"Quote by Theodore Roosevelt on real estate investing." "Person looking frustrated while managing a home renovation." "Infographic showing differences between single-family flips and multifamily syndications." "Chart comparing active versus passive real estate investments." "Illustration of a landlord dealing with tenant issues." "Infographic on the three T's: Tenants, Toilets, and Termites." "Person relaxing while receiving passive income from investments." "Map showing diversified real estate investments across different markets." "Graph depicting tax benefits of real estate syndications." "Community impact through real estate syndications illustration."

Escaping the Single Family Trap: Embracing Multifamily Syndications

December 12, 20245 min read

"Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming financially independent." - Theodore Roosevelt

Starting Small: My Journey from Single-Family Flips to Multifamily Syndications

After being let go during COVID, I started exploring different avenues to earn passive income. I quickly stumbled upon a real estate mentorship program and learned why real estate is considered the greatest wealth builder compared to any other investment class. During that time, I did what most people do when they want to get started in real estate investing: I bought a single-family home to flip. That was the most efficient thing to do, right? Eh, not so much.

I bought a single-family home and managed the project with no prior experience. I dealt with a bad contractor, a bad realtor, and a bad lender—overall, the experience was overwhelming. A two-month project turned into a year and some change. On the other side, I heard stories from people who were constantly getting calls when their rental property’s toilet broke, when the furnace went out, or just about any issue you could imagine. Some of them even had to use vacation days from work to go to court and evict tenants. Not efficient at all!

So, why did I buy a single-family flip, or why do people start with single-family rentals? Because we’re all conditioned to start small. When most people think of getting started in real estate, they imagine buying a single-family home or doing a fix-and-flip. We can’t possibly picture ourselves investing in a large apartment complex (which, ironically, has a lot less risk than a single-family home).

That’s my point: many people don’t even realize they can invest in multifamily syndications. I want to help educate others so they can achieve financial freedom and skip the "learning phase" I went through.


If you’ve ever owned single-family or multifamily homes, you know these investments require significant time and energy.

Investing in residential real estate can be challenging because, typically, the investor wears many hats throughout the seemingly never-ending process. Responsibilities include finding the property, negotiating and funding the deal, renovating the property, interviewing tenants, and even performing maintenance.

The trouble is, it doesn’t stop there. You have to repeat most of the process all over again when your tenant’s lease is up.


Why Investing in Multifamily Rentals Can Be a Lot of Work

Small multifamily rentals have some advantages over single-family homes. For example, if one tenant moves out, the other tenants’ rent can still help cover the mortgage. Plus, it’s much easier to manage one property with multiple tenants than to manage multiple properties with one tenant each.

But even with a property manager on board, you’re still responsible for bookkeeping, strategic decisions, and maintenance/repair costs. Essentially, you’re running a small business, which can be challenging if you already work full-time.


The Case for Passive Real Estate Investments

On the flip side, there are fully passive investments in commercial real estate. These are professionally managed and operated, so you don’t have to deal with the three T’s: Tenants, Toilets, and Termites.

Once investors begin to understand passive commercial real estate investments, they often gravitate toward syndications. Here’s why:

  • Minimal Time Commitment
    Have you heard the phrase “set it and forget it”? In a syndication deal, you invest your money, collect cash flow during the holding period, and receive profits upon the sale of the property.
    You won’t be fixing toilets, screening tenants, or handling maintenance. The sponsor and property management teams expertly handle those tasks, allowing you to sit back, enjoy the returns, and focus on living your life.

  • Opportunities for Diversification
    It’s unrealistic for anyone to become an expert in every phase of property investment, especially across different markets.
    By investing with experienced deal sponsors, you can diversify into various markets and asset classes while trusting that the professionals are taking care of business. This allows you to scale your portfolio quickly and mitigate risk.

  • Tax Benefits
    Similar to personally owned rentals, you get pass-through tax benefits when investing in real estate syndications. You can write off most of the quarterly payouts, meaning you essentially receive tax-free passive income during the holding period.
    However, you may owe taxes on the appreciation income you earn upon the property’s sale. Always check with your CPA about your specific situation.

  • Limited Liability
    When you invest passively through real estate syndications, your liability is limited to the amount of your investment. For example, if you invest $50,000, your biggest risk is losing that $50,000. You won’t be responsible for the property’s total value, the loan to buy it, or any other obligations.

  • Positive Impact
    With personal investments, you might improve the lives of two to four families. But with real estate syndications, you can positively impact hundreds of families and entire communities with just one deal.
    Each syndication creates a cleaner, safer, and nicer place for people to live while benefiting the environment and the community. That’s something you won’t get from stocks or mutual funds.


Conclusion

If you’re on the fence between active and passive real estate investments, the experience you gain from owning small rentals can be invaluable. However, personally owning rental properties is not a prerequisite to investing in commercial real estate syndications.

Either way, real estate is an excellent way to diversify your portfolio and mitigate risk. It allows you to positively impact the families who live in your units and improve the community and environment around you.

We provide highly vetted, investment opportunities, in real estate, to both accredited and non-accredited investors that are looking for passive income opportunities. We partner with experienced operators, in growth markets, who have an extensive team and track record.

Diversified Equity Partners

We provide highly vetted, investment opportunities, in real estate, to both accredited and non-accredited investors that are looking for passive income opportunities. We partner with experienced operators, in growth markets, who have an extensive team and track record.

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