Why Do Family Offices Love Multifamily Syndicated Investments?

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There is a very wide variety of investors into multifamily and/or BTR-SFR syndicated real estate. These may include private individuals, corporations and institutional investors such as pension funds or investment banks with private equity to invest or even high net worth individuals HNWI.

Family Offices are another type of investor which particularly likes to invest in multifamily syndicated real estate, so let’s have a closer look at the details and of this investor type.

What are Family Offices?

Family offices are a unique type of investment entity that is typically manage by a single wealthy family or a group of families. They are intended to provide high-net-worth individuals with a variety of investment opportunities that are not usually available to the average retail investor. One particular type of real estate investment that family offices have shown a growing interest in recent years is multifamily syndicated investments, seeing such investments as a great addition to any family office investment portfolio.

What are multifamily syndicated investments?

Before reviewing why family offices love multifamily syndicated investments, it’s important to recap for newer readers the basics of multifamily family syndicated investments. Simply put, multifamily syndications are a type of real estate investment that involves pooling capital from multiple investors to purchase and operate a large apartment complex, occupied by a number of tenants.

These investments are typically structured as limited partnerships, with the investors acting as limited partners and a sponsor or general partner managing the investment.

Multifamily syndicated investments have become increasingly popular in recent years due to the stability and potential for high returns they offer. Unlike single-family homes, apartment complexes generate consistent cash flow from rental income, making them a great long-term investment. Additionally, as the US population continues to grow, the demand for rental housing is expected to increase, providing investors with a steady stream of tenants and potential for capital appreciation.

Why do Family Offices like to invest in multifamily syndicated investments?

There are several key reasons why Family Offices particularly like investing is multifamily, and these include:

Diversification of portfolio

Family Offices love multifamily syndicated investments as they provide an opportunity to diversify their investment portfolio. These Offices typically have a substantial amount of wealth that they need to allocate in a manner that minimises risk and maximises investment returns. Investing in multifamily syndicated investments allows them to diversify their portfolio by investing in a different asset class, which can help reduce overall portfolio risk.

Stable and predictable cashflow

Multifamily and/or BTR-SFR syndicated investments are also attractive to Family Offices as they provide a stable and predictable cash flow. Unlike other types of real estate investments, such as commercial or industrial properties, multifamily properties generate consistent rental income. This income is generally predictable and can be used to pay down debt, distribute dividends to investors, or reinvest in the property.

Professional management

Another benefit of investing in multifamily syndicated investments for Family Offices is that the assets are professionally managed. The sponsor or general partner of the investment is responsible for the day-to-day operations of the property, including leasing, maintenance, and rent collection. This allows Family Offices to invest in real estate without the hassle of managing the property themselves.

Potential for high returns

Multifamily syndicated investments also offer the potential for high returns. Due to the stable and predictable cash flow generated by the property, investors can earn consistent returns over a long period of time. Additionally, if the property is managed well and the market conditions are favourable, there is potential for capital appreciation, which can result in even higher returns.

Tax benefits

Multifamily syndicated investments also offer tax benefits to investors. Investors can take advantage of deductions related to depreciation, interest and other expenses associated with the property. Additionally, the income generated from the property is typically taxed at a lower rate than other types of income, such as ordinary income or capital gains.

Access to exclusive deals

Finally, Family Offices love multifamily syndicated investments because they provide access to exclusive deals which are not always available to the general public. These investments are typically only available to Accredited Investors, which means that family offices can invest in high-quality deals that are not available to the average retail investor.

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CPI Capital works with a number of Family Offices which appreciate that multifamily syndicated investments are an attractive investment opportunity due to their potential for high returns, stable and predictable cash flow, professional management and so on.

CPI Capital believes that the diversity of investor types already involved or looking to get involved with the multifamily and/or BTR-SFR sectors is, on balance, healthy for the longer-term prognosis for the classes of assets, and can continue to benefit our passive investors! 

Yours sincerely,
August Biniaz
CIO, Co-Founder CPI Capital