#237 Should You Buy Properties or Invest In Syndications?

Hey, everyone. In today's episode, we're diving into a question I get asked all the time, and this week alone, I swear it came up to me about three times. Should I buy my own properties or invest in other people's deals like syndications? Now, it's a great question and a really important one, and I think it's something we need to talk about, so stay tuned. I think you're going to enjoy this episode. All right, everyone, I hope you've had another great week. It's funny, this past week for us, we had some neighborhood gatherings. We had Halloween. I had a neighbor come up to me and actually tell me that he listens to my podcast, so I felt so honored. First of all, if you're my neighbor and you're listening to this, thank you so much. It's really cool to know that this is getting out to people and creating an impact. And if you're getting value from it, just let us know. Just send back an email, let us know, or give us a nice review or whatever it is. Any case, if it continues to bring you value, we're going to continue answering your questions and bringing you topics that I think should help you on your passive income or real estate or entrepreneurship journey. Welcome to the Passive Income MD Podcast, where we talk about creating your ideal life through multiple streams of income. If you enjoy hearing about this stuff, make sure to hit subscribe. Now. Let's get on with the show. Now, whether you're starting your investment journey or you're looking to just grow, expand your portfolio, I'm sure it's natural to wonder where you should best put your money, your time, your energy. And so when people ask me that question again, should I buy my own properties or invest in other people's deals? Again, those are usually called syndications or real estate funds. They usually grab me at a moment or they email me. And I always feel like it takes a longer conversation, so it really helps to have a podcast like this to talk it through. Now, if we have a chance to really go deep, I'll ask that person about their experience level, how much capital they have, the time that they want to put into this, how much energy they have, their goals, all these things that will ultimately help you or me zero in on what's best for your unique situation. Everybody's different, and so everyone has different outcomes and goals, and that's why it's important to have a deep conversation about this. But if time is short, I just keep it simple and say, why not consider doing both? And I do that because I want people to think about both sides. What are the pros and cons, what answer makes sense. And it's important to talk about both the, both the good and the bad of each. And so let's do that right now. So let's start with investing on your own. This is what I consider active ownership, where you own the property yourself. You call the shots on what to buy, how to manage it, everything about the finances and when to ultimately sell or refinance a property or whatever you want to do with it now. It's incredibly rewarding. I own a bunch of properties myself. I've owned some, I've sold some. It is really cool to see a property that you personally selected and manage yourself, bring in that steady income that you're talking about or appreciate over time, which means the value goes up over time. But there's definitely some challenges too. Managing your own property or at least overseeing the manager for any of these properties actually takes a lot of time and energy. It is like running a business. You're handling the day to day operations or at least running somebody else who does day to day operations. And the more units you have, the bigger the property, the more challenges there are. Maybe even help find tenants, maybe you help come up with a business plan when things aren't working well. The list goes on and on. Even just this past week, one of my very first properties that I bought is a five unit building in an area in near Los Angeles. And I converted it to a six unit property. And you know, we've had this property for quite a while. So if any property, this is the one that's kind of on auto drive, full self driving for Tesla owners. But even this week the property management came to me and said one of the tenants wants a new countertop. It costs this much. They'd also love to get new cabinets. They made great tenants of ours since the beginning. Since you've owned it, they currently pay this amount of rent. They, they're also up for rent renewal. Do you want to increase the rent? Do you want to put in new countertops? Is this price okay for you? And then ultimately how do you want to manage the cabinets on this particular unit? And I remember thinking I was in the middle of something and right now it was kind of a busy season with some of the things I'm doing. And honestly it's not a decision that I particularly want to make right now, if I'm completely honest with you. But I have to make this decision as the owner. I have to make that Final decision. And so I went and did some of the numbers. I looked at current rents, where's the market rent for where this tenant is. If I increase rent, how long before that countertop would get paid for? How much would cabinets be? And what I ended up doing after all of this is asking the property management to go out and find another quote for me. But I'm going to have to make this decision. Not a huge one, but it is a couple thousand bucks that I have to think about then. When you own your own properties, there's a capital investment. When you buy a property outright, that usually means you're putting in all the money for the deal. So if you're buying any decent sized property, you're going to put a significant chunk of your own money into the deal. That's not always possible for all of us. I know people think we are wealthy doctors and we have got all this money saved sitting around, but I think most of us know that's not truly the case. And especially if you're early on in your career, you may not have that initial capital to buy a several million dollar investment property or have all of your funds tied up in just that one property. However, again, the great thing is you've got full control. I get to make the decision on my properties that I own, so would you. So in terms of running this business of owning that property, you get to make the best decision that you think serves you at this time and to potentially get your best returns to give you potentially the best tax benefits to help your property grow, whatever that might be. Of course, that comes with having to know more experience, to know what decisions to make. But that can be learned over time. So those are some things to think about when you own your own properties. Over the last 35 years, MLG Capital, they focused on making smart investments in real estate and building relationships with their investors. They call it an investment investor centric fund structure. That's what they focus on where accredited investors, they can invest their money with confidence in funds that target diversification. They prioritize cash flow as well as low leverage with a what they call a unique dual sourcing strategy. So if you're unsure about investing due to rising inflation or volatility in the stock markets, well, I want to let you know that investing real estate, it's been historically one of the best, best hedges against inflation. In fact, I've been investing with this company for years. So if you're a medical professional and you'd like to learn more about investing with MLG Capital, make sure you visit passiveincomemd.com MLG Again, that's passiveincomemd.com MLG now back to the show. Now let's look at syndications or investing in other people's deals. Now it's called syndications because they pull capital to go purchase up property. You are usually a something called a limited partner or a smaller partner in one of these deals and it might be called a syndication or real estate fund. It's a passive form of investing where you're pulling your money. Again with other investors. Someone else is running this deal, whether they're called the syndicator, the sponsor, the general partner, and they're the ones that are responsible for finding, financing, purchasing, managing the properties. And your role as an investor is to simply provide your money well, make a good decision about who you're going to invest with and then earn a return and just wait for those checks to come in and those deposits. Now one of the best parts about syndications is that you can leverage the heck out of the professionals that you're investing in. You, you get to leverage their experience, their capital, their connections, their resources, their time, their energy. And allows you to invest in either more deals. Cause you can partition small chunks of money into different deals and it might allow you to get into some maybe higher end properties that you wouldn't be able to do on your own. Just to give you some perspective, I'm investing in over 30 deals and how am I able to invest in over 30 deals? If it were my own it'd be impossible. But since I'm investing in other people's deals, making that decision, checking my quarterly reports, but that's pretty much the extent of how much I do. And I wait for those distributions to come to me. And a lot of those properties are high end properties in some amazing areas, some really nice hotels, some multifamily apartment of things. And there's no way I'd be able to own some of those properties on my own. It can be a great opportunity for someone like myself who loves to have that passive income, or for someone who's like a busy physician who wants to diversify, but particularly doesn't feel interested in owning the property themselves or managing or making all those decisions. Now the downside is you do give up control since you are not making the decisions. Like I said about the countertops, when to sell, refinance, how to take the tax benefits or whatever that is, you don't get to decide the business plan and the outcome for that property. So you're really dependent on the sponsor or the person running the deal, their expertise, and then their ability to execute the business plan. So it's important for you to decide who do I invest with? Who do I make that right decision to trust my hard earned capital with? And just so you know, with these indications, your capital is usually locked up for a period of time. Real estate in general, it's not easy to get your money in and out, but especially when you own your own property. At least worst case scenario, you can decide to sell it. But if you're investing in a syndication where somebody else makes that decision, your money's usually locked up for that period, whatever that might be. So I know that was a pretty surface level discussion of the topic. I've had other podcasts where I've gone really, really deep into that topic. So look for that if you're interested. But back to my answer. I tell people, why not do both? I actually have done this on my own investing journey. I started by investing passively in these small deals. Then I bought a few properties for myself. Over time, I scaled back on those properties I own myself just because started taking up a little bit too much time and energy and started focusing again on more passive investments because I wanted that for my lifestyle. And why is that? Because times change. Like how much time I have, my current interest, my energy level, market conditions. Just because something worked in one season of life doesn't mean it'll always be that way. And what I believe is really nice about real estate is that it is flexible to a degree. I know you can get your you can invest in a different deal. If it's your own property, you can sell a refi, you can buy a property, you can hold for a while, you can refinance, cash out. When I say indication sells and you get your return of capital, you can decide what to put it in. It's all based on where you're at in life and what you want to achieve. So if you're listening to this and you're trying to figure out your next step, you feel like the market is finally at a place where interest rates have stabilized, or at least they're coming down right now, so it'll be a more favorable situation. Consider where you're at right now. Maybe you invested a good amount of property and it's generating solid cash flow, but you don't have all the capital to buy another big property. So maybe a smaller investment in syndication might allow you to keep growing. So just remember, you have options you can really tailor your approach to match your goals, your time, your energy and your capital. It's not a one size fits all. They try to put you in one camp or another a lot of times on some of these platforms or on videos, but you don't have to stick to one strategy forever and be exclusive. But here's my advice. If you're just starting and people always ask how do I start? Just take the first step. It doesn't matter what it is. Look at what you can do in the next six months. Set a goal that feels really achievable, aligns with the resources and opportunities available to you right now, how much your ambitions are, and just take that first step. That can be your launch pad and you'll figure out what you like. Get educated, seek out a mentor, maybe take a course. Join a community that supports and really aligns with your goals. Don't do this on your own and get started connecting with like minded investors, whether virtually in person at conferences like pimdcon, which can really help set you on the right path and keep you motivated and inspired and moving forward. At the end of the day, it's all about getting in the game. Don't let that analysis paralysis keep you from taking action. So thanks for tuning in. I hope this has helped you in some way. I know this is a topic that gets talked about quite a bit even on my own podcast. I've talked about this quite a bit, but I still think it's an important topic because I get asked this again and again. Wanted to put it out there for you. Hope you got some value from it. Have an amazing week and let's talk again soon. Thanks everyone. Enjoy the show. Let me know by dropping a review in the podcast app you're listening to us in. And if you haven't already me make sure to hit subscribe. Join thousands of physicians who are also on this journey to creating their ideal lives through multiple streams of income. Learn more at our website passiveincomemd. Com. Thanks again for allowing me to be a part of your journey. See you next time.