EP264: How To Build Wealth Without Working – The Easy Way!

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They said that real estate is the best asset class for building generational wealth, but there’s a truth no one has told us.  This video is about the lessons that completely changed our lives that we wish we learned earlier.  

We used to feel a pang of envy when we saw people flaunting their home value on Zillow. And thought, when will we get to do that?

Fortunately, we snapped out of that trance quickly.  Instead, we chose to delay gratification.  We’re going to show you guys the smartest way we’ve ever seen to create that generational wealth.  It’s the best way to build wealth without putting in additional effort, time, or energy.

This is the best risk-adjusted investment. It generates cash flow from day one, and it’s how people like Sam Zell,  made their billions. 

And no, it’s not building single-family rentals one at a time. It’s how many wealthy people grow their wealth, and it’s a strategy that you and we can do too.

Believe us, they aren’t just buying their primary homes, counting on those equities to happen, doing Airbnb, or investing in small commercial buildings, no they are not.  

For you, it all starts with two words – apartment syndication.

In the last 6 years, we have bought 9 large multifamily apartment properties (76 units and above) and sold 3 of them for a total of $45.2 million. We did this through apartment syndication.

Your first $5,000 monthly income or your next $500,000 can come from investing in apartment syndication as a passive investor. This means you’re a limited partner who contributes capital to the purchase and management of an apartment building and receives a share of the profits and cash flow.

By leveraging other people’s time, team, talent, and most of the money – usually our multifamily price tag is $40-80 million, ok, we know, this may be a sticker shock moment for you, but you too can invest your money and become part of a significant deal. 

This way, you can have a piece of that pie without coming up with all the money, taking all the risk, or spending all your time and energy on it.

By pooling your resources and investing your money, you can make it work for you.

What if we told you right now not only can you do this, yes, but syndicators/general partners need you to do it?  There are many apartments on sale, but not enough money to buy them.  It isn’t our opinions, it’s just the reality.  

By the end of this episode, you’ll know how to completely replace your 9-5 income by building your passive income streams. 

You’ll learn how to find apartment syndicators like us who do all the hard work, so you can reap the rewards while living the life you love. 

You’ll discover the different ways we increase our cash flow to make you a lot of money. And you’ll see why there’s no better time to get started. 

Why? 

Loan maturity issues, rising interest rates, and expanding cap rates – which for buyers mean a steep discount.

Salvatore Buscemi, CEO of Dandrew Partners, told CNBC that centimillionaires “seek to preserve their legacy and wealth by investing in “very strong, stable pieces of real estate,” particularly Class A properties built within the last 15 years.

Also, 90% of all millionaires become so through owning real estate – Andrew Carnegie.  

Investing in multifamily apartment syndication won’t make you a millionaire overnight, but it could seriously fatten your wallet. Let’s unravel this money-making magic.

Apartment syndication is like a tag-team wrestling match. You’ve got the general partners (the active wrestlers) and the limited partners (the audience with ringside seats). 

Limited partners/ Passive investors (that’s you!) put money into the deal, just like buying stock in Apple or Microsoft, but with a property twist.

Here’s the game plan: The lender covers 65-80% of the property price, while passive investors fill the gap. So, if you’re eyeing a $100 million property, the lender might shell out $65-80 million, and the passive investors chip in $20-35 million.

What’s in it for you, the passive investor? Multifamily apartments are cash cows, typically yielding 5-8% projected return per year. 

Over a 5-year period, that’s a sweet 25-40% return. Plus, when we sell the property, it’s payday! If you put in $100,000, for example, you could pocket $40,000 from cash flow and another $60,000 from the sale. 

That’s doubling your money in 5 years.  But always consult your professionals before making an investment decision.  Because these are just examples, not guaranteed returns.

And wait, there’s more! Multifamily investments come with juicy tax perks. Think bonus depreciation that can turn your taxable income into a ghost. Your returns stay high, and your tax bill stays low.

In a nutshell, apartment syndication is like joining an investment super team. You pool resources, enjoy steady cash flow, and reap tax benefits—all without the hassle of dealing with tenants and toilets. It’s a win-win!

The next step, now that you’re smitten with multifamily investing, is to find a reputable general partnership (GP) team to invest with. In this game, the jockey is more important than the horse. So, how do you find your champion jockey? 

Start by networking at real estate conferences, webinars, and local meetups—think of it as speed dating for investors. 

Dive into online communities, where you can rub virtual elbows with seasoned pros. Don’t shy away from asking fellow investors for referrals—personal recommendations are pure gold.

Once you’ve got some potential GPs in your sights, it’s time for the vetting process. Check their track record—how many deals have they successfully closed, and what are their typical returns?

A solid history is a good indicator that they know what they’re doing. Ask for references from previous investors and listen to their war stories. If a GP team has no war stories, in our books that’s a red flag. Because if you’ve been in any business long enough, you’ll experience the full gambit of highs and lows.  The true test is how they performed and got out of the situation.

Transparency is key: a trustworthy GP will openly share their business practices, fees, and performance metrics. If they’re being secretive, it’s time to gallop away. Also, take a peek at their team dynamics. A strong, cohesive crew often means smoother operations and better outcomes.

Now, here’s our secret sauce: the Charcuterie Board Test. If the GP isn’t someone we’d happily share a charcuterie board with, they’re not the right fit. It’s all about the know, like, and trust factor.

Some newer limited partners/passive investors mistakenly wonder, “Why would anyone want to take my money?” or “How can I find reputable GPs?” This is much easier than you think. 

Remember, this is a symbiotic relationship—both sides need each other. There’s no zero-sum game here; each side benefits from the partnership.

Now, let’s talk about risks because even the best jockey can’t control everything. Research the market where the property is located—economic downturns, job market shifts, and local government policies can all impact your investment. 

Consider the property’s condition and location; older buildings might be money pits, and less desirable areas might have higher vacancy rates. Operator risk ties back to your GP—your investment’s performance is directly linked to their experience and integrity.

Finally, scrutinize the deal’s financial structure and business plan. Understand the loan terms, capital stack, and projected returns. Ensure the numbers add up and there’s a buffer for unexpected costs.

Now let’s close out this episode and talk about different ways we increase cash flow, making our passive incomes (and ourselves) a lot of money!

These are some business plan ideas, you might want to consider when evaluating the potential execution certainty of a property.

First, let’s get to the math behind multifamily apartments.

It’s a quick lesson, and for those already familiar, a great practice anyway.

The key formula is value = net operating income (NOI) / capitalization rate (cap rate).  

Just know that, unlike single-family homes, the value of multifamily assets is determined by the income the property generates. 

For example, if the NOI is $2 million and the cap rate is 6%, the property value would be $33.33 million. Multifamily apartments aren’t easy to run, but they’re simple: increase income, and reduce expenses.

So, how do we boost our NOI? The primary driver is rental income, but there are other ways to generate revenue. 

Think reserved parking, covered parking, in-unit washer and dryer hookups, Amazon lockers, office space rentals, and tech packages. 

Even negotiating property tax reductions can be a game-changer. Let’s explore that with an example from one of our properties.

This apartment pays $1.5 million annually in property taxes. That’s a hefty sum. Imagine reducing that bill. We’re negotiating with the municipality to designate some units as affordable housing. This move could eliminate our property tax for 99 years. 

If successful, saving $1.5 million annually at a 6% cap rate would boost the property’s value by $25 million overnight. Lowering expenses can be just as powerful as raising rents.

Speaking of cap rates, if they drop from 6% to 5%, that same $1.5 million savings now bumps the property value by $30 million. 

No changes to management or amenities—just smart financial maneuvering. This example shows why it’s crucial to partner with experienced GPs who can execute advanced business plans.

Not all GPs are created equal, and vetting the right team is paramount. 

Remember, apartment syndication offers cash flow, appreciation, and significant tax savings, making them an unmatched asset class for building legacy wealth – all without you working on it. Invest smart, and watch your portfolio flourish.

Now if you love the idea of investing in a business without working, go watch this video and learn how to print endless money and get rich forever!