Is Investing in Real Estate Safe? Yes – If You Do it Right

Although real estate investing is often considered a high-risk endeavor, it is actually one of the safest investments you can make. In fact, real estate investments have outperformed the stock market by a margin of 2 to 1 since 2000, making it a more reliable choice for steady long-term financial rewards, even during economic downturns. At Onbridge Capital, we aim to debunk this myth and promote the fact that real estate investing can be a safe and intelligent choice, as long as it is approached correctly.

The Safety of Real Estate Syndication

Real estate investment can be intimidating and confusing for some people, leading them to question its safety. To ease these concerns, experts recommend starting with a syndication sponsor who has in-depth knowledge and experience in the real estate market. With real estate syndication, a group of investors pool their resources to invest in a profitable property project, freeing individual investors from the need to have extensive knowledge about the market or risk factors. This approach offers a passive investing option that allows investors to benefit from the sponsor’s expertise while focusing on other areas of their life.

Your Sponsor is Financially Invested in the Outcome

Real estate syndication is considered safe due to the personal stake that the sponsor has in the project’s outcome. They are motivated to invest in profitable properties and ensure that the dividends keep flowing to keep their investors satisfied. Additionally, on average, sponsors contribute about 5% of the initial capital investment themselves, making their investment both professional and personal. However, the contribution percentage varies depending on the deal’s size and sponsor’s financial resources. It is advisable to ask a potential sponsor about their contribution level to determine their level of investment in the project and their ability to find future mutually beneficial projects.

Syndication Can Bring a Bigger Payoff

Real estate syndication enables a group of investors to come together and combine their financial resources, making it possible to take on larger and more lucrative projects than they would be able to do individually. This means that even investors with just a few thousand dollars can participate in real estate projects worth millions of dollars. For instance, the average real estate syndication project nationwide is valued at around $3 million. At Life Bridge Capital, our projects have an average value of $25 million to $35 million, with a typical minimum investment of $50,000.

Reap Modest But Reliable Returns

Real estate syndication may not be suitable for those who prefer to make high-risk investments. It is a more patient type of investment that generates consistent and respectable returns, with preferred returns ranging from 5% to 10%, and an average of 8% nationwide. Investing in real estate provides a far better return than a savings account, making it a wise investment option for those who have always dreamed of owning property but haven’t known where to start.

Investing in real estate syndication is a better option than flipping a house or buying investment properties on your own. You don’t have to deal with property tours, repairs, permits, taxes, or tenant issues, as your sponsor and their contractors take care of everything. As a passive real estate investor, you can still earn a significant income without the added stress of being a landlord.

A Safe Investment in a Tough Economy

With the uncertainty brought on by the COVID-19 pandemic, you may be wondering if investing in real estate is still a wise choice. Fortunately, there is some good news.

During tough economic times, there is a greater demand for affordable housing, making multifamily real estate a crucial investment. Real estate syndication targets undervalued and under-marketed properties like apartments, condos, and mobile home communities, and a skilled sponsor adds value to the properties, making them appealing to renters and buyers.

Real estate has historically been one of the top wealth builders, and while no investment is entirely recession-proof, it has proven to be a reliable asset class that can bounce back. This makes real estate syndication a safe choice, even in challenging economic times.

If you are interested in investing in real estate syndication, consider reaching out to Onbridge Capital for more information. They offer educational resources such as podcasts and blogs to help investors make informed decisions.