Are Rental Properties Or Real Estate Syndications – Which Is The Best Fit For You?
April 4, 2023

After decades working as an automotive business broker, I stumbled across real estate investing as a way to create passive income. Although I was successful, I found myself starting to become even more overworked and tired. Not exactly the freedom and sustainability I had thought real estate investing would provide.

The world of rental property ownership is full of stress, headaches, and time commitments. When you’re a landlord, you never know when unexpected issues or expenses will arise, and as you’ve probably guessed they will arise.

Running my businesses left me overworked, with no downtime. I felt like I was in a hamster wheel looking out at the life I built, but not able to live it. Adding the stress of managing my real estate rental properties felt like the hair that would break this camel’s back.

Most people begin real estate investing by purchasing rental properties, like I did. These are often single-family homes or small multifamily properties (like duplexes or triplexes). Too often they quickly realize that being a landlord is challenging and time consuming.

Luckily, I found a better way.

Fortunately, I discovered that real estate syndications would allow me to scale consistently and build sustainable wealth, with the freedom of not having to serve in the role of landlord.

But what type of real estate investing is right for you?

Take it from me, investing in residential real estate feels like a never ending cycle. You have to find the property, supply the funds, handle all renovations, screen tenants and even act as the maintenance crew. Unfortunately, this process becomes another hamster wheel, with no end in sight. The worst part is you have to repeat the draining process every time a tenant’s lease is up. Scaling and sustainability becomes near impossible due to the varied nature of the properties and tenants not allowing you to have solid systems in place. Sure, you’re earning income as a landlord, but it’s far from passive and you’re far from living the independent lifestyle you’d imagined.

You’ve worked hard in your job or growing your own business and now you need a wealth-generating vehicle that doesn’t take more of your precious time. It’s time you let your money work harder, creating that legacy you’ve dreamed about.

Residential Rental Properties Are Labor Intensive

There’s no way around it, rental properties require a great deal of work and time. I made the switch to real estate syndications because I could not scale the labor required to manage my residential portfolio. I knew there had to be a better way.

Small multifamily rentals do offer some advantages over single-family rental homes. With a small multifamily property, if one tenant moves out, the other units’ tenants are still there to help cover the mortgage. Of course it’s also much easier to manage one property with multiple tenants than to manage multiple properties with only one tenant.

Hiring a property management team does lessen your day-to-day burden. While property managers help with bookkeeping, decision making and maintenance, you as the landlord, are still ultimately responsible for all the costs incurred.

Yet, property managers can also raise costs, waste money, or do poorly when selecting a tenant. Often, you find yourself spending just as much timing managing the property managers as you would have spent yourself.

When managing rental properties – whether as a landlord or managing your property managers – you quickly find out that you have created another job for yourself. As a landlord, you’re more weighed down with stress and to-do lists than ever before. What was intended as a vehicle to create passive income has become quite the opposite.

Passive Real Estate Investments Are Low Stress

You’re not alone if the thought of becoming a landlord leaves you unexcited to invest in real estate. Afterall, you’ve worked hard to create cash flow to invest. Now, you want your money to do the heavy lifting.

Luckily, there are opportunities for investing in commercial real estate that are entirely passive. These passive investment deals, or real estate syndications, are professionally managed and operated from the beginning of the project to the end. You do the initial work to determine your goals, find an operator like Legacy Creek Investments, and vet the deal. Once your money is invested, the operator team does all the work as you collect the returns.

Let passive investments, or real estate syndications, be your rescue from the unexpected stress and expense of being a landlord. Don’t just take my word for it, even Forbes reports that once investors understand passive commercial real estate investments work, they quickly choose syndications over owning rental properties.

Here are the top reasons I personally invest in real estate syndications, and what makes them so attractive to others:

1. Very Little Time Commitment Required

Real estate syndications are truly passive investments. When you passively invest in a syndication deal, you simply put in your capital, collect your monthly cash-on-cash during the holding period then receive your profits upon the sale of the property.

In a real estate syndication deal, the sponsor team and the property management team handle all the day-to-day operations, so you’re completely free from the stress of being a landlord. You also never have to be concerned about any unexpected expenses. The sponsor team accounts for any unforeseen costs when creating the project’s business plan.

2. Increased Opportunities for Diversification

The beauty of investing in real estate syndications is that you’re able to leverage the boots-on-the-ground knowledge of an expert team. By partnering with a solid sponsor team experienced in various markets and asset classes, you’re able to invest in markets where you don’t have any personal expertise.

Relying on your sponsor team gives you limitless opportunities to invest in various markets and asset classes, allowing you to quickly and easily scale your portfolio, while also mitigating risk.

3. Attractive Tax Advantages

Investing in commercial real estate syndications gives you pass-through tax benefits, similar to owning your own rental properties. Simply put, as the passive investor, you’re able to write off most of your quarterly payouts making the passive income you collect throughout the holding period virtually tax-free.

As always, it’s wise to check with your own CPA to see if your personal situation will require you to pay taxes on the appreciation income you earn upon the sale of the property.

4. Limited Liability

Your limited liability as a passive investor is a huge benefit to investing in a real estate syndication. During a syndication deal your liability is limited to your investment amount. For example if you invest $100,000, you’re only at risk to lose that $100,000. Meaning if something goes wrong during the lifecycle of the project, you won’t be held responsible for the entire value of the property, and don’t have to worry about any of your other assets being at risk.

5. Opportunity To Make A Positive Impact

Impacting my community for the better is a big part of why I do what I do. While rental properties allow you to make a difference in the lives of families, a few at a time, investing in real estate syndications allows you to multiply that impact substantially. Investing with real syndications gives you an opportunity to impact hundreds of families and entire communities.

Real estate syndications by design create cleaner, safer, improved communities. The positive impact on the environment achieved through investing syndication deals, isn’t something that can be found when investing in the stock market or mutual funds.

Which Investment Is Best For You?

Investing your hard-earned money is a big decision. Choosing whether to become an active or passive real estate investor depends upon your investing goals. When trying to determine which is right for you, it’s wise to consider what you’d like to get out of your investments (regular cash flow, minimal time commitment, tax advantages, etc), as well as your lifestyle.

While some property owners thrive on the day-to-day management of small rental properties, others find the daily operations to be a time-consuming, draining process. Owning small rentals gives you irreplaceable experience, but it’s not a prerequisite for investing in commercial real estate syndications.

When I partnered with a quality, experienced sponsor team, I was finally able to achieve the freedom and sustainability I wanted in my life, while also building my own legacy for future generations. I’m no longer on the hamster wheel waiting for my next real estate sale. I’m free to spend my time how I want.

Whether you choose to be an active or passive investor, investing in real estate is a great way to diversify your portfolio and mitigate risk. You’re letting your money work for you while also positively impacting families and communities in the process.

Get Started Investing In Real Estate Syndications Today

If you’re interested in hearing more about the tax-advantaged cash flow gained from truly passive real estate investments, I’d love to talk with you! Be sure to join the Legacy Creek Investor Club so you can have exclusive access to the numbers and details on past syndications we’ve done, plus a chance to get in on the next one.

Next Steps

Here at Legacy Creek Investments, we provide multiple ways to leverage the power of real estate syndications in your investment portfolio so you can take advantage of real estate’s cash flow, equity, appreciation, and tax benefits.

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If you’re accredited and looking to deploy capital, we invite you to sign up for our Investor Club to get access to our current or upcoming opportunities.

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