If you’ve decided that incorporating real estate into your investment portfolio is a no-brainer and realize that you don’t have the time or desire to be an active investor (another great choice!), then investing in a no-hassle, hands-off, Real Estate Syndication is the best option. These investments enable multiple participants to pool capital together to purchase a real estate property that delivers passive income and appreciation to the investor.
Each Real Estate Syndication investment typically focuses on a single property, located in a single market. While this structure is the most common, there are investments that are set up as a Real Estate Fund, which allows investors to access a diversified portfolio with a single investment. Let’s explore the key benefits of investing in Real Estate Fund vs. a Single Property:
1. Lower Minimum Investment
One of the main benefits of investing in a Real Estate Fund is the investment minimum is oftentimes much lower than your traditional single property syndication. This is a great feature for first-time syndication investors that cannot meet the investment minimum for a single property syndication.
2. Increased Diversification
Another great benefit of investing in a Real Estate Fund is accessing multiple properties, markets, asset classes and business plans through a single investment. Most funds acquire 5-10 different assets in target markets which allows investors to increase their diversification without needing to invest in multiple single property deals. This enables investors to increase their potential return while also lowering their risk.
3. Less Work
The final benefit of investing in a Real Estate Fund is that it requires even less work than owning multiple single property syndications (which are also extremely passive!). The investor will make a single investment in the fund and will not have to provide any additional investments or sign additional documents even though the fund will be acquiring additional assets. The passive income and appreciation gains will be consolidated across the multiple properties in the monthly/quarterly distributions, and the investor will receive a single K-1 for their yearly tax filings.
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