High Tech Careers + Passive Investing

Owning and managing a 300-unit apartment complex in Austin while working full-time may seem impossible, especially with stressful careers like in Pharma and IT fields, but it is possible and those in the know have found a shortcut to create passive income streams. Let your annual bonuses work for you! Let me break it down for you in the next three minutes.

Most of us understand how to buy stocks to invest in public companies. Some of us even go so far as investing in private companies before they go public.

Few people know that it is possible to own parts of large apartment complexes, similar to how one would buy stock. Since there is no real estate marketplace like there is for stocks, the approach is a bit more involved, but not difficult. The most popular way to participate in owning a piece of large apartments is through syndications.

What is Syndication?

In simple terms, an apartment syndication is when a group of investors pool their money to purchase the apartment and co-own it. In this arrangement, all investors get the income and tax deduction benefits from being co-owners. This is one of the major advantages of syndications over owning stocks.

There are 3 things I look for when considering a syndication project.

1. Sponsor(s): Also known as Managing Partners or General Partners, this is the group that found the deal, put the deal together, brought it investors and will manage it until it is sold. You'll want to assess the experience/track record of the Sponsors, how well they communicate, and, for me, whether I feel comfortable/like them. It is a very subjective measurement but I prefer doing business with people I like.
2. Return on Investment (ROI): There are many measurements for ROI, but I focus on the Preferred Return and Sponsor-Investor splits. (This is discussed in a different article)
3. The Apartment: Rounding out the top 3 things to consider, one has to look at the subject property, its location, characteristics and economic outlook. Do you like the neighborhood? Are there employers nearby? Does it have easy access to transportation, night life, grocery stores and other amenities? Would you buy it if it was just you?

There are many Sponsor groups doing apartment syndications--spend the time to research the members and their past projects. Ask around for referrals, but most importantly, go with your instinct. I suspect you've made it this far in your corporate life honing your radar for good people--use it now for your investment life!

If you would like to hear more about our adventures and misadventures into syndications, stay tuned for future articles.

Have your own stories to share? I would love to hear them!

My wife, Delphine Nguyen, and I have a passion for finding apartment and land investment opportunities for our investors' passive income portfolios. We work with both veteran and new investors, so we understand what it feels like to just want to learn more. We look forward to sharing with and learning from you!