Being a high-level entrepreneur is (in our opinion) the absolute BEST thing you can do. After all, there’s no better way to live than making good money 💰, doing what you want, and having all of the options that entrepreneurship has to offer!
But… being a high-level entrepreneur often means that you’re preeeeeettttty dang busy — and that’s why apartment syndication is key for high-level entrepreneurs.
See, apartment syndication allows you to be a passive investor in a way that other investments can’t. Instead of needing to be highly involved and mega plugged into your returns and your investment performance, you can simply invest your money and reap the benefits.
It’s that simple. Really.
Today, we’re going to dive into the inner workings of apartment syndication — and talk about why it’s so great for high-level entrepreneurs.
In this post, we’re going to show you:
- What is apartment syndication?
- Who’s involved in an apartment syndication?
- Who can invest in an apartment syndication?
- How are apartment syndications structured?
You ready? Let’s go. 🙌
What is Apartment Syndication
The first step to getting involved in apartment syndication is to know exactly *what* apartment syndication actually is, right? To put it simply, apartment syndication is when a group of investors pools their money together to purchase a large apartment.
When you invest in apartment syndication, you’re investing in a relatively low-risk asset with a relatively high rate of return, and you’re sharing the profit with your fellow investors.
Plus, almost all apartment syndication investors are truly and totally passive investors. 😌😌
Unless you’re leading the syndication deal as a general partner (which we’ll get into later), your only job as an apartment syndication investor is to invest. That’s it — no property management or tenant relations involved, we promise.
Who’s Involved in an Apartment Syndication?
In apartment syndication, there are two groups of people: the general partners (also known as the sponsors or syndicators), and the limited partners (also known as the passive investors).
The general partners have the biggest job — to secure the property, to secure the investors, and to secure the deal. The general partners are also the ones who have to deal with the nitty-gritty side of owning a piece of the apartment pie (AKA, finding property management, etc.).
General partners typically don’t invest as much as the limited partners, but they also have more responsibility.
Now, limited partners (let’s refer to the limited partners as YOU, ok?!), have one job — to make an initial investment and then to make passive income. That’s literally it.
Both of us actually started off as passive investors before we decided to get involved in a bigger way as general partners, and it was the best thing we could ever done.
See, as a limited partner, you’re essentially getting paid to learn and paid to grow your investing confidence. Plus, you get profit — i.e., it’s a win-win. ✌️
As a high-level entrepreneur, there’s really nothing else you can ask for — and it’s a huge reason why we recommend apartment syndications to every entrepreneur we know. Your involvement can be as small or as big as you want, and that’s a big deal.
Who Can Invest in Apartment Syndication?
As a high-level entrepreneur, you may be wondering one of two things 〰️ first, who can actually invest in apartment syndication? And, first of all, can YOU invest in apartment syndication? Short answer? Yes. Long answer? Here you go. 👉
There are two types of investors who can invest in apartment syndications 〰️ accredited investors and sophisticated investors.
Sophisticated investors are defined by the Securities and Exchange Commission as those who possess sound financial education — or a good amount of capital wealth.
- Earned income that exceeded $200,000 (or $300,000 together with a spouse or spousal equivalent) in each of the prior two years, and reasonably expects the same for the current year, OR
- Has a net worth over $1 million, either alone or together with a spouse or spousal equivalent (excluding the value of the person’s primary residence), OR
- Holds in good standing a Series 7, 65 or 82 license.
- Any trust, with total assets in excess of $5 million, not formed specifically to purchase the subject securities, whose purchase is directed by a sophisticated person, OR
- Certain entity with total investments in excess of $5 million, not formed to specifically purchase the subject securities, OR
- Any entity in which all of the equity owners are accredited investors.
At The Kitti Sisters, we are a 506(b) offering, meaning we can take on both accredited and sophisticated investors. 506(b) offerings are only required to have an investor (or up to 35) to be sophisticated, and an unlimited number of accredited investors can be accepted.
However, having a 506(b) offering means that we can only offer investments to our existing client base. That’s why we work to establish relationships through really great content like this one!
And, just to get detailed, we’ll touch on 506(c) offerings too. In a 506(c) investment, all investors have to be accredited. They have to have a minimum $1M network, exclusive of home or income requirements ($200,000 for single people, $300,000 for married). 506(c) investments also require additional verification, while 506(b) investments do not.
How are Apartment Syndications Structured?
The next step in getting involved in apartment syndication is being really clear on how the apartment syndication itself is structured — namely, equity.
Typically, we see both 80/20 and 70/30 splits in apartment syndication deals. The limited partners (i.e., the passive investors like you) own the bigger piece of the apartment, and the general partners own the smaller piece. The general partner, however, earns the portion of equity known as carried interest for putting together the deal.
Ideally, you want your apartment syndicators to be investing alongside you (like we do at The Kitti Sisters)! But, we recommend focusing a little less on the split and a lot more on the returns, specifically the cash-on-cash return (CoC) and the average annual return (AAR).
For instance, you want to look for a good quality multifamily deal, a strong operator, a conservative underwriting, and a 15+% AAR — and that’s a heck of a lot more important than the equity split.
Wondering what else to look for in an apartment syndication deal? We recommend looking into:
- Your overall returns
- Control and voting rights
- Return on principal
- Sponsor fees
- Average length of deal
As a high-level entrepreneur, there’s no better financial decision you can make to increase your wealth and maximize your time than apartment syndication. By getting involved in apartment syndication and owning a piece of the apartment pie 🍰, you can start creating passive income streams that allow you to really, honestly reach true-blue financial freedom… giving you back the time and energy you want to live the life you’ve been dreaming of.
At The Kitti Sisters, we’re proud to help high-level entrepreneurs like you scale and grow their wealth through investing in apartments alongside us. As your general partners and syndicators, we’ll strategize and lead you on the journey to financial freedom — and you can trust us to help you earn a return on your investment, help you lower your tax liability, and help you feel great about your financial choices. 😌😌
Do you want to get started? Hop on the waitlist for The Kitti Club here, and we’ll be in touch soon.