“Coming together is a beginning; keeping together is progress; working together is success.”– Henry Ford
Real estate syndication involves pooling together investments from individual investors to buy a larger asset.
The biggest challenge is undervaluing your time.
I found this out while working in single family investing.
During my time in that market, I was making good money, but the work was taking a lot of time and was not scalable.
At that point, the work wasn’t passive.
That’s why undervaluing our time can be one of the biggest mistakes we can make.
I encourage you to do a time audit.
Figure out how you’re spending your time.
You might surprise yourself once you see the ways you’re being limited.
As a bonus, time management skills have been proven to lead to a successful life by academic studies.1
Now, let’s jump into some cool syndication ideas and why I think it’s a great move for especially high net worth individuals.
1. What is Syndication?
Syndication involves two parties.
You’ve got a general partner and a limited partner.
A general partner could be a team of people or one person.
They’re basically operating the deal.
The limited partners are the ones who are actually putting resources into the deal, typically capital.
General partners typically invest as well, but eventually there’ll be a split between the two partner types.
When this deal starts making money, you can actually become a passive investor.
So, when you see “limited partners,” it means limited in responsibility.
You’re not actually dealing with the issues as they come up on the property.
Instead, you trust the general partner team to handle all of that.
Being a limited partner allows you to acquire more profitable assets to diversify your investments as a passive investor.
According to this study in Real Estate Economics, limited partnerships can flexibly allocate cash, profits, losses, and gains to each partner.
This can allow for maximum returns throughout the investment’s lifetime.2
It’s a very attractive position to be in!
2. Benefits for Investors
The benefit to investors is reducing risk and helping you achieve time freedom.
We talked about this being one of the biggest challenges.
People will think they’re a passive investor when they own 10 rental houses.
How much time does that take?
It usually takes a fair amount of ongoing time investment.
When you have that many rental houses, you will get calls even though you’re not the property manager.
One tenant didn’t do this, or another tenant broke that.
House repairs are also a big one.
When you get to larger assets, they tend to be much more institutional.
You can even predict cash flow.
3. Your Experience
The last thing I want to look at is your experience.
Not everything has gone perfectly for us in syndication.
We’ve had some serious challenges, but we’ve learned from them.
Now we’re seeing some great opportunities available right now, particularly in multifamily.
Some of these assets have decreased 20% to 40% from where they were three or four years ago.
Warren Buffett says to be greedy when others are fearful.
If that’s the case, there’s some opportunity to buy and go get other assets.
One big mistake I see a lot of people make when it comes to investing is not getting started.
They have analysis paralysis.
This happens when you look at a few deals and don’t know what you should do.
A good way to get through that is to find a friend who’s been doing this for a while.
Go to meetups.
Attend a conference.
One of the most transformational relationships a lot of passive investors have is with other passive investors.
That’s the only type of person who is not really biased.
They’re not trying to sell you anything.
We love doing our deals, but even we’re biased.
We recently launched a mastermind group called the Wealth Forum.
It’s a small handful of high-net-worth passive investors.
We all talk about different deals we’re doing and the things that work.
Joining groups is a great way to shortcut your success, get around other passive investors, and create transformational relationships.
One of my goals as a fund manager is to own everything and operate nothing.
I want to do this so I can travel, create, write, and do the things that are important to me.
My version of being successful involves developing more time freedom.
If you find more things to do, you’re not achieving that freedom.
Now I want to hear from you!
What do you want to do with your time freedom?
Let us know in the comments.
Before you leave, make sure to check out our special report about inflation investing. It shares the best choices to invest during an inflationary environment.
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Disclaimer: I am not your investment advisor. This is for educational purposes only. I am not giving specific advice on what you can do. I am simply giving my opinions.
