H Squared Capital, LLC
There are Two Types of Passive Investors in Multifamily Real Estate Syndication:
1). Preferred Equity Investors – These investors are in the first position for returns and have higher returns than common equity investors. If the project goes south, they are the first to get their money back after the debt is paid.
2). Common Equity Investors – these investors are in the second position for returns and have lower returns than Preferred equity investors. If the project goes south, they will share the remaining proceeds, if any, after the preferred equity holders are made whole.
The average minimum investment for passive investors is usually $50,000 but typically not exceeding 20% of the required equity.
If you're interested in becoming a passive real estate investor, there are a few things you should keep in mind:
a). Do your due diligence on the sponsor. Make sure you trust and believe in their ability to execute the business plan.
b). Read the private placement Memorandum (PPM) carefully. This document outlines all the details of the investment and should answer any questions you have about the deal.
c). Make sure you understand the risks involved. Just like with any investment, there is risk involved in real estate syndications. But the rewards can be great if you do your homework and invest in a quality project with a good sponsor.
If this article piqued your interest in investing in real estate, then congratulations:
Download your Operations Manual Here. In the Operations Manual, you will learn how passive investors leverage Syndication to create Passive Income to grow their wealth for their future generation and create the ability to make an impact!
For more information on getting involved in a value-add multifamily syndication deal, don't hesitate to contact me at Hutch@HSquaredCapital.com or Dr. Heath Jones at Heath@HSquaredCapital.com. You can also visit our website at www.HSquaredCapital.com. We'd be happy to answer any of your questions and help get you started on the path to financial success through multifamily investing!