top of page

Do This Before Your First Passive Investment

How to prepare for your first passive investment
How to prepare for your first passive investment

Multifamily apartment syndications provide a true opportunity to earn passive income. If you’ve just recently heard all the benefits you may be itching to do your first deal. How are you preparing? Here are five steps you should take before you join a real estate syndication project.

Find your why and set a goal

Investment goals are important because they help you to filter through investment opportunities. Your “why” is your motivation for taking action. If you know why you are investing it makes it easier to set these goals. For instance, your “why” may be investing for capital preservation, building a retirement nest egg or saving for your newborn’s college tuition.

Each of these reasons will change what is a good deal for you because they affect your risk tolerance, your time to return and your type of return. Someone wanting to preserve capital would choose a lower risk opportunity. With lower risk there is usually a lower return. This lower return may be too low for someone [building a retirement nest egg.] Type of return refers to whether you would need cashflow, tax write-offs or if you would be happy with just a large lump sum payday once the investment matures. Timing of return is how long you can wait to get your first distribution. Is 1 year too long or can you hang on for a decade?

Once you know your why, you can set a goal. Let’s use the “why” of saving for college tuition. The goal should be a specific measurable outcome with a deadline. For instance: I want to save $200,000 by my daughter’s 18th birthday.

Decide where you will source your funds

Once you have decided on your goal you will have to