Summary
This blog is your go-to resource for quickly evaluating apartment syndication deals. You will learn how to decide if a deal is right or not within 5 minutes – so you save precious time and energy for the deal that fits your financial goals!
You’re ready to start your apartment syndication investment adventure…heck yes! Buuut you’ll soon find that not every investment deal that comes your way is THE ONE that will change your financial life (and there will be a lotttt of options coming your way).
So, let’s say you get about 5-7 investment opportunities landing in your inbox per day.
Cool, right?! 🤩
It’s suuuuper cool to be rolling in choices, but the real big Q is… how do you choose the right deal for you? Each syndication deal is packed with info, but no one has time to be reading every single one!
Here’s where we come in, because you know we’re all about saving you TIME and ENERGY while – of course – helping you make MONEY. So, today we’re teaching you exactly what to look for as you filter through the many apartment syndication deals you come across. 🤓🤓
If you follow these guidelines, you will only need about 5 minutes to know if it’s right investment for you.
Thaaat’s right. In about as much time as it takes to make your morning coffee, you can confidently decide your own “deal or no deal” outcome for each opportunity.
Here’s what you’ll learn today…
- 5 things to look for at a quick first glance
- How to go deeper
- 5 important numbers: what they are and how to find them
- What do you do with all this info?
Let’s get into it!
How to Know if an Apartment Syndication Deal is Right for You in 5 Minutes
What’s the first thing you do when you see a new deal hit your inbox?
(After doing a little happy dance, obvi💃)
First…Pull out your first glance details
Your first read is more like a quick skim. This first step is suuuper important because it will save you TONS of time reading unnecessary info.
Look for these 5 things right away:
- Type of asset
- Market
- Hold time
- Minimum investment
- Funding deadline
This info will be pretty simple to find. It’s basically asking these questions…
…What? Where? How long? How much? When?
Once you find your initial deets, you’ll know if the deal aligns with your investment goals or not.
Now you kick it to the curb OR dig a little deeper.
Going deeper… The 5 apartment syndication numbers you need to know
Let’s say you’re ready to take one of your investment deal options to the next level. This means that, at first glance, it looks somewhat promising.
Verrry exciting. 😀🎉
BUT there’s still a bit more info needed before you can seal this deal and – you know – live happily ever after together making lots of moneyyy.
Now you’ll get more nitty-gritty into the numbers of it all, but don’t worry. We will walk you through the criteria, so you know exaaactly what you’re looking for.
As we dive deeper, let’s create a fictional deal to work with 🔽…
- Total return: 100%
- Average annual cash flow: 8%
- IRR (internal rate of return): 16%
- Average annual return including sale: 20%
- Investment opportunity hold period: 5 years
What’s the total return on the apartment syndication deal?
Your total return is how much your investment is expected to grow during the project.
For this example, let’s say you’re investing $50,000. If the total return is 100%, you’re looking at gaining $100,000 once the asset is sold. This includes the cash flow distributions PLUS the sale profits.
👉 Quick tip: you can start with a benchmark of about 80-100% total return, which is what we look for in our deals.
What’s the average annual cash flow?
Your average annual cash flow is your estimated monthly earnings from rent and fees, minus monthly expenses, multiplied by 12.
Don’t let the math scare you. Let’s continue with our example above, shall we? If the deal is offering 8% annual cash flow, your $50k investment will produce around $333 per month (income from rent and fees minus expenses), which is about $4,000 per year.
What’s the average annual return?
The average annual return is the total return of your investment divided over the hold period. 🤟
In our example, we take our 100% total return divided by the 5-year hold time, which brings us to our 20% average annual return.
What’s the IRR?
The internal rate of return takes the average annual return and adjusts for the time delay.
You’ve heard that time equals money, right? In this case, it’s quite literal.
Since you will make money off the sale of our fictional property, and that sale will take place on a later date, we have to account for the time involved. That brings us to our little friend, the IRR.
Aaaand by the way…We suggest looking for 14% IRR or higher as a starting place. 😘😘
What’s the investment opportunity hold period?
The investment opportunity hold period is how long your investment will be tied up in the property.
This is especially important to note because you have to make sure you don’t need access to your money for the length of the hold period.
Apartment syndication is the BOMB for creating passive income over time. Just don’t invest cash you will need aaanytime soon, OK⁉️
5 years is a fairly common hold period, but that’s not to say some won’t ever be shorter. We’ve personally had deals come full cycle within 27 months or less. But the point is – be ready to give your investment time to multiply for ya. It’ll be SO worth it!
Now you’ve gathered your numbers…What’s your next move?
Whoop, whoop! You have enough data points to make a decision! 😋
But don’t put too much pressure on this step. After all, you’ve only been evaluating for about 5 minutes. Sooo this is NOT where you cross your fingers and set up a wire transfer (not yet at least).
This is where you simply make the choice to keep learning more about this syndication deal.
You just saved yourself tons of time reading through deals that aren’t right for you. If all the numbers we just discussed align with your investment goals, you will want to invest a bit more time learning about this one.
You can take the next step by contacting the sponsor to request the full summary or submit a soft reserve while you learn more.
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We know this sounds like a lot of info. But trust us, it just takes practice. You’re going to be flyyying through this process once you know what you’re looking for and where to find it.
As always, we’re here to help you get the most out of your apartment syndication journey.
We hope this 📝 blog helps optimize your time and energy so you’re ready to roll when you do find the right investment deal. It’s okay to be a bit choosy in the beginning because it’ll pay off big when you find your perfect fit.
We’d LOVE ❤️❤️ to help you get your passive income streams flowing with apartment syndication deals.
Contact us to get started today!
GET ME ON THE KITTI FREEDOM CLUB
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