1. Lend Syndicators Deposit Money
In today’s market, most syndicators need to write a check for a deposit, that can range anywhere between $100,000 - $500,000, depending on the market and the deal size. In more competitive markets, syndicators need to pay some or all of the deposit amount “hard,” meaning that the deposit becomes refundable, even if the deal doesn’t go through (with some exceptions, such as title or environmental issues, and sometimes financing contingencies are acceptable). A passive investor can lend the deposit money in exchange for equity or as a hard money lender, in which case s/he will receive interest for the loan.
2. Bring a Balance Sheet
Some syndicators lack an appropriate balance sheet to submit offers, since brokers and sellers often ask for a Proof of Funds (“POF”) to make sure that a syndicator has the means to make the purchase (especially since, to get a loan, one needs to have a net worth that is equal to the loan amount). A passive investor can receive a small equity stake for providing information on their balance sheet and net worth.
3. Sign the Loan
As I mentioned earlier, in order to get a commercial loan, lenders require the borrower to have a net worth that is equal to the loan amount and liquidity of 9-12 months of the loan payments. In this definition, net worth doesn’t include the value of one’s home. Most commercial loans are non-recourse loans, which means that the lender cannot collect any collateral besides the property which is subject to the loan. The only exception to that rule is a Bad Boy Carve Out; according to this exception, there is a personal liability against the principal who signed the loan upon the occurrence of certain enumerated bad acts committed by the syndicator or the principals.
A passive investor can sign the loan as a Key Principal (“KP”) for an equity stake of the General Partnership (“GP”), which is usually 5%-10% of the GP. As a passive investor, you are protected from loan default, however, in case of a fraud committed by the syndicator, you might find yourself liable for the entire loan amount. Hence, passive investors either sign on loan only if they are personally or professionally familiar with the syndicator or spend some time vetting the syndicator before deciding on becoming a KP.
In one of my previous articles, I discussed various ways you can invest in real estate without investing your own money Ways to Become A Passive Investor. Becoming a passive investor in real estate can be a smart and safe venture to explore because there is not only one way to invest; you can get creative and find many ways to accumulate wealth through real estate investing.
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About Ellie Perlman
Ellie Perlman is the founder and CEO of Blue Lake Capital, a woman owned multifamily real estate investment firm focused on partnering with family offices and accredited investors to build and preserve generational wealth. Since its founding in 2017, Blue Lake has successfully acquired and operated multifamily assets across high-growth U.S. markets, completing $1B+ in transactions.
At Blue Lake Capital, Ellie and her team work exclusively with family offices and accredited investors, offering carefully curated investment opportunities that emphasize long-term wealth creation, stability, and risk-adjusted returns. A defining aspect of Blue Lake’s investment strategy is its integration of advanced AI-driven analytics and data science into the entire lifecycle of acquisitions and asset management. By leveraging cutting-edge technology, the firm executes data-driven forecasting on market trends, asset performance, and tenant behavior, ensuring strategic decision-making and optimized returns.
In addition to leading Blue Lake Capital, Ellie is the original founder and host of "REady2Scale - Real Estate Investing" podcast, which provides insights into multifamily real estate, alternative investments, and finance.
Ellie began her career as a commercial real estate attorney, structuring and negotiating complex transactions for one of Israel’s leading development firms. She later transitioned into property management, overseeing over $100M in assets for Israel’s largest energy company.
Ellie holds a Master’s in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.
You can learn more about Blue Lake Capital and Ellie Perlman at www.bluelake-capital.com.
*The content provided on this website, including all downloadable resources, is for informational purposes only and should not be interpreted as financial advice. Furthermore, this material does not constitute an offer to sell or a solicitation of an offer to buy any securities.
