Some investors do not want to get into multifamily real estate investing because they know these real estate assets can be difficult to manage. Playing the role of landlord—especially if you do not have experience—can be tricky. You have to deal with emergencies, collect rental income, manage property taxes, keep up with repairs and maintenance needs, and communicate with tenants.

However, you do not have to be intimidated by the idea of becoming a landlord. One of the greatest advantages of a multifamily syndication deal is that the syndicator handles property management. This means multifamily syndication is a truly passive investment wherein you can just sit back, relax, and focus on your other investments.

You can collect passive income and let your money work for you. Meanwhile, the syndicator will either hire a property management team or take care of the real estate property themselves. The syndicator has plenty of responsibilities. They pay attention to real estate market cycles, look for high quality real estate for syndication, put the deal together, and even handle property management.

Because multifamily real estate properties tend to generate a strong and steady cash flow, it usually justifies hiring a professional property management company to take care of the day to day necessities of the apartment. They will keep it running on your behalf. But sometimes syndicators take a more active role by managing the property themselves and optimizing it to create forced appreciation. Either way, it is out of your hands.

A multifamily syndication deal addresses two of the biggest concerns for real estate investors: the high barrier to entry and property management.

Beyond this, there are other reasons why you should consider investing in a multifamily syndication, especially if you are an accredited investor.

Multifamily syndication offers tax benefits. Investors get certain tax benefits through their K-1 tax filings by owning a piece of the real estate property. [4]

The government incentivizes investors for providing housing for residents of any given city. For this, they reward investors with tax breaks and tax incentives. [5]

The value of the property gradually increases over time, which means your multifamily syndication will also benefit from appreciation. This will increase your potential ROI.

Participating in multifamily syndication is also a good way to diversify your investment portfolio. Not only will you be able to try real estate investing, you will even have the opportunity to spread your capital across multiple syndication deals. Real estate syndication will help you boost your investment portfolio quickly. [4]

The only challenge you will face with multifamily syndication is that your capital will be locked up for a long time. Since these syndication deals last for years, you will not be able to access these funds for a significant period. You have to be aware that these investment opportunities come with a bit of illiquidity, which you must be comfortable with. This is why real estate syndication deals are exclusive to accredited investors. They have the financial capability to participate in these deals and still have a big enough safety net to deal with the risks involved.

Real estate investments always come with a bit of risk. Accredited investors have the financial sophistication to make informed investment decisions. Overall, multifamily syndication is a hassle-free investment strategy suitable for accredited investors looking for a great source of passive income.

A real estate investment company can benefit from vertical integration in a number of ways. For starters, a company like BAM Capital that can handle the complexity of vertically integrated real estate can be considered an expert in its field.

A vertically integrated real estate company has an unmatched level of domain expertise. This means BAM Capital also has an incredible understanding of the real estate market and best practices. BAM Capital clients can therefore enjoy the benefit of working with an industry expert that can offer the best real estate investments for accredited investors.

A real estate company that is vertically integrated has far more industry knowledge and experience compared to one that only handles one part of the supply chain such as acquiring commercial properties. [2]

BAM Capital handles everything involved in the investment life cycle, from purchasing to property management. This level of involvement has given BAM the expertise necessary to identify and acquire only the best multifamily properties for their investors. Since BAM also handles things like remodeling and construction, this saves and generates a lot more money for its investors. Vertical integration can maximize the returns for investors.

A vertically integrated real estate company can also make more deals viable. With its own construction unit, a vertically integrated company can pursue projects that other companies cannot, and they can do so with the confidence that their construction unit is operating with their interests in mind. [2]

Real estate companies that only outsource certain jobs do not have this same reassurance; therefore certain projects are not as viable for them. They will have to look for a third party company to rebuild investment properties to bring it up to rent-worthy condition. It would require more preparation, planning, and money to make the project work for them. [2]

Overall, vertical integration helps generate greater returns for the company’s investors.

Finally, a vertically integrated company also benefits from economies of scale. When a company increases its level of output, it can give them proportionate cost advantages.

For example, BAM Capital is a vertically integrated real estate company specializing in multifamily properties in the Midwest. This means that the company knows everything there is to know about properties in that area, including market values and the most cost-effective ways to develop such properties. BAM Capital has already established expertise when it comes to Class A, A-, and B++ properties in this area, making them the go-to company for accredited investors looking for multifamily assets and real estate syndication deals.

Performed well, vertical integration will give a company greater control over the supply chain, which will lead to lower reliance on external parties and lower costs.

While it’s true that the company will have to take on more responsibilities as they take control of the supply chain, it will also lead to faster turnaround times. If the whole process is done by a single company in-house, then this also means simpler logistics. Despite having more things to manage, the company will be able to get everything in proper order because all steps of the manufacturing process are perfectly aligned. [2]

Keep in mind that vertical integration is a long and difficult process. It cannot be achieved overnight. The company will have to buy into the entire manufacturing process. This means they have to spend on new systems, new equipment, staff training, etc. [2]

Any company that manages to implement vertical integration while narrowing its focus on its area of expertise will be able to develop effective processes that push them toward their long term goals.

Despite the rigid criteria for becoming an accredited investor, there is actually no federal verification process that investors have to go through in order to become accredited. The burden of proving that an investor is qualified for certain securities offerings falls on the investment vehicle itself. The company offering the securities will have to verify the status of prospective investors before allowing them to invest. [2]

Accredited investments usually require investors to fill up a questionnaire and provide certain documentations that prove their net worth or annual income. They may be asked for financial statements, tax returns, proof of securities licensing or employment, etc.

Because of the way syndications work, you are pooling your money with other investors and therefore exposing yourself to fewer risks. Imagine how risky and expensive it is to purchase a large multifamily property all on your own. In the real estate syndication space, you are only liable for losses that are equivalent to what you invested. Unlike other investment types, you don’t have to bear the load of all the losses.

The lowered risk is not the only benefit of investing in multifamily syndication. In fact, these investment opportunities can be potentially lucrative for a number of reasons.

For starters, larger properties tend to enjoy high occupancy rates. This means lower vacancy rates and a much smaller toll on your pockets. Even in the case of an occasional vacancy, the high quality real estate properties offered by some of these investment companies tend to draw in a lot of attention, so they don’t stay vacant for too long. The high occupancy rate means it can generate a strong cash flow. [1]

Additionally, the passive nature of real estate syndication means that it is much less time-consuming than other investments. In fact, you don’t even have to take care of the property once it has been purchased. Property management falls on the shoulders of the syndicator. This means multifamily syndication is a truly passive investment where you can just sit back, relax, and let your money work for you.

With real estate syndication, you do not have to play the role of landlord. There’s no need to manage tenants, handle emergencies, collect rent, etc. The syndication company will do it for you, either by hiring a third company property management company or by handling it themselves. Either way, you do not have to do anything.

Real estate syndication gives you all the benefits of owning a real estate property without the headaches of managing one. Keep in mind that most syndication deals are exclusive to accredited investors.

If you fit the description above, then you are qualified to become an accredited investor. You can work with a registered investment company or a small business investment company to participate in these exclusive investments. But what kind of process do individuals and entities have to go through in order to get accredited?

It is actually a common misconception that there is an official “accreditation process” for accredited investors.  There is no agency or independent body that gives you their stamp of approval saying you are now accredited. [1]

However, accredited investor verification still happens in some form but that burden falls on the investment vehicle itself. The company issuing the unregistered securities is required by the SEC to confirm whether they are dealing with an accredited investor or not. This is why you can expect these companies to require some documents and financial statements that prove your financial sophistication.

Accredited investors who wish to participate in these exclusive investments may have to submit financial statements, tax returns, W-2 forms, and other requirements to prove their status. This is done with every single unregistered security that they want to join.

Investment managers are often the ones in charge of the screening process. Accredited investors also may be asked to submit letters of reviews by CPAs, tax attorneys, investment advisors, and investment brokers.

Once their accredited investor status has been confirmed, they can participate in their desired investment venture.

Many investments limit participation to accredited investors because of federal securities laws. This means companies that are offering unregistered securities need to identify accredited investors before they can allow them to participate.

As an investor, you may want to know your own status as well, especially if you wish to invest in early-stage companies, hedge funds, private placements, etc. To qualify as an accredited investor, you need to meet certain financial criteria. When the SEC amended and expanded on their definition of “accredited investor”, it allowed even more people to qualify, which means you can also secure this status using certain professional criteria.

According to the SEC, an accredited investor is an individual who has a net worth of over $1 million. The person’s primary residence needs to be excluded from the net worth calculation. This net worth test may be accomplished individually or with a spouse or partner. This means you are considered an accredited investor if you and your spouse have a joint net worth of over $1 million. [2]

Another way to determine accredited investor status is by using an income test. Any individual with an annual income of over $200,000 in each of the prior two years, and with a reasonable expectation of meeting the same income level in the current year is considered accredited.

If you wish to meet this income threshold with your spouse or spousal equivalent, you need to have a joint income of $300,000. The net worth and income tests are the two primary methods of determining accredited investor status. But this title is not just based on wealth, it is also based on financial sophistication.

Investment professionals who are holding specific licenses may be considered accredited investors as well. Investment professionals holding Series 7, Series 65, or Series 82 licenses are accredited investors. Knowledgeable employees of a private fund also qualify. [2]

Professional investment managers from an investment company, executive officers, directors, and general partners of the company selling securities are considered accredited investors.

Even entities may secure the accredited investor status by satisfying certain criteria. If an entity owns investments in excess of $5 million, they may be considered accredited. This applies to limited liability companies (LLCs), corporations, partnerships, trusts, and family offices.

If all equity owners qualify as accredited investors, then the entity is also considered accredited.

Both qualified purchasers and accredited investors are allowed to purchase securities that are not registered with the SEC. This refers to shares that are not sold on public markets and typically issued by privately held companies.

Some investments are exclusive to accredited investors. Accredited investors can invest in 3(c)(1) funds, for example. Qualified purchasers can invest in both 3(c)(1) funds and 3(c)(7) funds. [1]

If you can meet the accredited investor verification requirement, then you are qualified to become an accredited investor. You may start working with a registered investment company or any company that is offering unregistered securities and begin investing.

What most investors don’t realize is that there is actually no official “accreditation process” for accredited investors. The SEC does not have to give you a stamp of approval that says you are now accredited. [1]

The burden of having to verify your accredited investor status falls on the investment vehicle itself. Companies that offer these unregistered securities are required by the SEC to check if their prospective investors fall under the definition of accredited investor.

There is still some form of verification that happens, but it is done by the investment vehicle or an investment manager for every single unregistered security that you wish to participate in.

These companies will typically require investors to provide documents and financial statements that show their annual income level or net worth. They may ask you to fill in a questionnaire and submit tax returns, W-2 forms, credit report, and other requirements that will help prove your status. [1]

Doing this every time you want to participate in an unregistered investment opportunity can prove to be tedious. This is why there is an alternative way of completing the verification process. An accreditation investor verification letter may be submitted to the company offering the security.