As busy professionals, we’re no strangers to long hours, high stress, and the constant demand for our attention. With all this, the idea of investing in real estate—specifically multifamily properties—might seem like a smart way to build wealth and diversify your income. The big question is: should you invest passively through a syndication, or go all in and buy and manage your own apartment buildings? Let’s break down the pros and cons of each approach so you can decide what’s best for you.

Option 1: Passive Investing through Syndication

The Pros:

1. Minimal Time Commitment: Passive investing is exactly what it sounds like—passive. You put your money into a deal, and then you let the professionals handle everything. This is perfect if you’re already juggling a hectic job and want to build wealth without taking on another full-time job.
2. Diversification: With syndication, you can spread your investment across multiple properties or different markets. This reduces risk compared to owning a single property in one location.
3. Professional Management: When you invest in a syndication, you’re essentially hiring a team of experts—property managers, contractors, and real estate professionals—who do this full-time. They’re motivated to make the property profitable because they also have skin in the game.
4. Tax Benefits: Syndications often come with tax advantages such as depreciation, which can offset some of your income, potentially lowering your overall tax bill.
5. Lower cost of entry: You can often invest in syndications for as little as $25,000 as above to hundreds of thousands or millions that are typically needed to buy an apartment building.

The Cons:

1. Lack of Control: The biggest downside is that you’re not in control. The decisions about how the property is managed, when it’s sold, and what improvements are made are all in someone else’s hands.
2. Liquidity: Real estate is inherently illiquid, and syndications are no exception. You can’t just sell your share whenever you want. You’re typically locked in until the deal is completed, which could be years down the road.
3. Fees: Syndicators often charge fees for their services, which can eat into your returns. Make sure you understand the fee structure before investing.

Option 2: Buying and Running Your Own Apartments

The Pros:

1. Control: Owning and managing your own property means you’re the boss. You decide on renovations, set the rents, and choose the tenants. If you like being hands-on, this can be very rewarding.
2. Potentially Higher Returns: Because you’re cutting out the middleman (the syndicator), you might enjoy higher returns on your investment. You’re also not paying the fees that come with syndication.
3. Building Equity: As you pay down the mortgage and the property appreciates in value, you build equity that can be leveraged for future investments.
4. Tax Benefits: Like syndications, owning property directly offers tax advantages. You can deduct mortgage interest, depreciation, and other expenses.

The Cons:

1. Time and Effort: Managing a property is no small task. From dealing with tenants to handling repairs and maintenance, it’s a job that demands time—time you may not have in abundance as a busy professional.
2. Risk: With great control comes great responsibility. If something goes wrong—like a major repair or a downturn in the rental market—it’s all on you. This can be financially and emotionally draining.
3. Learning Curve: Real estate investing isn’t rocket science, but it does require knowledge and experience. You’ll need to learn about property management, financing, legal regulations, and market trends. Mistakes can be costly.
4. Capital Requirements: Buying and managing your own apartment buildings requires a significant upfront investment. This might involve taking on debt, which could be risky depending on your financial situation.

So, Which Should You Choose?

If you’re a busy professional who wants to dip a toe into real estate without sacrificing your time or sanity, passive investing through syndication might be the way to go. It offers a way to diversify your portfolio with relatively little effort, and you get the benefit of professional management.

On the other hand, if you’re willing to put in the time to learn the ropes and you enjoy being in control, owning and managing your own apartments could be a lucrative venture. Just be prepared for the challenges that come with it.

Ultimately, the choice depends on your personality, financial goals, and how much time and energy you’re willing to invest. Both options have their pros and cons, but with the right approach, either can be a solid path to building long-term wealth.

Whichever path you choose you will need knowledge about multifamily.  Thankfully you are in the right place.  If you have not already joined the Buy It Rent It Profit Community go to the main page and sign up for free to become a member in order to receive comprehensive resources and training from industry expert Bryan Chavis, a best-selling author and award-winning consultant.