The Importance of Real Estate Syndication Goals for Passive Investors

Investing in Real Estate can be a great way to grow your portfolio, but it's essential to understand your goals before starting a deal. A real estate syndication, where people pool resources to purchase property, is attractive for passive investors. It's easier to manage since the investor only has to commit funds to one significant investment instead of many. But some pitfalls can happen when passive investors don't have goals set beforehand. 

Without knowing your reason for investing in real estate, you could miss out on good deals or invest in properties that don't align with your goals. Without understanding where you want to go, it's easy to become distracted by good marketing and beautiful photos. This article will help new passive real estate investors understand the importance of starting with the end in mind by planning their goals. Here are some of the most common real estate syndication goals for passive investors.

Becoming a Passive Investor to Maximize Cash Flow

Real Estate Syndicates offer the best of both worlds: chances for you to build wealth with an increased cash flow without all the ongoing property management work. A real estate syndication is an excellent option for those who want to invest in real estate but don't have a lot of time on their hands. You could do a few small residential real estate deals and have the headache of being a landlord, or you can do one large syndication deal as a passive investor and enjoy passive cash flow on your investment. Which option would you prefer?

Here's Why Real Estate Syndication Deals Are Great For Investors Looking To Maximize Cash Flow

Real estate syndication deals do not require active supervision or day-to-day involvement from their passive investors since the principal investor will perform and manage all the required tasks. Passive investors also enjoy the additional income that complements the funds invested into the property through monthly distributions that allow them to use 100% of their profits without loss.

Both factors free up time while helping passive investors accomplish their goals of replacing income from other sources, putting more away for retirement, or simply ensuring that they can pass on wealth to future generations.

As you can tell, there are many reasons why investing to increase the cash flow is an excellent option for passive investors. However, it's not the only reason real estate syndication could be a great fit for you. Let's talk about another common goal for syndicate investors—investing for appreciation.

Passive Syndication Investing for Property Value Appreciation

Investing for property value appreciation is suitable for investors that want to profit from the historic increases in real estate values over significant periods.

But first, what is appreciation? Real estate appreciation happens when you invest in a property, and the value increases over time. Real estate values mainly increase in many parts of America, and in some parts of the country, they've been skyrocketing. The potential benefits of betting on real-estate appreciation are unrivaled: great deals historically provide double-digit returns.

However, passive investors with a primary goal of investing for appreciation typically take on more risk. Common wisdom states that investors should do a deal to benefit from cash flow and an added benefit of potential appreciation. Typically, most investors select the first goal of maximizing their cash flow by joining a real estate syndication. Still, some also take on added risk by relying solely on an investment's ability to appreciate to become profitable for the passive investor.

What Should Passive Investors Know About Investing for Appreciation?

If you're joining a deal because you believe the property value will appreciate, you should already have a stable financial foundation. There's always a risk that the deal won't increase in value as much as you expect within several years. Therefore, you should always ensure that your cash flow is solid before investing for appreciation.

What About Investing for Both Cash Flow and Appreciation?

Real Estate syndicated deals allow passive investors who want cash flow and appreciation to achieve the best of both worlds potentially. However, if your goal is to maximize both cash flow and appreciation, you must have a principal investor that is incredibly knowledgeable about the deal. 

Not everyone has lots of time or the desire to manage properties independently, so syndication provides an excellent opportunity to those who want a more hands-off real estate investing experience. You can get involved at a lower risk level while enjoying similar benefits as active real estate investors and landlords.

Passive Real Estate Investing also helps you increase the value of your assets without managing any day-to-day tasks that require dedicated attention—a great option, if you're goal, is cash flow AND appreciation! Plus, there's the bonus that increased cash flow typically leads to higher property appreciation values with sizeable commercial property deals, which can be a win-win for passive investors.

In Conclusion - Know Your Real Estate Investing Goals

Before you ever invest funds in any real estate deal, always know what you'd like to achieve. Working with the end in mind is one of the best ways to ensure you accomplish your goals, and it will help you find properties that can bring the cash flow and appreciation you seek.

If you're searching for new ways to invest in real estate that don't require your day-to-day attention while also providing high rewards, consider real estate syndications! Learn more about starting your investing journey today.