Are you looking to achieve financial freedom through passive real estate investing? 

Syndications allow you to invest in large-scale properties without being involved in day-to-day management.

In this post, we’ll discuss how to maximize returns and minimize risk by diversifying across geography, asset class, timelines, and operators.

Investing in Rentals Pre-2008 Taught Tough Lessons

Brian Davis, co-founder of Spark Rental, started his real estate journey as an account executive handling investment property loans. After seeing investors make money hand over fist, he started buying his own rental properties just before 2008 hit.

Like many investors who bought rentals pre-recession, Brian lost his shirt on early investments. But rather than giving up on real estate entirely, he viewed it as an expensive tuition for a valuable education.

Brian learned tough lessons about accurately forecasting rental cash flow, including:

  • Accounting for vacancy, repairs, maintenance, and management costs
  • The hidden costs of lower-income neighborhoods like higher tenant damage and turnover
  • The importance of getting mentors to shortcut the learning curve

Without guidance, Brian invested in low-income Baltimore neighborhoods. In hindsight, that niche real estate market required expertise he lacked in his mid-twenties.

Turn Tragedy into Opportunity by Investing in Your Education

Rather than abandoning real estate after his early missteps, Brian worked for a company offering products to landlords and investors. He co-founded Spark Rental to empower others to build wealth through rentals.

Brian also continued investing personally in various ways. He learned from his early mistakes and moved forward wiser.

Tragedy often presents opportunities for growth. Rather than dwell on losses, focus on investing in yourself through education and mentorship. Use errors as tuition to fuel your future success.

Community Accelerates Real Estate Investment Education

Brian discovered his students craved access to regular real estate deals, not just education. So Spark Rental experimented with buying single-family rentals jointly with students.

They profited, but the model proved too labor-intensive. Passive syndications better fit their customer needs.

Brian and his partner launched a real estate investment club focused on syndications. Each month they evaluate deals side-by-side with club members.

Access to collective intelligence helps optimize decisions. Members with specialized market or asset knowledge often provide unique insights. Vetting deals as a group leads to sharper due diligence.

A member living near a potential acquisition provided an invaluable boots-on-the-ground perspective. Firsthand local intel can’t be gleaned from market reports.

Syndications Offer Strong Returns with Passive Ownership

Syndications allow passive investors to participate in larger assets they couldn’t purchase outright themselves. Leveraging the expertise of experienced operators minimizes effort while providing tax advantages, cash flow, and equity gains.

Brian’s Club facilitates fractional syndication investing for smaller investors. Members can invest in deals with only $5,000 instead of the typical $50,000 to $100,000 minimum. Spreading capital over more deals enhances diversification.

The club doesn’t actually syndicate deals themselves or handle securities to avoid regulatory complications. They simply pool funds and negotiate access to deals, charging members a flat monthly or annual membership fee.

Diversify Across Geography, Asset Type, Operator, and Time Horizon

Avoiding concentration risk is a top priority. Brian’s club strives to diversify across:

  • Syndicator or sponsor
  • Geographic market
  • Asset class

In addition to multifamily, they’ve invested in industrial, and retail, and plan to add self-storage and mobile home parks.

Geographic and asset diversification lessens vulnerability to downturns in any single area or property type. Multiple operators mitigate sponsor-specific risks.

Another benefit of syndications is diversification across investment lifecycles. Assets may hold for 1, 3, 5, 7 or 10+ years. Staggered timelines provide safety in times of volatility.

For example, interest rate hikes may impact deals nearing refinancing but not others mid-hold. Taking a portfolio approach helps weather market shifts.

Dollar Cost Average into Syndications at Regular Intervals

Timing markets perfectly is impossible, even for experts. Brian is a firm believer in dollar cost averaging for both syndications and stocks.

Rather than wait for the “perfect” entry point, invest methodically at regular intervals over months and years. This smooths returns and takes emotions out of investing.

Brian allocates the same amount monthly across assets. He doesn’t treat real estate differently than stocks or try to predict trends.

Automated periodic investing ensures discipline. Time in the market trumps timing the market.

International Lifestyle Flexibility Enabled by Location Independent Income

Brian and his wife moved overseas in 2015 for what they thought would be a two-year stay. Eight years later, the global lifestyle has stuck.

His wife worked for international schools in Abu Dhabi, Brazil, and now Peru. They get furnished housing, flights home, and full benefits including private school tuition.

Running Spark Rental remotely provided the location flexibility to become long-term expatriates. Their three-year-old daughter is also getting a multicultural upbringing.

The biggest drawback of expat living is the distance from extended family and long-time friends back home. But they return to the U.S. twice annually to visit.

Overall, the benefits far outweigh the tradeoffs for their family. International life has been an intentional adventure powered by passive income.

Geo-arbitrage Maximizes Income and Controls the Cost of Living

Because passive income is separated from living expenses, Brian leverages geo-arbitrage. He earns money in the U.S. but lives much more affordably overseas.

For example, his oceanfront highrise apartment with a balcony and Pacific sunset views costs just $1,300/month in Lima, Peru. The same would cost exponentially more in any U.S. coastal city.

Latin America’s lower cost of living stretches income further. Geoarbitrage amplifies purchasing power and savings.

Choosing cost-effective locales close to family helps offset the travel tradeoffs. Proximity makes visiting home quicker and cheaper.

Intentional Lifestyle Design Achieves Financial Freedom

Brian believes strongly in intentional living shaped by values and vision. Passive income enables desired lifestyles without required work locations.

He designed businesses, investments, and family priorities to maximize flexibility. Nothing was left to chance.

Financial freedom provides options. With purposeful planning, you can craft a lifestyle not limited by a paycheck.

Be proactive in deciding your ideal life, then engineer assets and income sources to fund it. Living intentionally allows you to thrive on your own definitions of success.

Community Accelerates Knowledge to Achieve Freedom Faster

Educating yourself and others is instrumental to reaching independence sooner. You don’t have to learn solely through costly trial and error.

Brian created the Spark Rental community to empower aspiring investors to bypass common mistakes. Education through mentors provides lucrative shortcuts.

The collective real estate wisdom of crowds far outpaces individual perspectives. As Brian stated:

“The greatest risks are usually the questions people aren’t asking at that moment.”

 

Leverage forums and masterminds to gain the knowledge you’d otherwise lack. Align with leaders surrounded by diverse expertise.

Start Investing in Yourself to Design the Lifestyle You Want

Passive income surpasses active income by funding customized lifestyles with minimal required work. Take control by proactively crafting your ideal life.

Educate yourself alongside mentors and peers. Absorb knowledge to amplify returns while controlling risks.

Diversify intelligently across the dimensions of geography, asset class, sponsor, and time horizon. Keep investing regularly to dollar cost average into assets.

Live intentionally to align income sources with your personal definitions of success. Financial freedom is closer than you think with the right roadmap.

The time is now to start investing in yourself, your community, and passive assets. What first step will you take today?

Ready to start your journey? Download the Passive Investor Toolkit to get started.