Most people building passive income in Real Estate start by acquiring single-family homes as rental properties. They take on the role of landlord while working in their career. After dealing with toilets, tenants, and trash for a few years, this can become exhausting. That doesn't even include the annoying "investors" that continually cold call and text them offering "cash" for their properties.

This tends to lead them to either sell eventually and quit Real Estate or start learning to acquire commercial real estate like apartment buildings. This newsletter is about to go over three ways you can get started investing in apartment buildings.

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First Option: Buy With Own Cash

This is an option few people have the luxury of doing, which is purchasing an apartment building with all cash by themselves or through a 1031 exchange from the preexisting properties they already own. This way would be great for a person who has experience overseeing multifamily, but if they do not have that experience or know how to hire the right people with the knowledge, this can be very risky for them and cause them to lose a lot of money.

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Second Option: Syndicator/Raise Capital

This is the option most people take, or so it seems sometimes, which is becoming a syndicator. A syndicator looks for opportunities and then goes to their investors and raises capital for that opportunity. They typically ask "capital raisers" to help them reach the equity goal they're trying to get so that their earnest money doesn't go hard. Earnest Money going hard means you lose it because you had the property tied up but couldn't close on it.

This creates a lot of risk for a syndicator because that could easily be 100,000 dollars or more that a syndicator loses because they couldn't raise the money to close on the property they found. Another risk with this way is that even when you acquire the property, if you don't get the right lender, then you could find yourself not being able to make the proper renovations to add value to the property so that you can increase the cash flow for yourself and your investors.

This current market has some newer syndicators feeling the pressure because the Federal Reserve has been raising interest rates which are hard on a syndicator with a variable interest rate on a property.

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Third Option: Limited Partner/Passive Investor

This option is excellent for people with a lot of cash or over 100,000 in their retirement accounts who don't want to manage one of these properties, look for them or chase down investors trying to raise capital to fund the equity side of the property. All of those tasks can be time-consuming and exhausting, and on top of that, you're exposed to a lot of risks.

As a Limited Partner (LP), you're not responsible for anything dealing with the property, such as the loan, maintenance, or any other miscellaneous things with the property. From this position, you have actual Passive Income and Financial Freedom because you do not have to do the leg work like the other two options but bring in monthly or quarterly cash flow.

Conclusion:

If you want actual Financial Freedom and Passive Income, the third option is best for you. This option allows you to travel and do whatever else you want without worrying about managing a property and ensuring it performs well for your investors.

Here is a webinar on the Ten Benefits of Investing in Multifamily.

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