5 Reasons to Invest in Multifamily Commercial Real Estate

Multifamily real estate syndications allow everyday investors to gain part ownership in larger apartment buildings. With the help of a sponsor or syndicator, you can passively invest in commercial properties. The syndicator is the active member locating and vetting each opportunity. Once the sponsor chooses a property that meets their criteria, they secure financing, raise capital for the down payment, and manage it during ownership. At the end of the hold period, the syndication will sell or refinance the asset to repay investors.

Below are five reasons to invest in multifamily commercial real estate:

 1. Lower financial requirements: Investment properties typically require a minimum down payment of 20% of the purchase price. With the average single-family home selling for $428,700 in 2022, you could expect a minimum investment of $85,740 plus closing costs to secure financing for the property.

 By combining resources with other investors, you can participate in a syndication for as little as $50K.

 2. Does not require real estate expertise: Vetting and owning commercial real estate is more complex than buying a single-family home. It requires high levels of industry expertise. Successful ownership depends on locating a profitable deal based on regional market conditions. You must finance a multi-million-dollar asset, manage the property efficiently, and sell or refinance to get your cash out.

Syndications are a done-for-you investment. The sponsor or syndicator becomes the managing partner and does all the legwork. They assembled a team of experts to successfully locate, buy, hold, and sell the property. You contribute cash and receive distributions based on your investment level.

 3. Do not have to qualify for the loan: Funding is often a significant hurdle for investors interested in growing their real estate holdings. While single-family homes are more familiar, syndications can eliminate this barrier to entry because the sponsor or managing partner secures the financing for the deal.

4. Limited Liability: Real estate syndications involve two parties: Limited and active partners. The risk of loss for the limited partner is the capital contribution. The managing partners guarantee the loan and could be on the hook for the amount borrowed in addition to any personal investment. This arrangement limits investor risk and aligns the goal of maximizing profits for both active and limited partners.

5. Steady returns: Apartment complexes tend to produce stable returns. They have short-term leases of one year or less, which reduce the risk of non-paying tenants and allow the company to raise rents with inflation.

Sunage Equity Capital focuses on multifamily properties of 100 units in fast-growing markets. We choose assets with high occupancy rates and upgrade potential to force appreciation. Our strategy reduces risk and creates steady returns for investors. In most cases, we begin investor distributions within a year of ownership.

FAQ