If you take a poll of what comes to people's minds when you mention "real estate investing" you will be provided with a spectrum of answers. Some people might think of greedy landlords counting profits at the expense of their residents while others might think of a risky investment avenue that could cause high stress. Today, we will discuss how a healthy syndication business model actually creates a win-win-win scenario for investors, residents and the community.
Stakeholders in the syndication business model
There are numerous stakeholders involved in a typical real estate syndication and it would be difficult to create a list of everyone truly involved and impacted by the operation of an apartment complex. To summarize it down to three main categories though you have the investors who invest money through the implementation of their business plan, the residents who call the apartment their home and the community where the apartment is located. Within each of these categories there are numerous people impacted either through the offering of an investment, providing for a basic need of shelter or providing for a job near where they live.
How this business model can mutually benefit everyone
In business, we can sometimes fall into the trap of believing that negotiations is all about us getting what we are looking to receive. While this might be true in TV shows, it is not the case which is typically seen in business. The more common and healthy negotiation is two parties seeking to find an avenue forward that will bring the most benefit to each party. This mindset for negotiations is necessary for everyone involved to receive a positive outcome. In real estate syndications, there are multiple parties with sometimes seemingly competing priorities. You have investors who are looking to maximize their profits, residents who are looking to live in a clean and safe location that feels like a home and you often have community stakeholders who have interest in property improvements that result in economic benefit through jobs and taxes.
What we look for in a syndication busines plan at Apogee Capital is an agreement that will benefit all parties involved. So investors improve a property by purchasing it and making a large investment into it. This in turn creates jobs and higher taxes that benefits the community along with improved living conditions which benefits residents. Investors then receive a profit on their investment which is often then reinvested into the same or a similar property which starts the cycle all over again. The important thing to understand is that in this well developed business plan every party gets what they are looking to receive. This means that investing in real estate not only makes an impact on your net worth, but also in the lives of the residents and communities which we serve.
There are many important considerations when evaluating a multifamily deal and we make it our mission to careful vet each of these items. If you would like to learn more about passively investing in multifamily, please set up a meeting with us through our Calendly link and subscribe to our weekly blog here.
