Choosing the Best Funding Strategy for Multifamily Real Estate Investment
Updated: May 22
You’ve been won over by Multifamily Real Estate’s offer of reliable cash flow, passive income opportunity, and potential to scale. Now ready to invest, how do you ensure you make the right decisions in funding your investment?
The best funding strategy depends on your circumstance and investment goals. Do you have cash on hand? Are you investing to grow your portfolio? Are you investing for personal goals or shared goals?
However different your particular circumstance is, here are the different ways you can fund your Multifamily Real Estate investment:
You can fund the investment as an individual if funding is readily available to you via savings or liquid assets. As the only signatory in the investment, you will bear the total cost and enjoy the full benefits from the investment.
Having just one person involved simplifies the process, including receiving total earnings and availing of passive income tax advantages.
2. Joint or Partner Investors
Taking on an investment can be too steep or too daunting for some. This option allows the investor to pull in a trusted partner or a loved one to join them in the investment. While it adds more complexity to the investment process, joint investments remain pretty straightforward. Under this, investors share the cost of and earnings from their investment. However, remain crucial for these investments to provide the intended benefits to investors by clarifying responsibilities, ensuring asset protection, and identifying designated beneficiaries for the asset.
3. Investing via Corporation
If you’re planning to invest in real estate syndication, you’ll likely invest through corporations in the form of LLCs, self-directed IRAs, or a qualified retirement plan. These entities offer better structures for more significant investments and cater to multiple investors. Apart from this, these corporations provide some protection against personal liability for investors. The agreement you will enter with the corporation will determine the particulars of your asset protection and beneficiaries. Check the laws in your state and with your accountant, as the laws on these entities vary from state to state.
Do you have more questions about real estate syndication or passive investment in Texas? Are you exploring any of these at the moment? Speak to Makaan Investment Group team to find the best options for you.