Strong Return on Investment
The main benefit of multifamily syndication is the strong return on investment and the opportunity for reliable passive income. Multifamily properties may lead to economies of scale and can generate consistent rental income while gaining equity. That means more cash flow and easier equity gains over time for you as the investor. Due to the ever-changing environment of the housing market, large-scale residential buildings are integral and popular housing options in small and large cities alike. Because of this, multifamily properties can provide a stable income stream to investors even in uncertain economic conditions, making the return on investment reliable and predictable.
Professional Property Management
The most common setup for multifamily syndication properties is to have a group of investors and a single sponsor or property management company. The property management team would be responsible for the day-to-day operations of the property, letting the investors be silent partners in the deal. The property management team handles rent collection, maintenance, and tenant retention, allowing investors to sit back and watch their original investments grow. Professional Property management allows for truly passive income because the pool of investors doesn’t need to be involved with the day-to-day. This makes syndication a great option for investors looking to keep their day job and make passive income on the side.
Investment Diversification & Reduced Risk
Multifamily syndication also provides investors with an opportunity to diversify their portfolios. These investments have less risk than properties purchased individually because of the pooled resources and shared responsibility. By pooling resources, each investor has less individual risk. Syndication also allows small investors to have a stake in larger properties and make investments that would otherwise not be possible as an individual. This makes these investments a great option for breaking into the real estate market because you can start with a smaller investment, have reduced risk, and still see a strong return.
Tax Advantages
There are tax advantages available with investment properties that are not available with other types of real estate investments. For example, depreciation of the property can be used to offset rental income and reduce investors’ adjusted growth income. Additionally, certain multifamily properties may also qualify for tax incentives such as low-income housing credits which can further increase returns for investors.