The benefits of multifamily investments are many as investing in real estate has been a smart idea since the days of kings and castles. The challenge, however, is finding those real estate investments that will offer the greatest return on investment (ROI) from a sponsor with a consistently winning track record. These direct investments are usually carried out through dedicated co-investment vehicles that operate with management fees and carried interest. This is where the better real estate syndicators separate themselves from the crowded field of private equity firms, crowdfunding websites, and independent investment groups.
- The first question is whether to invest in a sponsored investment fund like those offered by Trion, rather than buy the properties yourself? Simply put, multiple properties come with multiple responsibilities. First, you’ll need to find tenants – and responsible ones at that. Then there’s renovations, maintenance costs, repairs, insurance, rent collection, complaints, advertising, etc. Then, there’s economic cycles/changes. And what happens if the neighborhood goes downhill? The scenarios for potential hurdles are endless.
To be fair, some independent real estate investors do quite well by increasing their net worth by acquiring a second and third home, or even a 4-, 6- or 8-unit apartment building. These passive investments though often require an outsourced management company for day-to-day upkeep. What’s certain is none of these investors could call themselves “passive” investors.
And when it comes to investing, more is usually better as you increase the income and spread the potential for late payers, natural disasters, etc. So owning one apartment building is better than one apartment unit. An apartment building with say 100 units, is better than one with 10. Apartment complexes are better than one apartment building. And so on. Rather than apartment owners having to bear the accountability of owning and maintaining multifamily properties, investing in a multifamily fund gives you the benefits without the onus of responsibility. Add to it, with multiple properties you mitigate the risk of failure even more. If one property – or even area of the country – is suffering, then investments in several others can and will carry the load.
The largest hurdle with all of these benefits of multifamily investments is capital. Purchasing just one large complex could cost upwards of $50 Million. That’s why many accredited investors who seek multi-family investments that are truly passive opportunities, look to real estate sponsors as their best option. Trion Properties is a private equity firm that specializes in multifamily funds, boasting an average internal rate of return (IRR) that has exceeded 30% since our inception. That’s tough to beat for passive income opportunities.