1/5

Buying a single family rental home

VS

Investing as a partner in Syndication or Fund

(Which one I focus on & why)

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(A THREAD)

2/5

SINGLE FAMILY RENTAL

Price: $200k
Down Payment & Closing Costs: $50k

Rent: $2k
Mortgage/Tax/Insurance: $1400
Maint. Reserves: $200

Cash Flow: $400/mo

Return: 9.6%
Return w/ principal pay down: 15.6%

W/ a prop. mgr returns drop to 4.8% & 10.8%

Assumes no rehab budget

3/5

CONSIDERATIONS FOR SINGLE FAMILY RENTAL

-Appreciation of property depends on area growth only

-Have to buy local or use 3rd party mgmt

-Have to take a loan out under your name

-Relatively straightforward to manage

-Can own forever

-No tax advantages if you have a job

4/5

VALUE-ADD APARTMENT SYNDICATION OR FUND

Minimum Investment: $25k-$50k

Fees: 3-5% (Acquisition, Asset Mgmt, Refinance, etc)
70-80% ownership (Sponsor gets 20-30%)

6-8%/yr Cash Flow
25-75% Return of Capital after 2-3 Year
50-60% Gain in Year 5 after sale & appreciation

5/5

CONSIDERATIONS FOR SYNDICATIONS/FUNDS

-Appreciation of Commercial RE is based upon NOI (Net Operating Income)

-NOI can increase dramatically if business plan is executed well

-Sponsor/Operator track record & experience can make or break the project

-Huge tax benefits!