Owning real estate for investment purposes can be a great path to wealth. Depending on the property, it can generate predictable cash flow, capital gains and provide tax benefits. Besides being lucrative, real estate investing can be a hedge against inflation and an excellent way to diversify your investment portfolio. There are several ways to invest in realty, from purchasing Real Estate Investment Trusts (REITs), rental single-family or multi-family properties, flipping houses, building an investment property, or joining a real estate syndication. Your choice in real estate investing will depend on the specific role you seek or want to avoid. Suppose you prefer to be a passive real estate investor as part of a group investing in one property and avoid the burdensome duties of landlords. Real estate syndication may be attractive to someone with capital who prefers to be a passive investor rather than getting involved in an investment property’s operational aspects. What is Real Estate Syndication?The structure of real estate syndication consists of two groups: syndicators and investors. The syndicators are real estate professionals of an investment company who team up with individual investors to make the syndication happen. This way, they combine operational expertise and pool financial resources to invest in a project that would be too expensive to tackle individually. Typically, returns are split between syndicators and investors by a 70/30 or 80/20 split. Investors should see a higher participation rate to feel “sponsors have skin in the game.” A syndicated investment is an excellent way for individual investors to invest in a specific project. Still, it is far from a get-rich-quick scheme. You may be accustomed to long investment periods if you are already a buy-and-hold stock investor. The average holding time for the project is about five years, but some projects may be shorter or take as long as eight to ten years. This timeframe is a considerably long lockup period for some people who may prefer greater liquidity. The average annualized returns are 15% to 20%. Some deals offer preferred returns averaging 6%-10%. (Preferred returns are paid to investors before the sponsors take their portion of the returns.) The Structure of A Real Estate SyndicationThe SyndicatorsSyndicators are sponsors of the real estate syndication, organized as a Limited Liability Company (LLC) or partnership. As a partnership, the syndicators serve as the general partners (GPs) of the investment company that structure the syndicate and operate the property. They find and vet the specific property, perform due diligence, work with lenders, underwrite the deals, and arrange the deal’s funding. They should have expertise in investing in real estate property, negotiating with the seller, developing and executing a business plan, property management, and finding investors and capital. They manage the asset and schedule meetings to share the property’s progress and essential information with investors, similar to the investor relations function of any investment. The GPs do the heavy lifting by executing the plan as sweat equity. Sponsors are in charge of the decision-making, which may be difficult for passive investors who want to provide their input, like moving the project faster or in a different direction. Passive InvestorsBy financing the capital, passive investors or limited partners (LPs) receive proportionate ownership interests and get monthly or quarterly income distributions from the rental income of the asset as part of their return on investment. Besides investing, passive investors are responsible for paying various management, loans, refinancing, and acquisition fees that the sponsor should disclose. Like many investments, especially real estate, there is never a guarantee about the timing or amount of profitability, and you can lose money. Longer term, investors should realize capital appreciation upon completion and sale of the project. Benefits of Real Estate Syndication
The Drawbacks of Real Estate Syndication
How To Participate As A Real Estate InvestorOne of the biggest challenges for an investor in a syndicate is becoming an investor with a reputable syndication group. Do your research, find Facebook groups, attend conferences, and talk to other real estate investors. Before committing to the real estate syndication, read the risk factors, read and understand the asset identified in the legal documents, and question the real estate group’s projections. Consider seeking advice from a real estate attorney experienced in syndications. Although you cannot exit the real estate syndication, you can protect yourself by having an emergency fund with ample liquidity. Although I have done my share of successful real estate investing, I often share one of my most challenging experiences on a real estate project that taught me a lesson about real estate risks, notably recurring delays, added costs, and lengthened timeframe, eliminating most of the property’s profitability. Various Individual Properties That Work In A Real Estate SyndicationSpecific individual properties may work as part of a real estate syndication, including:
Accredited Investor Requirements For Real Estate SyndicationReal estate syndication has been around for decades. Becoming part of a real estate syndication was challenging unless you knew someone in the investment company or had a financial advisor who opened the door to real estate investment opportunities. Before the creation of the Securities and Exchange Commission (SEC), investment companies would advertise and privately solicit funds from wealthy investors who dominated participation in available syndicates. The SEC, through the Securities Act of 1933, governs the raising of capital through real estate syndication, considering all new private offerings must register with the SEC for approval before soliciting investor funding, similar to the issuance of new securities. Investing in real estate syndication is subject to Rule 506 of Regulation D, and the SEC outlines accreditation requirements. There are several different ways to be qualified as an accredited investor, including: An accredited investor, in the context of a natural person, includes anyone who has:
Becoming part of a real estate syndication was challenging unless you knew someone in the investment company or had a financial advisor who opened the door to real estate investment opportunities. How Does Real Estate Syndication Differ From REITS?Although passive investors also favor REITs, they sometimes get these confused with real estate syndication. REITsREITs are publicly-traded securities that are more like a mutual fund of many income-generating properties. By law, REITs must distribute more than 90% of their earnings as dividends and may generate attractive capital appreciation. As marketable securities, they are highly liquid, and you can buy and sell them anytime. Real Estate SyndicationReal estate syndication’s strategic focus is on a specific real estate property identified by the sponsor before investors contribute their funds. The investors are locked into the operational plan managed by the sponsor, who determines when to sell the property. Investors receive distributions on a monthly or quarterly basis but receive potential capital appreciation based on a prescribed split with the sponsor. JOBS Act Spurred Crowdfunding OpportunitiesThe Jumpstart Our Business Startup (or JOBS) Act of 2012 relaxed solicitation rules, making real estate syndication more accessible through real estate crowdfunding, allowing real estate investors to participate in syndications as long as they meet specific criteria and satisfy accreditation requirements. Crowdfunding means funding a project by raising small amounts of money from a group of investors, which aligns with real estate syndication. Several crowdfunding sites, CrowdStreet, EquityMultiple, and RealtyMogul, provide real estate investment opportunities, allowing accredited investors to participate in individual properties. They vary in minimum investments, fees, timeframe, and specific projects. Final ThoughtsReal estate investing can be lucrative. A real estate syndication is an attractive way to invest in a specific real estate property as part of a team, with a common goal of enjoying predictable cash flow, potential capital gains, and tax benefits while diversifying your real estate portfolio. As a passive investor, you’ll avoid the onerous decision-making and duties. This post originally appeared on Finance Quick Fix. Via https://mylifeiguess.com/real-estate-syndication/
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Whether you’re a young professional still thinking about your career goals or an experienced professional transitioning into another industry, you may have switched jobs a bit before getting to where you are now. Job hopping is increasingly common in the workforce. However, it’s still seen by employers as a red flag if you have numerous short-term jobs on your resume. Fortunately, with the right strategy, you can overcome job-hopping in your resume and make a positive first impression on employers. What is job-hopping?Job-hopping refers to someone switching jobs multiple times within a short period of time, usually a year or less. Job-hopping can happen under circumstances outside of your control, like during layoffs or restructuring. Or, it can be a result of struggling to find a company that is the right cultural fit. Whatever your reason is, whether you’re looking for a more meaningful career or you feel like it’s time to find a new job, you may be concerned about how this will affect your chances of gaining employment. Here are 3 tips to help you frame your job-hopping in a positive manner: 1. Choose the right resume formatThe chronological resume is the most common resume format. It lists your work experiences in reverse chronological order, placing your most recent job title at the top. This format is a good option for most job seekers, but if your resume features many short-term positions, you may want to choose a functional resume format instead. A functional resume allows you to emphasize your skills rather than your work experience. You can then group together and elaborate on your acquired skills in categories. Under each skill category, use bullet points to highlight examples of the skills you’ve used in both your work and personal life and detail the positions you’ve used these skills in. The functional resume format is best used in situations where you’ve experienced long periods of unemployment or you’re switching to a new industry. It’s also a good choice if you have highly specialized, industry-specific skills. Here’s an example of what a functional resume looks like, with your relevant skills at the top: If you’re wondering about how to write a functional resume, using a resume builder to optimize your current resume format can simplify the process and save you time so you can focus on writing a solid and customized cover letter. Related: Hard Skills vs. Soft Skills: Which Ones Do Employers Want? 2. Explain your job-hopping in your cover letterJob-hopping doesn’t have to be a negative experience. Your cover letter is the perfect place to address job-hopping head-on and turn it into an advantage. Use your cover letter to explain the circumstances surrounding your job changes. Emphasize that you’re looking for stability in your next role and that you’re not afraid to work hard to succeed. You should clearly state why you didn’t stay longer in a role and describe your departure in a positive manner, even if you experienced a layoff. Frame your background in a positive manner by emphasizing your skillset and what your various experiences have taught you to pull employers’ attention away from your job-hopping. For example, you could say: “My previous workplace couldn’t accommodate my increasing caregiving responsibilities even though I surpassed KPIs. One of the reasons I’m interested in this role is because of the possibility to work on a flexible schedule.” It’s important not to dwell on the negative experiences you may have encountered (this includes experiences with former employers). Try to find the positive aspects of your time spent in your past positions, such as skills and experiences acquired, and to emphasize those in your cover letter. Highlight how your job changes have helped you grow professionally and how you’d be able to apply the skills you’ve acquired and developed in your current role. End your cover letter by mentioning that you’d be happy to answer any questions about your employment history if given an opportunity to interview. Offer to provide references if necessary, which can ease a hiring manager’s doubts about your qualifications, work ethic, and character as an employee. Since your cover letter is your best opportunity to make a good impression on the hiring manager this early in the hiring process, learning how to write a well-structured cover letter optimized for your unique situation is essential to create a strong job application. 3. Explain your job-hopping during the interviewAn interview is your chance to explain any notable gaps in stable employment on your resume. Even if you already touched on the reasons in your cover letter, the hiring manager may still bring it up so it’s best to be prepared. Be strategically transparentIf job-hopping comes up during your interview, be honest about why you left a position. Don’t be on the defensive, over-explain or downplay your job changes, or blame your former employer. But being transparent doesn’t mean complaining about what you were unhappy about with your previous job’s working conditions, like your manager or colleagues, your workload, or office politics. A potential employer doesn’t want to hear about potential complaints you may have with their own workplace. Diplomacy is a better policy than full disclosure to avoid negativity. Here are some acceptable examples to reframe a negative situation:
Note that it’s not mandatory to disclose information concerning highly personal matters like health issues or a difficult family situation, for example. Shift the focus of the conversation during your interview back to your qualifications by:
Focus on your acquired skills and accomplishmentsIn addition to being honest about your job changes, you should also focus on the skills and accomplishments that you have gained from each position. By emphasizing what you have learned and accomplished, you show that job-hopping has actually been beneficial for your professional development. Related: 30 Places to Learn New Job Skills for FREE! Additionally, highlight transferable skills you developed throughout your career to strengthen your application. Here are a few examples:
By being upfront about job-hopping, you show that you’re trustworthy and able to turn difficult situations into a positive learning experience. This will help put the interviewer’s mind at ease, and they’ll be more likely to see your job changes in a positive light. Via https://mylifeiguess.com/how-to-overcome-job-hopping-in-your-resume/ |
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