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March 2020 Newsletter

Massive Wealth through Passive Investing!


Have you ever wanted to get into real estate investing, but just had no idea how to get started? Well in this article I'll be teaching you guys exactly how you can get into real estate investing with NO prior experience! Let's jump right into it. When investing into anything, you need to know all the possible options you have for getting the best return on your investment. So I’m going to show you all the different avenues you can take for passively investing in multifamily syndications. This is the best and most rewarding investment out there to date and if you really want to build passive income and make money when you sleep, I mean who doesn't, then this is something you'll want to pay attention to! Most of you are probably thinking "I don't have any money so how am I going to passively invest anyway?" That's the beauty of multifamily, there are so many great options that make it available to everyone! And the returns are high enough to substantiate even smaller amounts invested, such as just $10,000! Now, all of these options I will be discussing are only brief synopsis' of the opportunities available to you, and if anyone would like to learn more, please feel free to contact us @joshferrari901@gmail.com. CASH – BANK OR LIQUID The easiest way to invest in real estate syndications is with cold, hard cash. Of the possible sources of capital, it is the most liquid. Which means it is readily available and can be quickly wired to the syndicator you are working with. Of course, I know not everyone has access to capital like this, so if this isn’t for you then there are four other options for you! STOCKS & BONDS Another source of capital for real estate syndications is stocks and bonds. You can sell a portion of your mutual funds or ETFs for cash and put that money in a multifamily deal. Of course, you will have to call your broker and have a conversation about why you want to sell. And while I don’t recommend pulling ALL of the money from your current investments in stock and bonds, it makes a ton of sense to use a portion of it to add multifamily to your portfolio. Diversifying your portfolio is a great way to protect your long term wealth. I truly believe there is no better, investment in the world than multifamily syndications. Nothing else affords you the cash flow, above-average returns AND the extraordinary tax benefits of real estate syndications. Or as I like to say the I.D.E.A.L. investment! Income, Depreciation, Equity, Appreciation, & Leverage! LINES OF CREDIT Yet another way to access funds involves opening a line of credit. If you have equity in your home, for example, you can get a loan at a relatively low interest rate and use that money to invest in real estate syndications. Please do be careful, though. It’s important that you invest in a multifamily deal with a fairly high return in order to bridge the gap between your line of credit and your investment return. SELF-DIRECTED IRA If you have a retirement account, you can use a portion of that money to invest in real estate syndications too! Here’s how it works: 1. Open an account with a self-directed IRA custodian. 2. Write a letter to the administrator of your existing account, asking them to move a certain amount of money to the new self-directed IRA. 3. When you’re ready to invest in a real estate syndication, instruct the custodian of your self-directed IRA to wire the money to the appropriate closing attorney. 4. Congratulations, your self-directed IRA now holds a share in the LLC of that particular real estate syndication! Although, there are some limitations that come with investing through a self-directed IRA. The law requires you receive no direct or indirect benefit from the investment. In other words, you can’t touch the money until legal retirement age of 59 ½, and cash flow distribution checks must be deposited directly to the IRA. QRP The one problem with investing through a self-directed IRA? There’s a good chance you will get taxed on the money you earn from a real estate syndication. Alternative? Well, there’s this little thing called the Qualified Retirement Plan or QRP. And it just so happens to be exempt from the Unrelated Business Income Tax (UBIT) IRA investors are subject to when an asset sells. Full disclosure, it does cost more to set up a QRP trust up front, but it has benefits beyond avoiding the UBIT tax:

  • You don’t need a custodian to sign your paperwork. You do that yourself!

  • You can borrow up to $50K from the trust without penalty.

  • Flexibility to adjust your contributions

  • Total tax free gains

  • AND you don't pay any taxes on any of your QRP money for 100 years!

The current tax code allows any owner of a QRP to leave the accounts to an heir who can decide to take distributions of the money over their entire life expectancy. This is true for deferred, (regular) and ROTH accounts.

Let’s say you set up a ROTH account today, grow it for the next 40 years, and then leave it to someone who happens to be 25-years- old when you pass away. That person doesn’t pay any taxes on the account, the gains or the distributions. (Assuming the account balance is less than the current estate tax exemption, which is over $5,000,000 in 2019.)

The heir gets to grow the account, spend the money and do so for the rest of their life, with zero tax.

You’ve now got the power to opt out of the tax system for the next 100 years. Your children and grandchildren will thank you.


So, What’s Best? If you have access to several different sources of capital, cash is best, simply because it’s the easiest to deploy. Multifamily deals move fast, and once an opportunity is announced, syndicators take investors on a first come, first served basis. If you have cash, you can get into a deal quickly and wire the money right away. Investors using a self-directed IRA are at a slight disadvantage because it does take a few days to complete the paperwork and get your custodian to wire the money. CONCLUSION So, what are the different sources of capital you might use to invest in real estate syndications? 1. Cash 2. Stocks & Bonds 3. Lines of Credit 4. Self-Directed IRA 5. QRP Find which one works best for you and start creating some wealth for you, your family, and for your future generations to come! We typically have opportunities for you guys to get passively involved in a multifamily syndication deal, but we are currently chasing some good leads, and will let you know as soon as an opportunity such as this becomes available. Mobile, AL Market Analysis - In an update, the nearly 50-year-old Spring Hill Oaks Condominiums currently undergoing $4 million in upgrades by Burton Property Group and located at 3655 Old Shell Road in Mobile, is expecting to roll out phase one of the completely renovated spaces for viewing and sale by early July of this year.

Originally designed as apartments in 1972 by Ladner Construction, all units at the site were converted into condominiums in 1982.

A new fitness center and clubhouse will also be built at the center of the site upon final completion of buildout. - Living up to the “Roaring ’20s” narrative for the new decade, in terms of housing supply and demand for one of the nation’s hottest home markets, the newly released Baldwin County Association of Realtors (BCAR) Housing Report for January 2020 activity did not disappoint.

Some of the more attention-grabbing numbers centered on total properties sold last month, with an increase of nearly 27 (26.8) percent as compared to last year. Most impressive, however, were sales volume numbers that skyrocketed up nearly 35 percent (34.9) versus last year. January 2020 sales volume totaled $158,035,680. January 2019 numbers came in nearly $41 million less, at $117,184,277.

Additionally, the Baldwin Realtors’ Multiple Listing Service (MLS) reported the total amount of residential, active inventory in January 2020 was 2,793 units, compared to 3,027 in 2019. A total of 492 properties sold last month versus 388 in January 2019. - Airbus’s U.S. manufacturing hub in Mobile will once again be spared from tariffs slapped on many goods coming to the country from European Union member states.

In a statement released Friday, Feb. 14, the office of U.S. Trade Representative (USTR) Robert Lighthizer announced a revision of a previous notice of the $7.5 billion worth of tariffs, based on statements made during a public comment period, that removes the parts shipped from Europe to Airbus’s A320 final assembly line in Mobile. - The Department of Defense (DOD) is looking to tap $3.8 billion appropriated for military equipment to continue the ongoing construction of a wall along the U.S.-Mexico border — a source of funding that would include $261 million allocated for ship construction at Austal in Mobile, AL. Arguably President Donald J. Trump’s marquee campaign promise, a wall along the U.S. - Mexican border has been a source of political contention since his election. Unable to secure the funds through a Congressional appropriation, Trump has repurposed military funding to pay for parts of the wall before.

That concludes this month's newsletter! Don't hesitate to reach out if you have any questions. To your success!

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