What is real estate syndication?

Real estate syndication is not a REIT – it is a way of investing in specific, tangible real estate through a crowdfunding model. A group of investors pools their money in a large real estate investment they couldn’t afford to acquire individually. Management of the investment is the responsibility of the real estate syndication company. This allows investors to profit from passive real estate income without the hassle of managing the property or tenants. The investors benefit from a predictable cash flow and are not subject to stock market volatility.

Benefits of investing with a real estate syndication company

Historically, multi-family real estate has offered one of the highest returns on investment. However, a single investor must either absorb the cost of hiring a property manager or handle the tenants, maintenance, mortgage, insurances, improvements, and rent collection themselves. They’re also limited in the size of the property they can buy. Real estate syndication removes the hassles of single-owner investing and shifts the management responsibility to the real estate syndication company.

The BRRRR model

The BRRRR (Buy, Rehab, Rent, Refinance, Repeat) Method is a real estate investment strategy that involves flipping distressed property, renting it out and then cash-out refinancing it in order to fund further rental property investment.

Buy a property: The property we purchase should be a distressed property that needs some work to get up to code and ready to rent. Because of the home’s condition, it will likely be cheaper to purchase.

Rehab the property: Since the property is distressed, it may require extensive work. In this step, we’ll renovate the property to make structural, safety and aesthetic improvements, and prepare it for renters.

Rent out the property: We determine the rental price and find people to rent the home.

Do a cash-out refinance on the property: With a cash-out refinance, we convert the equity into cash. The cash is tax-free and can be used for paying back investor or purchasing another property.

Use funds from refinance to buy another property: In this final step, we’ll start the process all over again. Using the funds from the cash-out refinance, we’ll purchase another distressed property and rehab it, before renting it out and refinancing that property.

Inflation Protection

Historically, real estate investments outperform inflation and provide a consistent rate of return for investors. Real estate offers more predictable returns than stocks.

Tax Benefits

Take advantage of the investment’s depreciation caused by lower demand, deflation, age of the building, or other factors.