5 Steps To Your First Passive Investment In An Apartment Syndication

5 Steps To Your First Passive Investment In An Apartment Syndication

1. Get Educated

It pays dividends to invest in your thinking. What is financial freedom? How do the wealthy create their wealth? What is passive income? Is it possible for passive income to replace earned income? Reading and understand these concepts is a prerequisite to massive action in apartment investing.

After creating the growth mindset, it is essential to understand the benefits of real estate, how syndications work and what is your investment criteria for your next investment. To help you with this, check out our Passive Investor Startup Guide.

2. Plan Your Finances

Next is getting liquid. What funds will you use to invest in apartments? If you do not have a savings and investment plan, stop right now and create one. Your investing will not happen magically, so make it a priority. If you have a 401k, did you know that you could roll that money over into a self directed IRA, Solo 401k or an EQRP, like I did for my first passive investment? These are immense sources of untapped investment capital, ready for you to invest in the way that you choose and not in accordance to some plan that charges fees and limited investment choices.

If you currently have investment properties, other options are refinancing to pull out cash or selling altogether to focus on your apartment investing.

3. Network with Other Investors

In a previous post, I shared three ways that you could meet other investors. These are on online forums, virtual meetups and conferences. The point of doing so is to get immersed in the mindset and the world of apartment investing. Learn from others’ experiences, who they invest with and continue to refine your strategies and criteria.

Firmly press that gas pedal and get immersed in the world of apartment investing. The relationships are where the opportunities lie, so do not be shy!

4. Find A Great Sponsor

I have written numerous posts on finding great sponsors, how to vet them and questions to ask. Check them out, network and start meeting syndicators. Go to their website, read their blog, listen to their podcast, schedule a call and get to know them. What you are listening for is alignment of personalities and interest, trust and good talent, in that order. Meet as many as you can. Not only does this broaden your network, but also your opportunities.

5. Identify The Right Opportunity

Finally, when presenting with an apartment investment opportunity, make sure it meets your criteria. This includes market, sub-market, unit count, demographics, level of improvement projected returns and risk altogether. Projected returns are only as good as the numbers and assumptions used to derive them. For the market, is there job and population growth? Why does the team belinve that this is a growing market. For the deal itself, find out how those numbers are crunched up. Is the underwriting conservative? What assumptions are made for rent growth and the final sell? Ask questions and a lot of them and ensure you understand and agree with the prospects of the investment opportunity.

After going through this process, voila, you have your first deal as a passive investor in an apartment. Now you can monitor the management team through the periodic updates, collect your passive income and learn and grow for more opportunities.

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Rodney Robinson II
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