What are the advantages of syndications?
- Access to arguable the best investment vehicle in the world, commercial real estate
- Sound Real Estate investments are uncorrelated to the volatile and unpredictable stock market
- Partnering with the industry professionals
- Tax advantages include depreciation, long-term capital gains tax, interest deductions
- True passive investing. No dealing with tenants, trash, or toilets
- Real ownership in real assets (unlike a REIT where you buy a share in a company)
- Opportunity to diversify capital across asset types, markets, and risk profiles
- Limited liability, only the capital we invest is at risk if a deal turns sour with a lawsuit
- Aligned incentives. Farmers Capital Group gets paid when our investors make money first.
- Hedge against inflation
- Tenants pay down the principal balances
- Potential for 1031 exchanges if structured correctly
However, there is always a flip side. So, what are the cons?
- Real Estate syndications are not liquid. The typical deal can last for 3-10 years, depending on the business plan.
- There is no control of operations as a limited partner in the deal (This can also be an advantage)
- Third-party verification is required to validate your accreditation status (Read about this here)
What’s the conclusion?
Investing in Real Estate Syndications can help reduce investment risk and set up investors for consistent cash flow and building long-term, generational wealth. However, there is no perfect investing vehicle; each has a risk profile. Nevertheless, we at Farmers Capital Group believe the advantages of syndications far outweigh the cons.
Of course, we are a little biased! If you’d like to chat and discuss your investing goals, please reach out via email or schedule a call with this link!