Option #1 - Help a Syndicator Find a Deal (“Sweat Equity”)
If you have free time to dedicate to deal sourcing, then it could be a great way to own a property without paying cash for it. Many syndicators will be willing to give deal seekers equity (a percentage of the general partnership) if they find an off-market deal that will be sold to them. Finding off-market deals requires dedication, good interpersonal relationships with property owners and creativity. You’ll need to network with syndicators and understand their investment criteria pretty well (so you won’t waste your time bringing them deals that they’ll never buy), as well as the equity portion they are willing to give you. Next, as the deal finder, you’ll need to reach out to property owners, find those who are willing to sell and connect then to the syndicator. Finding off-market deals takes time, but it’s a great way to get equity without paying cash.
Option # 2 - Help a Syndicator Raise Capital
I know very few syndicators who don’t need help raising capital; as their investor pipeline increases, so does the size of the deals they can pursue. Helping syndicators provide investors relationship services is the most common way for new investors to get in the game. You reach out to family and friends (or network with investors) and go over the investment in details with them. In exchange for your hard work, you get a portion of the general partnership. Besides getting equity in a real estate deal, you’ll learn the business inside out. Many syndicators will guide you through the process and prepare you to answer any question that the other investors you recruit will. It’s a great way to learn about real estate investing in real time.
Option # 3 – Provide Syndicators Investing-Related Services
Another great way to receive equity is to help syndicators close the deal by providing different services; deal underwriting, legal services, accounting, etc. This is another way of bringing value to investors and receiving equity in return. Even if you are unsure of how you can bring value, simply ask the syndicator “how can I help?”. Keep an open mind and try to be creative, and you will be rewarded for bringing value.
Option # 4 – Signing on a Loan As a KP (Key Principal)
When it comes to commercial real estate, lenders require that the person who signs on the loan have a net worth equal to the loan amount and liquid assets that are enough to cover 12 months of loan payments. Net worth is basically a person’s property owned minus debt. Some syndicators have enough net worth to sign on the loans, but if they don’t – they partner with a Key Principle (“KP”) who signs on the loan in exchange for equity (that could be anywhere between 1%-10%). As a KP, make sure that the loan is non-recourse, which means that the only secured collateral is the property, and if the syndicator can’t pay the lender, then the lender will not be able to seize the KP’s own assets as collateral. However, KPs should know that there is usually a “bad boy guaranty” (also known as “recourse carve out guaranty”), where the KP can be held liable if the syndicator committed a bad act (such as fraud).
Option # 5 – Providing Syndicators With Proof of Funds (“POF”)
Many times, sellers require that buyers show proof of funds (“POF”) to indicate that they are serious about the deal and have enough money to at least pay the down payment for the mortgage or have liquid assets that are worth 10% of the purchase price. A POF is a piece of paper from the buyer’s CPA, financial advisor or the bank, confirming that the buyer has certain amount/assets (liquid assets are preferred). If a syndicator is having a hard time showing a POF, and this is the case for many syndicators who are just starting out, they will partner with someone who can show a POF to help them get the deal. Syndicators will reward you for providing a POF by giving you a piece of the equity.
Summary
This article covered only a handful of ways to become a PASSIVE real estate investor without paying “real” money. You can always find a way to bring value to the deal; whether it’s your sweat equity you bring to the table, in the form of hard work, connection and professional knowledge, or whether you are using your net worth to sign on the loan or provide a POF.
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.
