Why Accredited Investors Are Choosing Real Estate Syndication Over Traditional Assets

For accredited investors seeking alternatives to the volatility of stocks and the low yields of bonds, real estate syndication has emerged as a compelling option. 

Real estate syndication is a partnership in which multiple investors pool funds to acquire, develop, or manage a property. The deal is organized and operated by a real estate sponsor, allowing investors to enjoy the financial benefits of investing without the hands-on responsibilities of direct ownership.

As the market for syndicated deals has grown rapidly in recent years, more accredited investors are turning to this structure for its portfolio diversification, tax benefits, and access to high-quality real estate opportunities.

Here are the top 10 reasons why so many of today’s accredited investors are choosing syndication over traditional assets. 

Your real estate syndication project is professionally managed by a real estate sponsor who handles every detail of the deal, including scouting potential properties, financing, construction, operations, and eventual resale. You get to leverage their experience, skill, and network. So you can start investing in real estate without any experience or local market knowledge of your own.  

Many traditional real estate investors prefer to invest in their local markets, wanting to stay close to their properties so they can be available to tenants and handle maintenance and minor repairs on their own. However, this can mean missing out on markets with greater opportunities than your local area can offer.  With syndication, geographic location is irrelevant. You can invest in property out of state or even from abroad!

Alternative investments, like real estate syndication, make it easier to spread capital across different asset classes, markets, and strategies. This diversification protects your portfolio by reducing the risk of excessive losses due to a collapse in any single investment category. 

For example, if your entire portfolio is held in corporate stocks and the stock market tanks, you stand to lose your wealth. But since real estate is largely disconnected from the stock market, real estate holdings may not be as affected by such an event and could sustain your portfolio until the market rebounds. 

Syndication provides a golden opportunity to participate in unique deals, typically unavailable to individual investors. Experienced sponsors have real estate analysts continually scouting deals (both on-market listings and off-market properties) and teams in place to facilitate quick acquisitions, fast-tracked building permits, and efficient construction. 

Plus, by combining funds with other investors, you can buy into multi-million-dollar projects with comparatively small minimum contributions, making these high-value, high-complexity deals even more accessible.

Unlike whole-fund investing, in which you buy into a portfolio of properties (as is common with REIT investing and some private equity investments), syndication allows for deal-by-deal control. You get to choose which specific project(s) to invest in. Many syndication sponsors even provide the physical address so you can do your own research on the area and the lot if you choose to.   

Many traditional investments offer tax advantages. Lower capital gains tax rates, for example, allow investors to keep more of their returns, compared to earned income taxes. And investing through retirement accounts offered tax-free or tax-deferred growth. 

But real estate syndication offers additional tax benefits beyond capital gains and retirement account investing. Cost segregation, depreciation, and certain operations deductions can all help reduce taxable income, allowing you to keep even more of your money.

Real estate tends to serve as a better hedge against inflation than traditional stocks, bonds, and other securities. This is because its value and income potential are directly tied to tangible assets whose prices rise with inflation. During periods of inflation, rental rates are often driven upward as resale values appreciate. At the same time, any debt leverage is devalued; the mortgage balance becomes less consequential as each dollar weakens under inflation. The net result for the investor is typically an increase in net worth.

Syndication is an incredibly diverse and flexible investment vehicle. You can tailor your portfolio to match your risk tolerance and goals by choosing a mix of core, core plus, value-add, and opportunistic investments, such as:

The stable legal ownership structure of a syndication project involves making all investors limited partners in the LLC or trust that owns the property. As a limited partner, your liability is generally limited to the amount of your investment. You won’t need to worry about ongoing expenses as you would with a traditional real estate investment.  

Many syndication projects target returns that outperform traditional securities, including high-return growth stocks. While the performance of any given project depends on a range of factors, including market conditions and management decisions, studies have found that syndication often returns 7-12% on an average annualized basis. Experienced syndication companies can provide even stronger returns. For example, Gatsby Investment has provided average annualized returns of 22.3% since completing its first deal in 2017!

Gatsby Investment is a California-based real estate investment company with a 100% successful track record of profitable syndication deals. Our proven systems, proprietary software, and relationships with local industry insiders give our investors an edge in outperforming the market. 

Are you ready to join the 20,000 investors who have registered with Gatsby Investment to invest in high-return-potential syndication projects? Explore our current real estate investment opportunities and take advantage of the benefits of syndication today!