Value-Add

A value-add investment is exactly what it sounds like – an asset that presents an opportunity to add value in some way. Maybe the rents are significantly below market rates because the previous owner hasn’t raised rents in 10 years. Maybe the kitchens are still from the ’90s and could use some updating. Maybe there’s an opportunity to add some brand new additional units.

Whatever the case may be, value-add means more control is in the hands of the deal sponsor team. Rather than relying solely on market appreciation, there are things they can do to create additional equity, even if the market stagnates.

One of the most common value-add scenarios is one in which the units need to be updated. Let’s say the apartments haven’t been updated in 10 years, and the rents are $1,000 per month. Even if the team were to stay the course, that $1,000 per unit would still be able to cover the mortgage and fetch a modest profit.

But, who gets out of bed for modest profits? Not I.

Because there’s a chance to add value and improve the living conditions, as well as the returns for the investors, this is a true value-add. The team will go in, complete the renovations, then rent out the updated units for, say, $1,200 per month.

When you add up the $200 per month increases across all 250 units, that creates a ton of additional equity in the building, not to mention a ton of value for the residents who live there. Once residents see the updated spaces, they’re often happy to pay the higher rents and start to take more pride in their community.

Track Record

The next thing that catches my eye is, “Similar to Beta Apartments (acquired just last year and currently undergoing renovations)…” This tells me that this is not this team’s first time at the rodeo. They’ve done this before and are currently in the trenches with another asset nearby.

I also see, in the Investment Highlights section, that they’ve started implementing their business plan at Beta Apartments and that they’re surpassing their original projections. This tells me that their business plan is working and that they would likely be able to continue to strengthen their track record through Omega Apartments.

Further, this tells me that they’ve likely built up a strong reputation in the area, amongst brokers, property managers, and other apartment owners. Otherwise, they wouldn’t have been awarded this off-market deal.

Strong Submarket

I don’t know about you, but if I’m going to invest in an apartment building, I want it to be in a growing and developing area.

The fact that this submarket is the “#1 fastest growing” within this fictional metropolitan area tells me that things are moving and shaking here. I would likely open a new browser tab and immediately google that metro area and that particular submarket, to learn more about them.

What am I looking for? Things like proximity to major employers in the area, shopping centers, decent schools, any news about developments in the area, what it looks like on Google street view, what nearby houses are selling for, and anything else I can find.

Much of this will be in the full investment summary, but I always like to do a little research on my own as well.

Proven Model

Did you catch it? “Ten units have already been updated and are achieving rent premiums of $150.” Jackpot.

Why is this so important? This takes all the guesswork and assumptions out of the value-add proposal. The previous owner already created the proof of concept. They updated a set amount of units, and they were able to fetch higher rents.

This is great news. This means that all we have to do is go in and continue those renovations to achieve those same rental increases. To me, this signals much lower risk in a value-add opportunity.

Equity Multiple

There are certainly lots of numbers in any investment summary, and they can be overwhelming. Percentages, splits, projected returns…what do they all mean?

One metric I’ve come to rely on is the equity multiple. In this case, the projected equity multiple is 2.1x. This means that during the life of this project, my money will be more than doubled.

That is, if you were to invest $100,000, you would come out of this project with $210,000.

This $210,000 would include your original $100,000 investment, as well as $110,000 of profits. This $110,000 would include the quarterly cash-on-cash returns you would be getting as long as the asset is held, as well as your portion of the profits from the sale of the asset.

Typically, I look for an equity multiple around 2x, so this one passes my test.

Unit Count

I always like to know how many units I’m investing in. In this case, Omega Apartments consists of 250 units. This is a pretty decent size. This means that the team would be able to take advantage of economies of scale (i.e., increasing efficiencies by leveraging shared resources across the many units).

I will typically look at anything above 50 units. Ideally, to maximize economies of scale, I like to see over 100 units.

Next Steps

Now that I’ve taken my initial look through the executive summary, my immediate next step would be to decide whether or not to request the full investment summary.

In this case, I would go ahead and request the full investment summary, as this opportunity ticks off most, if not all, of the things I look for in a multifamily investment opportunity – strong team, strong submarket, and opportunity to add value.

In the meantime, I would do some more research on both the submarket and the deal sponsor team. I would definitely google Alpha Investments and read about the core people on their team, learn about other assets in their portfolio, and see if I can find any negative reviews or stories out there about the individuals or the team.

Move Quickly

Once you find an investment summary that meets your investment criteria, it’s critical that you move quickly. Why? Because these opportunities fill up on a first-come, first-served basis.

Chances are, if this investment opportunity met your criteria, it likely met others’ criteria as well. Be ready to make a soft commitment to reserve your spot, then take time to review the investment summary in detail.

Pro tip: There’s no penalty for backing out of an investment down the road, so it’s to your benefit to reserve early, to ensure you get a spot in the deal. If you wait around to be 110% sure, others will have jumped in front of you in line, and you may be left on the backup list.

Request a Full Investment Summary Sample

If you’re interested in seeing a sample of a full investment summary, or to gain access to the deals in our pipeline, consider signing up for the Noblivest Investor Club.

We are here to support you in your investment journey and will never pressure you to invest. Our goal is to help you gain the knowledge you need to invest with confidence (whether in our deals or not), so that together, we can change the world, one investment at a time.

How to Quit Your Job Through Investing in Real Estate

No matter how many jobs you’ve had or how far down the career path you are, facing any workplace transition brings up emotions, fears, and possibly, some sleepless nights. The bittersweet feelings of quitting a job include guilt, worry, anxiety, excitement, adrenaline, and gratefulness. 

It only seems sensible that a cushion of cash in the bank might make any transition less worrisome. In this article, we’ll share 3 steps toward making the leap from the ol’ 9-5 through real estate investing so you can spend less time behind a desk and more time doing things you love.

Why Leave Your Job

Unlike generations prior, it’s rare for anyone these days to remain with a single company or industry throughout their career. There’s a massive work-from-home, remote position, freelancer, and small business shift happening at the same time. 

There are many professionals (you included) who want to take the leap and are aware of the freedom they desire, but feel the guilt and fear associated with abandoning a career path, reducing their income, and still being able to afford a life they love. Some of these fears can be because of their need to support a family or because the cost of living in their area is high. 

For some people, they actually like their jobs. Maybe resigning isn’t for you right now, but it doesn’t mean there won’t be a moment down the road when you might consider it or even think about taking a sabbatical to just travel or spend time with loved ones.

The simple solution to all of the above is passive income. Income you earn without actually having to step foot in an office or head to work even a few hours a day seems like a dream, but we’re here to share with you how you can make this your reality. 

Step 1 – Find Your Freedom Number

The first step toward building a strong financial plan toward quitting your full time job with confidence is finding your freedom number. This number is the amount of money that would more-than-cover your regular monthly expenses based on your current lifestyle. 

This is the amount of income you need to earn passively in order to quit working and still cover all your bills worry-free. You can easily find this value by looking at your expenses from the past six months. 

Let’s pretend your expenses for the last six months look like this:

Month 1 – $ 9,500

Month 2 – $ 12,300

Month 3 – $ 8,700

Month 4 – $ 10,800

Month 5 – $ 9,100

Month 6 – $ 9,600

The average of these expenses is $10,000. Now, add a 10% buffer. 

Your freedom number in this case is $11,000. This is how much you need to establish in consistent, passive income so you can leave your nine-to-five with confidence.

Step 2 – Build Passive Income

Now that you have your target, freedom number calculated, you can get to work building multiple streams of income that will equal that total.

Some ways to generate passive income include writing a book, creating online courses, or designing products to sell online. My favorite though, the one that requires much less time and effort, is real estate investing. 

Actually, did you know there are more people who become millionaires through investing in real estate than through any other path? 

It’s true! This is because you don’t need to know how to write, design websites, or create products and market them. With some capital and dedication to research, you can invest in cash-flowing real estate and build your streams of income, one deal at a time. 

Passive investments in real estate syndications can earn between 8 – 10% annual cash-on-cash returns, plus additional income upon the sale of the asset after an average of 5 years. 

So, as an example, you could invest $100,000 and earn about $9,000 in passive income per year while doing very little work. 

Get a few of these going, and you build, brick-by-brick toward your income goal /freedom number ($11,000 per month in the example above). Even just an extra one or two thousand a month relieves some financial pressure and allows for more flexibility in your personal schedule. 

No matter how you choose to build your financial cushion – through real estate or online products or both, the main goal is to create multiple streams of passive income to reach your freedom number. 

Step 3 – Track Your Progress

As you build each stream of income, it’s actually quite fun to track your progress and see that passive income number increase over time.  Whether you’re an excel nerd or not, you’ll want to establish a way so you can easily see how much passive income you’re earning each month and which investments are out-performing others. 

If you were to choose real estate syndications, for example, you could see that for every $50,000 investment, you’ll earn about $350 per month in passive income. By this math, you might consider moving the $200,000 you have in the stock market over to syndications and begin generating $1,400 per month. 

While $1,400 is quite far from $11,000, it’s a building block. Plus, it will probably more than cover your groceries for the month – one less thing to worry about. 

Each additional passive income stream you add covers another current living expense and acts as one more tile to your freedom number mosaic. One day soon, you’ll reach the tipping point where you feel comfortable reducing your work hours or quitting your job altogether, without experiencing a true reduction in income. 

Recap

Drastic changes and quick transitions can easily stir up fear or worry in any responsible adult, but even more so if you feel the weight of providing for a family or achieving steep lifestyle/income goals. The biggest thing to remember though, is that countless others have built passive income like we discussed here, and you can too. 

The steps outlined herein will help you identify your personal, passive income goals, create a path toward creating that passive income, and track your progress. No matter your reasons for wanting to build passive income, following the three steps above will help you build the financial assurance you need to quit your job with confidence. 

The Ultimate Beginner’s Guide To Real Estate Investing

I’m often asked about the best way for someone to get started in real estate investing. If you’ve been wanting to get into real estate investing but are sitting on the sidelines and not exactly sure how to jump in, you are not alone.

There are TONS of ways to get involved in real estate investing, which is why those who do it love it, but it’s also why those who haven’t yet taken the plunge are left feeling completely overwhelmed and intimidated.

If you’re one of those spectators on the outside looking in, rest assured that there are many ways to get involved. In this article, I will walk you through how to diagnose where you are, what you want out of investing in real estate, and the best way(s) for you to get started.

Here’s an overview of what we’ll cover:

  1. Get a Macro View of Where You Are
  2. Determine Your Why
  3. Decide How Hands-on You Want to Be
  4. Assess Your Risk Tolerance
  5. Determine How Much You Want to Invest
  6. Decide Which Types of Real Estate Investments to Pursue
  7. Recap and Takeaways

Step 1: Get a Macro View of Where You Are

First things first. Before you decide on where to plunk your money down, you need to take a step back to assess where you are in life and your financial journey, and what you hope to achieve through investing in real estate.

Are you just graduating from college, mid-career, retired, or somewhere in between? How much money do you have to invest? What are you hoping to get out of investing? Are you looking for a one-time payoff or smaller ongoing payoffs? How much would it take for you to become financially free?

Getting a good high-level picture of where you are will help you assess how much risk you’re willing to take on, how aggressive your real estate investing strategy should be, how much money you can comfortably invest, the types of returns you’re looking for, and the timeframe you’re aiming for.

All of these elements will come in handy as you decide how and when to get started in real estate investing.

Step 2: Determine Your Why

Because there are so many different opportunities in real estate, from investing in notes to corporate housing, from house hacking to investing in syndications, and everything in between, it’s very easy to fall prey to shiny object syndrome. One day you’re set on buying a cute cabin upstate for Airbnb, the next day you look into self storage.

In pretty much every real estate investment opportunity, there’s a good chance you’ll make some money. That’s why it’s hard to say no when you come across an opportunity. Someone will tell you a jaw-dropping story about how they are making boatloads of money investing in X, and suddenly, you think, hey, I could do that too!

Then, hopefully before you get too far down the path, you realize that it would take too long, or it’s not long enough, or it’s too hands-on, or it’s too passive, or it’s just not the type of investment that’s right for you.

This is why it’s so important to determine your why.

What’s the reason you want to invest in real estate? Why did you seek out this article? Are you hoping to create passive streams of income so you can quit your job and spend more time with you family? Are you hoping to go into house flipping full time? Are you in it for the tax benefits? Perhaps you’ve heard about house hacking and want to give it a go?

Whatever your reasoning, make sure to take some time to step back and gain clarity around what you hope to get out of real estate investing that you’re not getting out of your current financial vehicles (stocks, bonds, CDs, savings accounts, etc.).

This will better prepare you to resist the temptation when shiny object syndrome strikes.

Step 3: Decide How Hands-on You Want to Be

I’m sure you’ve seen all those house flipping shows on HGTV, where they do the whole shabam, from dilapidated junker through gorgeous showstopper, complete with a champagne-laden open house.

They go into the house with sledgehammers, masks, and protective eye gear. They crawl through moldy spaces. They come across unexpected critters. Sometimes there’s yelling, sometimes there’s drama. But in the end, they get that incredible sense of achievement from having turned an eyesore into a work of art.

If the previous paragraph excites you, fantastic. Then perhaps you want to be more of an active, hands-on real estate investor. More power to you. I’ve been there, and I know it to be incredibly gratifying, yet often very difficult, work.

If, on the other hand, that description made you cringe and almost close this article, don’t fret! The world of real estate investing has options aplenty for you too. Perhaps you want to be more of a passive, hands-off investor.

You put in the money, leverage other people’s expertise and sweat equity, and reap the rewards. Of course, they will take a piece of your returns, for all their work, but it’s a small price to pay not to have to deal with cockroaches and dirty toilets, don’t you think?

The decision of whether to be more of an active or passive investor is an important one, so take some time to step back and feel out where on the spectrum you’d like to be, given your current life situation and goals.

Step 4: Assess Your Risk Tolerance

Every real estate investment, just like every stock, every mutual fund, every dental procedure, heck, even walking out your front door, comes with a level of risk.

As with any investment, in real estate, there’s a correlation between risk and reward. The greater the risk, the greater the potential reward. The lower the risk, the lower the reward.

For example, a ground-up development in a transitioning neighborhood might come with a higher level of risk, whereas an existing apartment building, whose current as-is rents would cover the mortgage and expenses, might come with lower risk.

In real estate, because there are physical assets and paying tenants, there are often ways to mitigate risk. However, there’s always that teeny tiny chance that you could lose it all.

If the thought of losing money makes you fidget in your seat and your palms start to sweat, take that as a sign to start off slowly and with smaller amounts of money. This will help you learn the ropes on a smaller scale. Your cash returns might not be as big, but your educational returns will more than make up for it.

Step 5: Determine How Much You Want to Invest

Now that you’ve got a pretty clear picture of where you are, why you’re investing, how hands-on you want to be, and how much risk/reward you’re willing to take on, it’s time to think about the size of your investment.

Obviously, you don’t want to put your entire life savings into real estate, and especially not into a single investment. If you’re starting out, choose a modest amount you would be comfortable losing, or at least living without for a few years.

Unless you’re doing a short-term project, you should be prepared to have your money invested in the asset for a few to several years, so make sure you’re not investing so much that you don’t have enough to pay for your groceries next month.

When choosing an investment, make sure to take exit strategies into account as well, just in case you need to get your money out sooner than you’d expected.

Step 6: Decide Which Types of Real Estate Investments to Pursue

Now comes the fun part. You’ve taken time to reflect on where you are, where you want to be, and how real estate investing can get you there. With that information in mind, you can begin to narrow down the types of real estate investments into those that best fit your situation and goals.

Most likely, you fall into one of these categories:

  • The Lots of Money / Little Time / Hands-off Investor
  • The Little Money / Little Time / Hands-off Investor
  • The Little Money / Lots of Time / Hands-on Investor
  • The Lots of money / Lots of time / Hands-on Investor

Using these loose categorizations, let’s take a look at some different types of real estate investments that would fit into each of these scenarios.

The Lots of Money / Little Time / Hands-off Investor

Let’s start with those of you who may have some money saved up. Perhaps you’ve invested in the stock market, perhaps you have a decent amount in your savings account. You’ve heard about the many benefits of real estate investing, the tax breaks, the passive income, and the impact your money can have on families and communities.

But, given that you’re a very busy person, you simply have no time to put in all the research it takes to feel comfortable investing in something, and you definitely don’t have the time to actively renovate or manage a property.

There seem to be a bazillion real estate listings out there…how would you ever have time to research neighborhoods and markets, nevermind tour properties with agents and sign all that paperwork? Just thinking about it makes you exhausted.

Recommendation: Become a Passive Investor

If you’re in this camp, one of the best options for you to get started in real estate investing is through passive real estate investments, either through turnkey rental properties or through commercial real estate syndications.

Turnkey Rental Properties

On a smaller scale, you could get into turnkey rental properties. Turnkey is exactly what it sounds like; you buy it, and it’s ready to go, with minimal involvement or work needed.

Commercial Real Estate Syndications

If you want to go bigger, you can get into commercial real estate syndications, perhaps one of my personal favorite ways to invest.

What is a syndication, you ask? Quite simply, a real estate syndication pools together money from different investors.

Let’s say I’m a syndicator. I’ve spent tons of time researching markets, analyzing properties, and meeting up with brokers, contractors, and property managers. I find an apartment building that I think would be a homerun investment.

This apartment building costs $4 million, which requires a $1 million down payment. I have $100,000 to put in, which leaves me with a $900,000 deficit. I need to find investors to fill in the rest.

As an investor in my syndication, you rely on my time and expertise. I take care of all the day-to-day operations, renovations, accounting, etc. You just put in your money, and every quarter, I send you a check with your percentage of the returns. You would also get a portion of the profits when the apartment building is sold.

Your money goes toward revitalizing and improving an apartment community, and you see great returns. Win-win.

Overview of These Types of Real Estate Investments

What you put in

Your money

What you leverage

Other people’s time and expertise

What you get

Ongoing passive income, confidence knowing your money is being put to good use by an experienced team

The Little Money / Little Time / Hands-off Investor

Now, on the flip side, let’s say that you don’t have very much money or very much time or interest in real estate. You just know that it’s a good investment, but you have different passions and goals in life.

That’s okay. There’s a place for you too, in the world of real estate investing.

For you, one of the best and easiest ways to get involved in real estate investing is through real estate crowdfunding sites.

Recommendation: Invest through a real estate crowdfunding site

That’s right, just as Kickstarter crowdfunds new products, real estate crowdfunding sites crowdfund commercial real estate projects. However, unlike Kickstarter, these investments come with cash returns, rather than rewards in the form of t-shirts and sneak peeks of beta releases.

Real estate crowdfunding sites are available to the public, often have very low barriers to entry (as low as $500 minimums), and serve both accredited and non-accredited investors (what the heck is an accredited investor again? Find out here) .

These conditions make commercial real estate much more accessible to the general public than it once was. It used to be that you needed to know someone directly involved in a real estate syndication in order to invest in one.

And while this is still true in many cases, new SEC regulations have opened up a channel to allow certain types of syndications to be advertised to the public, which has led to the birth of many, many real estate crowdfunding sites.

So, if you’re strapped for both time and cash, but you still want to try out real estate investing, crowdfunding is a great place to start.

Overview of These Types of Real Estate Investments

What you put in

Your money (in small amounts)

What you leverage

Crowdfunding platforms, experienced deal sponsors, strength in numbers (i.e., lots of people all putting in small amounts of money)

What you get

Tons of choices on crowdfunding platforms and real estate projects, ability to invest with very little capital, various types of projects and project lengths to suit your investment goals

The Little Money / Lots of Time / Hands-on Investor

If you’ve been bitten by the real estate bug and want to start investing but don’t have a lot of capital at the ready, yet you are not afraid to roll up your sleeves and get dirty, you might fall into this category.

Even though you might not have saved up as much as you would have liked, you are interested in learning more about real estate investing and are willing to put in some time and effort (aka, sweat equity).

In my opinion, this is perhaps one of the most fun positions to be in. Count yourself fortunate that you actually have a passion for real estate, as many people get headaches just thinking about the analyses, paperwork, and potential rehab nightmares.

There are many ways to get into real estate investing with little or no money, as long as you’re willing to hustle and be creative.

Your Strengths, Interests, and Goals

Take stock of which aspects of real estate investing interest you the most. Is it the thrill of the hunt for those great deals? Planning and executing renovations? Running the numbers? Analyzing neighborhood trends and markets?

Figuring out what you’re most passionate about, as well as where your strengths lie, will help you hone in on how to start your real estate investing journey.

Moreover, what are you in it for? Are you looking to create short-term capital, or long-term equity? Passive income, or a quick buck?

Below is a quick rundown of some of the most common ways people with little money and lots of time and interest can get started in real estate investing.

1. Fix and Flips

As seen on HGTV, this is where you buy a fixer upper and then put in the sweat equity to renovate and sell it. If you have no money to put down, you can look into short-term private loans, which will give you several months to a year to complete the renovations. Once you sell, you can pay off your loans and take the profits.

2. The BRRRR Strategy

The BRRRR strategy is similar to fix and flips, except that you hold onto the asset long term, rather than selling. BRRRR stands for buy, renovate, rent out, refinance, and repeat.

Similar to the little/no money down option mentioned above, where you take out a private loan to cover the down payment, except you pay off that loan upon refinance.

If you buy and underwrite correctly, the after-repair value (ARV) will be significantly higher than the purchase price, allowing you to do a cash-out refinance and pay off any private loans you might have taken out for the down payment.

3. Wholesaling

Those of you who love to network and find off-market deals might love this one.

Wholesaling is when you find a deal and get it under contract for a low price. Then, while the asset is under contract (i.e., you haven’t completed the purchase yet), you wholesale it to another buyer for a higher price.

Who pockets the difference? That’s right, you do.

4. House Hacking

Depending on your market, house hacking might be a potential option for you. This is exactly how I got my start in real estate investing many years ago.

Basically, you buy a property (typically a duplex, triplex, or fourplex) where you can rent out some of the rooms or units. The rent from your tenants helps pay down your mortgage.

Pro tip: If you’re able to get an FHA loan, you can put down as little as 3.5% of the purchase price, making this an even sweeter deal.

5. Real Estate Crowdfunding Sites

If you’re interested in commercial real estate and/or running your own syndications some day, real estate crowdfunding sites might be a great place to start. This allows you to learn about syndications without the pressure of having to run one.

You can learn how to find and compare deals, what to look for in deal sponsor teams, and what types of communications and returns investors can expect. All of this will come in handy if and when you decide to lead your own syndications.

Overview of These Types of Real Estate Investments

What you put in

Your time

What you leverage

Other people’s money

What you get

Firsthand experience, potential for great returns on very little cash investment

The Lots of Money / Lots of Time / Hands-on Investor

Hi. Can you be my best friend?

If you’re in this category, you’re perfectly positioned to make your money work hard for you. Perhaps you have a large amount of capital in the stock market and are looking to shift some of that over to real estate. Perhaps you’ve already built up a healthy portfolio of rentals and are looking to go bigger, or transition into a more passive role.

Recommendation: Lead commercial real estate syndications

If you’re looking to be an active investor, you might want to pursue leading your own syndications. This puts you in the driver’s seat. You can find the deals, put together the team, raise the capital, and deal with day-to-day operations after acquisition, or you can partner with others to create a real estate syndication business.

Recommendation: Become a passive investor in commercial real estate syndications

If you’re looking to become a passive investor, you can still be involved through finding and vetting deals, either through real estate crowdfunding sites or direct connections to real estate syndicators or private equity firms.

To be a savvy passive investor, you will need to know the lingo (cap rates, equity multiples, and IRRs, oh my!), as well as have some basic understanding of how deals are structured and underwritten. After all, any team can put together a fancy marketing package, but savvy investors know the right questions to ask to ensure that the deal and team are solid.

Overview of These Types of Real Estate Investments

What you put in

Your money and your time

What you leverage

The power of others’ expertise, time, and money to help you go bigger, faster

What you get

The freedom to carve your own path and maximize how hard your money is working for you

Recap

By now, your head may be spinning a little. It’s okay, that’s natural. 

Here’s a quick recap.

We started out by getting a macro view of where you are in life, your investing goals, how involved you want to be, your risk tolerance, and how much money you want to invest.

Given your current profile, we then explored a few different scenarios, with some real estate investment recommendations for each.

The Lots of Money / Little Time / Hands-off Investor

Consider investing passively in commercial real estate syndications

The Little Money / Little Time / Hands-off Investor

Consider investing small amounts through real estate crowdfunding sites

The Little Money / Lots of Time / Hands-on Investor

Lots of options: Fix and flip, BRRRR method, wholesaling, house hacking, crowdfunding, and more

The Lots of money / Lots of time / Hands-on Investor

Active: Consider leading your own commercial real estate syndication

Passive: Invest through real estate crowdfunding sites or directly through syndicators and private equity firms

Takeaways

As you can see, there are many, many ways to get involved in real estate investing. And, the options included above barely skim the surface.

If you walk away with nothing else, remember this. No matter where you are in life, how much money you want to invest, and how much time and interest you have, there are ways for you to get started in real estate investing.

If you’re still overwhelmed or anxious, there are ways for you to start small, with a few hundred or few thousand dollars. If you lose it all, consider it tuition for the College of Real Life. Each lesson you learn makes you a savvier investor, so don’t be afraid to fail. Even the most successful real estate tycoons have lost money, but they kept going.

Above all, remember that real estate gives you a unique investment opportunity, different than any other type of investment. Real estate allows you to invest in places where people live, work, and make memories. Investing in real estate allows you to make your money work for you, and also to make an impact on families and communities. And that’s something that a stock certificate could never give you.

Why I love investing passively in Real Estate Syndications (And why you should too!)

I’m headed out to a fun girls day out wine-hopping with my friends around the Hamptons. Out of the blue during my drive there, I got a call from my property manager.
“Hey, we’ve got some bad news. There is a car wedged into your property.”
I had to pull over… “Wait, what??”
She responds, “A car crashed into your property.”
These kinds of calls are the best, aren’t they?

At that moment, I wanted to just quit… sell the property, leave it as a loss and RUN! I really didn’t want to deal with the mess that came with something like this. While I couldn’t just do that in the moment, it definitely ruined my supposed day off and instead I spent all day on the phone with countless contractors, tow truck services, insurance, the police, etc in an area that had bad service.

It was months of calls and arrangements with insurance adjusters, contractors, tenants, the property manager, L&I inspectors from the city and on and on it went. It felt like a neverending nightmare! Honestly, to this day as I’m writing this post it’s still a battle I’m working through. 

How I got here

After around 13 years in the corporate world, I finally acted on what I always knew. I just wasn’t a good fit for what was expected out of me at work. I was hired to do a job the way I was told and that was it. Any creativity or suggestions for efficiencies were completely nixed, nipped in the bud! Whether it were managers, directors or a lot of times even colleagues, I felt a lot of animosity towards different approaches and ways of thinking. I always considered myself a little different, and this environment made me feel exhausted and low all the time. There was no fulfillment or impact in what I did. I was trading time for a paycheck, but I knew my time was worth so much more than this!

By 2019, I had a family and two very young boys who needed me. It wasn’t just a time thing, they needed their mom in her best and most ideal state to raise and support them. Every parent knows how demanding children are under age 3. I felt depressed and full of anxiety all the time. My confidence was at an all time low. I wasn’t where I needed to be in order to be the best mom for them. I knew something had to change! It was a scary move, but it was necessary!

I started learning more about real estate at the end of 2019 and into 2020. WOW! What a big world it was! I knew I was committed to investing in this particular asset class, but I didn’t know what exactly I wanted to do. I first landed on the BRRRR strategy on properties in Philadelphia. It stands for Buy Rehab Rent Refinance Repeat. It’s a little like a Fix & Flip, however instead of flipping (which means selling) I am holding it as a rental property. The biggest advantages in this strategy are the Refinance step, where I get to draw out all of the money I invested in both purchase and renovations using a Cash Out Refinance and long term appreciation by holding the asset. These properties would multiply our net worth thanks to the tried and true appreciation of real estate over time. The goal was to own the property with none of my own money in, and have tenants pay down the mortgage while I still made a nice cash flow on top. I did this once, and it was great! Then I scaled up to 4 properties, and that’s when the problems started coming all at once. It ended up taking far more time that I would have liked, especially with my priorities focused more at home with my kids. I didn’t want to be tied to my phone keeping tabs on property managers and contractors, let alone getting calls like the one above during times I least expected. 

So that’s what brought me to real estate syndications. As you read in the first blog post, Margaret was one of my first exposures to real estate investing. She was already in the multifamily syndications space and had told me all about it. I figured because I couldn’t scale as quickly as I hoped using the BRRRR strategy in SFH rentals due to time limitations, I could supplement by investing passively in multifamily syndications alongside my active investing ventures. The results were far beyond what I ever imagined! I thought my rentals helped increase my net worth, but the syndications supercharged it and I didn’t have to worry about tenants, showers leaking or cars crashing into my properties! I just saw a nice direct deposit every month coming into my bank account and reports of how the property appreciated whether it was through value-add renovations or just plain market appreciation in hot population and job growth areas. The best icing on the cake was finally seeing a refund from the IRS after almost a decade of paying nearly 6-figures annually to Uncle Sam in taxes. WOW!

What is a real estate syndication?

In the simplest sense, a syndication is a group investment. A group of investors pools their money to invest in something together. In the case of a real estate syndication, investors come together to invest in commercial real estate assets, like apartment complexes, self-storage buildings, and mobile home parks.

The beauty of a real estate syndication is that you can leverage other people’s time, energy, and expertise.

As a busy mom, I can use all the leverage I can get.

In a syndication, the sponsors are the active investors, the ones who know the ins and outs of that particular market, who spend time getting to know the real estate brokers, who visit the properties and walk the units, who pore over the due diligence documents, who work with the property managers day-to-day.

As a passive investor in a real estate syndication, I get to partner with a stellar team with a strong track record, invest my money in a great piece of real estate, and get great returns, all while doing next to no work.

Let me say that again, because I think it bears repeating. I get to invest in real estate without having to do any work.

Renovations running behind schedule? Not my problem.

Noise complaints from the tenants in apartment 2B? Not my problem.

Shower leaked into the first floor? Not my problem.

The sponsor takes care of all of that, and I get a neat little monthly report on the progress and updates.

As a passive investor, I can spend more time with my family and less time dealing with the headaches of being a landlord. #winwin

What’s the catch?

Okay, you’re thinking, this all sounds pretty good. But what’s the catch?

I hate to disappoint you, but there is no catch.

In a real estate syndication, everyone works together, and everyone wins.

Think of a real estate syndication like an airplane ride. The sponsors are the pilots. They do the active work of flying the plane. If a warning light goes off, the pilots deal with it.

The passive investors, on the other hand, are the passengers. They get to enjoy the ride, while reading, watching a movie, or dozing off. They don’t have any responsibilities in making sure the plane gets to the right place safely. They’re just along for the ride.

For their work, the sponsors get a cut of the deal, just as a pilot gets paid for their work in flying the plane. The lion’s share of the returns, though, go to investors, even though they’re doing the mouse’s share of the work (okay, I’m not exactly sure what the opposite of lion’s share is, but you get my point).

In a syndication, just as in an airplane ride, everyone works together and is going to the same place.

Interests are aligned, and everyone wins.

What do returns look like?

Just like when you invest in a rental home, the returns in a real estate syndication can vary, based on the asset, market, and business plan.

What I can tell you though, is that, on average, the deals that I invest in (which are the same deals that we offer to our investors) have a cash-on-cash return of 8 to 10 percent per year and are held for a projected 5 years.

When factoring in the profits from the sale of the asset at the end of the 5 years, the average returns are around 20 percent per year. Not bad, right?

In other words, if you were to invest $100,000 in one of these real estate syndications with us, you could expect around $8,000 per year in cashflow distributions. On top of that, when the asset is sold in year 5, you could expect another, say, $60,000.

In 5 years, you would likely turn your initial $100,000 investment into $200,000. All without lifting a finger or dealing with a single broken toilet.

How to Invest in a Real Estate Syndication

The process to invest in a real estate syndication is a bit different than buying a rental property. For one, you can’t just go up to a broker and ask about a syndication. It doesn’t quite work that way.

Rather, to find real estate syndication opportunities, you need to find sponsors who have deals currently under contract. Often, because of SEC regulations, sponsors cannot publicly advertise their deals, so they can be hard to find unless you know someone who knows someone.

Luckily, now you know someone who knows someone. (Hint: It’s us.)

At Noblivest, we specialize in connecting passive investors to experienced sponsors in growing markets. We do the heavy lifting of finding and vetting sponsors and deals. We cherry-pick the best deals in the best markets, and we make them available to our investors.

We’re investors first and foremost. So we’re always looking for deals that we want to invest in ourselves. When a deal meets our strict criteria, we invest our own money into the deal, and we open up the investment opportunity to our investors as well.

What does Noblivest get out of it?

We’re in the business of helping people. We’ve seen firsthand the difference that great sponsors and syndications can make to a community. We’ve had tenants thank us profusely for the work we’re doing in turning their communities around.

We’ve also been thanked profusely by investors whom we’re helping to build passive income streams, so they can stop worrying about money and start living the lives they’ve always wanted.

As for how we keep our lights on, that part comes from our partnerships with the sponsors. We work hard to find great sponsors and great deals. When we find them, we partner up with the sponsors and join the general partnership.

As such, we get a cut of the sponsors’ fees and equity in the deal. That means that, as an investor, you invest your money directly into the deal; you don’t pay us any extra fees.

Ready to learn more?

The best way for you to learn more about real estate syndications, as well as our current, previous, and upcoming deals, is to join the Noblivest Investor Club.

Through the Noblivest Investor Club, you’ll get first looks at all the deals we offer. We’ll work with you to figure out your investing goals and to help you find the best deals to meet those goals. We’ll then walk with you every step of the way as you invest in those deals.

So if you’re ready to be done with the headaches of being a landlord, sign up for the Noblivest Investor Club below, and get started on your path toward becoming a passive real estate investor.