Multifamily Apartment Syndication: That’s a mouthful, isn’t it? I may as well be speaking an alien language to some of you. Lucky for you, I speak alien (no not really, but you know what I mean). Let’s start out by defining each word:
multifamily: “multi” meaning at least two or more, and “family” as in a group of people bound or related by the same thing. In our case, we are a family bound (or related) by real estate (versus blood).
apartment: we can regard this as any unit that can be occupied by someone not a part of the family
syndication: basically a fancy word for a group of unrelated people who manage one or more businesses
When you put this all together, Multifamily Apartment Syndication means:
“a group of unrelated people who manage apartments”
Does that make sense?
Good!
Now you might be asking: What does that mean in the world of Real Estate?
For the most part, Multifamily Apartment Syndication (let’s call is MAS for short), is when individuals work together to buy, for example, an apartment complex or a few apartment buildings. These buildings are rented out and in turn, the profit is shared among all the individuals.
Sounds like a pretty good setup if I do say so myself!
Let’s take a deeper dive…
There are three main things that I like to focus on:
– Crucial Roles
– Business Strategy and Life Cycle
– The Benefits of Passive Investing
Let’s go!
CRUCIAL ROLES
When it comes to roles in Real Estate, I believe ALL of them are crucial. From the cleaning staff who gets hired to the Property Manager who handles the day-to-day operations to the person who puts in their hard-earned money for returns on their investment, everyone plays an important part. Some of the most crucial roles include the:
– General Partner
– Limited Partner
– Property Manager
– Attorneys
– Accountant
– Lender, and
– Real Estate Broker
If you want the actual definitions of each, feel free to go here and view my Glossary any time you feel like it!
Otherwise, you can think of it like an airline (a good one, I might add):
The General Partner is the airline. In this case, that would be us: Eagle Summit Equity. We are in charge of acquiring the plane (the property or building). We also work with people who help us acquire the plane (the lender and real estate broker), and we work with the staff who man the plane (the property manager, attorneys, and accountant).
When it comes to Real Estate Investing, most people won’t necessarily jump in as a General Partner right away. I can tell you first hand that being a General Partner takes a lot of work! We essentially do the “heavy lifting.” In fact, as a General Partner, not only do we acquire ‘the plane’, but we help to fly it, too! If any of you have ever seen a cockpit, I’m sure you’ve noticed how many gauges, switches and panels there are. It’s our job to make sure we know how to fly the plane AND maintain it in case we decide to sell it.
This next part can be a doozie, so stay with me okay!
In fact, this next part is actually the part you DON’T have to worry about if you don’t want to!
BUSINESS STRATEGY AND LIFE CYCLE
As with any mode of transportation, it needs to be taken care of in order to run smoothly whether it be a bicycle, a car or an airplane. In order to properly take care of MAS, an effective (and official) Business Strategy needs to be in place. A good business strategy in MAS will clearly outline on paper:
– The Steps to Take (before, during and after the purchase)
– Management of the Property, and
– Sale of the Property
Within this Business Strategy Outline, there will be an:
– Executive Summary (location, size, purchase price and summary of the investment opportunity)
– Analysis of the Market (current and future demand as well as the competition in the area)
– Condition Reports (the condition of the property and any areas that could use renovation)
– Financial Plans (anticipated revenue and cost as well as anticipated ROI – Return On Investment)
– Structure of Investment (terms of the investment, details of the units, and the percentage of ownership each investor will receive)
– Possible Risks (as named including plans to lessen them)
– Exit Plan (how investors will be paid back after sale of a property)
All of the people involved (property manager, lender, broker, attorneys, etc.) are also listed in this Business Strategy.
The Life Cycle of MAS essentially involves four steps:
1. Acquiring the property
2. Managing the property
3. Increasing the property’s value, and
4. Selling the property.
And of course, the Business Strategy is woven into those four steps.
…now…with all that being said…
Who wants to be a General Partner??!!
No takers?
I didn’t think so. At least not right off the bat, right?
And hey, I could be wrong!
Some of you may have read that and thought, “That’s a piece of cake!”
(Cake actually sounds good right now)
There are people I know who are truly passionate about the inner workings of acquiring and maintaining investment properties. And they REALLY have a knack for it.
But what about the rest of you who just want to “plant your seeds (money) and watch them grow”?
THE BENEFITS OF PASSIVE INVESTING
If you look back at my first example of the airline, you’ll notice that there was one role I did NOT mention…can you remember what it is?
If not, it’s okay I got you:
The Limited Partner
Let me go back to that Airline example:
So we have the Airline (Eagle Summit Equity), the plane (the building or property), the people who help us to buy the plane (the lender and real estate broker), and the staff (the property manager, attorneys, and accountant).
As a Limited Partner, you can consider yourself an investor in the Airline itself. To put it another way: You like the Airline and what they’re doing, but you don’t want to get involved. You just want to support their services and keep the Airline going. To do that, all you need to do is give them money! AND you don’t have to worry about ANYTHING that the Airline/Eagle Summit Equity has to do.
Yup, that means:
🚫 No property management
🚫 No dealing with lenders or brokers or attorneys
🚫 No need to worry about the in’s and out’s of the Business Strategy or even the Life Cycle (but you’ll still get those details to keep on record because that’s how we role).
As a Limited Partner, all you do is:
✅ Put your money in
✅ Let the General Partners do their thing,
✅ and then Get more money back in return.
Not a bad deal, right?
There are a lot of ways to take advantage of this opportunity…
…but quite honestly, I’m beat, and I’m pretty sure this was a lot to take in already, so I’ll save that for another time.
But I hope you learned something and at least have a better understanding of how (say it with me!) Multifamily Apartment Syndication works.
If you’d like to learn more, feel free to email us at in**@ea***************.com
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