Are you interested in investing in New Britain real estate but don’t have enough funds to buy a property outright? One solution is to join a real estate investment group or syndication. Did you know that in 1961, a group of 3,000 investors purchased the Empire State Building, many of whom invested only $10,000?
Real estate syndications are an opportunity to pool your resources and knowledge with other investors to purchase larger properties such as apartment complexes, shopping centers, or office buildings that might otherwise be out of reach. Each member of the investment group shares in the monthly cash flow and divides the profits when exiting the investment. While these partnerships are open to accredited investors, there are some important things to keep in mind when considering buying New Britain investment property with a group.
While each member of the investment group shares in the monthly cash flow and divides the profits when exiting the investment, you also share the risks, so consider the group you work with carefully. Find a good team by performing due diligence; your checklist should involve a review of their track record for beginners. You will also want to explore their portfolio and consider how long they have been operating, the soundness of their entry and exit strategies in past dealings, and the financials to ensure plentiful reserves and conservative underwriting.
These partnerships are open to accredited investors with incomes of $200,000 or a net worth of at least a million dollars, excluding your primary residence. Investing in property with a group makes it easy for individual investors, referred to as passive investors or limited partners, to work together and locate investment properties in asset classes and geography for diversity.
Read on to discover five things you should know about buying New Britain investment property with a group.
Long-Term Investment
When investing in real estate with a group, it’s important to keep in mind that these investments are typically long-term, and it may take several years to see a return on investment. For example, a group of investors purchased a 141-unit apartment complex in New Britain in 2016 for $9.7 million. Over the next five years, they worked on renovations and improving the property’s overall value. By the time they sold it in 2021, the property had increased in value significantly, and they were able to sell it for $19 million, almost doubling their initial investment.
This highlights the potential for significant returns when investing in real estate with a group, but it also emphasizes the importance of being patient and committed to the investment for the long haul. Investors should not expect to see immediate returns or quick profits, and they should be prepared to hold onto the property for several years to see a return on their investment. This means that funds used for investing in real estate with a group should be exclusive of those set aside as a reserve or remain liquid, as they may not be easily accessible for personal emergencies or other short-term needs.
Landlord
Another example of the advantages of investing with a group can be seen with a group of investors who pooled their funds to purchase a mixed-use property in New Britain. The property included both commercial and residential units, which allowed the group to diversify their investment portfolio. The investors worked with a property management company to handle the commercial units, while the residential units were managed by a different company. This allowed the investors to benefit from the expertise of two different management teams, while still having the ability to oversee the overall operation of the property.
Tax Benefits
Investing in real estate with a group also comes with tax advantages. For instance, depreciation allows investors to pay a much lower tax rate on the investment. A group of investors in New Britain purchased a shopping center and took advantage of the depreciation deduction to offset their tax liability. In addition, they avoided capital gains taxes until the final sale of their holdings by utilizing the 1031 exchange laws to swap out one investment property for another.
Self-Directed IRA For Investments
Lastly, you can use your self-directed IRA to fund your real estate investment. This self-directed option feature of the IRA allows you to diversify your investment portfolio. For example, a group of investors in New Britain pooled their self-directed IRAs to purchase a portfolio of rental properties, providing a steady income stream for their retirement years.
The Property Warehouse
At The Property Warehouse , our experienced professional buyers can guide you through the process of buying New Britain investment property with a group. Let us help you find the best investment opportunities available in New Britain, and don’t forget to ask about our current inventory of available properties. With a full-service team of professionals, from identifying great deals to professional property management and everything in-between, let The Property Warehouse be your team. Contact The Property Warehouse at (203) 626-4282 .