Why Multifamily Syndication is a Better Investment than a Single Family Home

• Mitigated Risk

Investing passive funds into a real estate deal with a syndicator poses fewer risks. Investing in SFH means you put all your money in one pocket. You may own 100% of the deal, but you are also putting up 100%, and bear the burden of all the losses. With passive investments, you share the down payment with other investors and are only liable for losses that equal the amount you invested.

• Binary Occupancy

With an average of 93% occupancy in multifamily properties, the impact of several tenants leaving is marginal the larger the property is. If you own a 100-unit property, for example, you can still maintain a positive cash flow with 3, 4 or even 10 vacant units. However, with a SFH, it’s all or nothing; if your tenant leaves – you are 100% vacant and need to cover all expenses and mortgage payments out of your own pocket.

• Stable Value Creation

One of the primary reasons to consider multifamily consideration over SFHs is stable value creation over time. SFH investments rely on the fluctuations of the market and the nearby home prices, so losses and gains are both dependent on how the market moves. As a passive investor in a multifamily syndication, the syndicator has more control over the value of the property since it is mainly based on the property’s NOI (net operating income). By increasing a property’s NOI through capital improvements or streamlining operational inefficiencies, capital appreciation can be achieved and steadily maintained over time. 

• Time Commitment

Passive investing is much less time consuming than active investments. When investing in SFHs, you need to allocate time to find the right deal, which is a time-consuming task, and handle the loan, due diligence and later, managing the property. However, if you invest in a passive syndication, you do not have to look for deals, pursue loans, or manage the property. Syndicators do all this work for you. They are responsible for maintaining any loans needed for the deal, manage property for you and let you know when there is a deal worth investing your funds. Passive investments come directly to you through a syndicator without the need to spend days devoted to locating them on your own.

• Economy of Scale

Management of single family properties can be complicated, especially since they are not often in a single locale. The operating expenses required for managing SFHs that are not in one location or are scattered across a region or regions can be higher and more intense than having multifamily properties with all the units conveniently located in a single location. Hiring a full-time management company is not cost effective since the revenue from SFHs is not sufficient. Multifamily syndication provides the revenue needed for hiring full time property management companies who can provide the necessary day-to-day tasks associated with managing the property while being under the oversight and direction of the syndicator.  

More than 90% of the purchases of multifamily properties are made through syndication. This allows investors to take advantage of the financial strength and experience of a sponsor so that capital is aggregated among other investors. Collectively, investors invest in high-value multifamily properties that would be otherwise unobtainable. Through a syndication all the investors can take advantage of high-value real estate with high return values that would not be possible through other means. The risks are also dispersed among investors which allows for the adjustment of investments at a comfortable risk level.

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.