Pros and Cons of multifamily syndication investing

Most investors start their career with single-family home (SFH) investing. This is one of the most powerful ways to start investing in real estate when you have little money but want to start building momentum. You may have heard of the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) Method, or house hacking, where you live in a house and rent out the other rooms,  which are great ways to get a real estate portfolio off the ground. What I have personally learned in my 5 years of real estate investing is that investors want to grow but have a hard time achieving passive, tax-free income, with economies of scale. I want to break out some of the pros and cons of multifamily syndication investing and what you should think about before making that shift to multifamily from single-family rentals.

What is multifamily syndication investing?

At its simplest, a multifamily property is a building with several apartments where multiple families reside. It is sometimes called a multi-dwelling unit (MDU). Buildings like these could be duplexes, townhouses, condos, or apartments.

What distinguishes a residential multifamily housing property from a commercial property is one of the most often asked questions. Commercial real estate is usually defined as anything with more than five units (or doors). A business loan is required if the property qualifies as a business property.

A real estate syndication occurs when a group of investors pool their funds to acquire a piece of real estate. Real estate syndications offer investment options in apartments, mobile home parks, land, self-storage units, and other real estate assets. Syndications allow investors to buy an asset larger than they could by themselves.

Some Benefits of Multifamily Investing

One of the greatest advantages of multifamily investing vs. single-family investing is the economies of scale.

  • Time rewards: Multifamily syndications have a team of real estate professionals that range from acquisitions, management, legal, due diligence, and capital raising. These professionals make all the decisions on your behalf, and they use the breadth and depth of their knowledge to ensure maximum returns every month. Teams of around 10 people have the capability through efficiencies of scale to manage billions of dollars of assets. With multifamily syndications you can pool capital with other investors and take down 70-400+ doors per deal! Adding 70 units of single family homes, or quadplexes would be an overwhelming amount of time to handle all paperwork associated with closing, insurance, mortgages, and then management by yourself! Syndications allow you to invest hundreds of doors with less time and headache for you.
  • Management: As a passive investor in multifamily syndications you don’t have to do any of the day-to-day management. Due to the economies of scale usually found over 70 doors, real estate groups are able to hire full-time property managers and maintenance staff, and contract construction teams for renovation to take away the headache and brain trauma that normally comes with single family investing management. One key thing to remember is, if your syndication group has substantial amounts of units in one area, they can negotiate more favorable pricing for services rendered to the property. No more calls at 2 am for a broken toilet, or tenant parking issues (yes 2 am!).
  • Maintenance/Repairs: with single family portfolios, homes are often distributed in different areas or even in different states. You might have to have multiple property managers, and have to work with multiple contractors for any work needed. With multifamily syndication investing all your doors under one roof, managed by a single full-time maintenance team. The maintenance team automatically responds to any tenant issues on your behalf, and since they are always onsite it becomes easier and less costly for repairs to be done which saves every single investor capital. This leads to better returns, higher efficiencies, happier tenants, and less stress! 

Risk Profile of multifamily

The risk of investing in multifamily vs. single-family is widely different. Multifamily operates on NOI (net operating income). Residential real estate is valued based on comps (comparable recent sales). When the financial crisis hit, less than .5% of multifamily apartments defaulted. Roughly 1.2 million single-family foreclosures were started in the first half of 2008 alone. Due to the nature of how commercial real estate works on net operating income, it is much more resilient than single-family rentals.  If you have not watched our introduction to multifamily webinar, watch it now, we break this down and more with incredible detail.


Multifamily is a favorite to investors because it has such a great opportunity for forced appreciation. Even if you make significant renovations to a single-family property, you are very reliant on how the homes surrounding yours are priced in the local area. With multifamily, if you make renovations that increase operating income and decrease expenses, then you have increased your net operating income (NOI) and increased the total value of the asset, and you have complete control as the owner. This action will need a thorough cost-benefit analysis, which skilled operators can complete with thorough due diligence. This is why there is so much competition in the multifamily space, landing one of these deals can be a cash flow generation machine for generations as the asset continues to increase rent and therefore appreciate in overall value. 


Now you have some incredible insights as to why multifamily is such a powerful investment vehicle. Over the last 4 years of listening to Bigger Pockets podcasts, all I hear people say is “I wish I learned about multifamily sooner.” Everyone has their own reasons for investing, and often it always comes back to “time freedom.” With economies of scale and other clear advantages, you can see why multifamily investing is the vehicle used to create legacy wealth while preserving your time freedom.