1. Diversification
Diversification is one of the primary reasons people get started in real estate syndication, especially for those who are diligent about planning their financial futures.
Passive investments mean you are pooling your money with other investors to purchase multifamily properties. There is a real strategy behind passive investing.
Instead of buying a single-family dwelling for $75,000, you can invest the same $75,000 with a group of investors. Now, you don’t own one hundred percent of a single property, you own ten percent of all the profits generated from cash flow and the properties appreciation. By diversifying this way, you limit exposure to vacancy, maintenance and other expenses that pertain to single properties.
For instance, if you own a single property and it goes vacant, you have zero income for the month it sits empty. On the other hand, if you own ten percent of 10 properties and one goes vacant, you’re still 90% occupied and can still receive 90% of your expected rent.
2. Access to Better Opportunities
A second reason for participating in passive investments is the access you’ll gain to larger and more exclusive investment opportunities.
Commercial properties can be a huge investment, but it’s not always reasonable to pay the purchase price which can be between $5 million and $500 million! Syndicators allow you the opportunity of pooling funds with other investors, so you get exposure to this asset class without having to invest seven-figures.
Syndicators create large investment opportunities such as these and they can determine a minimum investment which may be as low as $25,000. This allows you the exposure to larger investing opportunities that might not otherwise become available to you.
3. “Passive” Involvement
There is a distinct advantage to investing passively, meaning the syndicator takes care of all the details and as an investor, you are removed completely from the management, asset and the general operations of the investment.
The syndicator handles all these aspects. It is common for the investor to pay the manager through a performance fund which is split between the appreciation and the cash flow. Common splits for investors are 80/20 or 70/30. In exchange for the fee, you can be completely passive.
4. Tax Deferment
Passive investments let you utilize LLCs and limited partnerships which opens up a new status of tax-deferred for you.
You can compound every cent of the fund’s proceeds for several years as long as the gains are not distributed outside of the fund. Depreciation often provides several write offs like interest payments or expenses. This means your annual tax exposure may be zero, or negative even though you are the recipient of thousands in distributions from cash flow.
When the property is sold, investors pay taxes on the gains they received.
5. High Returns with Lower Risk
Finally, as a passive investor, you can enjoy high returns without being exposed to personal liability or credit risk. When investing with a syndicator, you are not required to sign on the loan, the syndicator takes care of that.
The lender will offer the syndicator funds because of their track record, credit worthiness and experience in the field. Your maximum risk is the money you put in the investment.
Passive investing is for those who are looking to build long-term wealth and creating a stream of passive income. It’s basically a wealth-building strategy which is easy to get started as well as sustain for the long haul.
Hopefully you found this helpful. If you'd like to find out more about Blue Lake Capital or if you're interesting in investing in our new Multifamily Fund, just send an email to info@bluelake-capital.com. I invest in every one of our deals, and it would be an honor to have you invest alongside of me.
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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.
