The quick answer is that you can get started in some syndications for as little as $25,000. But the majority of the opportunities will be somewhere between $50,000 – $100,000 for minimum investment.
The real question is – should you invest it if that’s all you have? many people can put together and save their way to $25,000 but if that’s all you have and you have no other reserves/emergency money then I would suggest you take care of that first. I wrote another article regarding tips on how to save money. Look up “Tips on saving money before investing in Real Estate.”
Just make sure you have the right expectations when investing as far as what kind of cash flow and returns you should receive.
As an example, a very common set up is an 8% preferred return and a 16% Annual Average Return. The way this looks like is that you may invest $100,000 and for the 1st year through the 4th year you will receive $8,000 per year. That means $666/month or more like $2,000 per quarter. Some people may think that’s not enough or not congruent with the amount of money they just invested. But you have to look at the overall picture given that as a passive investor you receive money different ways. You will get paid a preferred return from the cash flow received every month (this may be collected monthly but distributed to investors quarterly). Then once the property sells 2-5 years down the road you will receive your initial investment plus a big payout which would be the profit from the sale of the property. Once you average it all through the lifetime of the project that’s where you will find that you averaged 16% return.
One of the biggest takeways from this article is the fact that Real Estate syndications are very illiquid, meaning once you invest in one, you are going along for the ride until the end of the project which is somewhere between 2-5 years. Prior to investing make sure you have money set aside for reserves and emergencies so that you are not finding yourself feeling like you should have never invested.
If you want to find out more about upcoming investment opportunities go ahead and schedule a call with me.
Satch Bernhardt
www.DeepSeaEquities.com
