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We value education at On Call Capital, so we've provided information to help you learn more about investing outside of the stock market.

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Why Invest in Multifamily Syndications?

Most of us are exposed to real estate on very limited terms. Buy some single family homes, condos, or apartments and live the good life off of the income, right? Or maybe you've invested in REITs, only to see your investment fall victim to the recent years of turbulent stock market returns. Is there any way to get control over your investments or your life savings, or do you have to follow the crowd of 401k investors by blindly putting your fate in the hands of 

financial advisors who continue to get rich while your accounts suffer?

Top 5 Reasons to invest in Multifamily syndications

Below Average Risk

The multifamily market is proven to be significantly less volatile than residential real estate, the stock market, and cryptocurrency.

Above Average Returns

Operators regularly produce yearly returns above 14%, surpassing other investment styles without the rollercoaster ride along the way.

Passive Income

Monthly or quarterly distributions average 6-8% of your initial investment, putting money back into your pocket.

Hedge Against Inflation

When inflation rises and costs go up, rents follow and the overall value of apartment buildings rises along with it.

Massive Tax Benefits

You are a shareholder of the apartment's LLC, allowing you to benefit from pass-through depreciation of the assets.

Multifamily investments provide you with greater control with hard assets, more predictably high returns, and massive tax advantages. Most of the rich become that way through real estate because they are able to utilize the powerful tools of control, debt (leverage), and taxes. If you invest in the stock market, you don't often get to use leverage - if you think XYZ company is about to double in value, you can't borrow $50,000 to invest from your broker with $10,000 down, right? But that is exactly what we are able to do with real estate. Also, the IRS has created more rules in the last five years to encourage real estate investment, so it is possible to produce nearly tax-free income!

So, why multifamily (5+ units) over the other real estate options out there? Single family homes are priced on neighborhoods, schools, and the whims of the local market. Commercial real estate investments such as apartment complexes are valued based on the income that the properties actually produce - that's it! This is the reason why the wealthy focus on commercial properties such as apartment buildings. When you control the income and expenses of a multifamily property, then you control the value. This means that you have multiple ways to increase income: you can raise rents, or add sources of ancillary income such as paid parking, internet service, or storage space. These things all add value. Decreasing expenses accomplishes the same end: you can renegotiate operating expense costs, bill residents back for utilities, reduce turnovers and vacancy, or put in energy efficient light bulbs and plumbing fixtures. Basically, anything you can do to add income or cut operating expenses immediately increases the value of the property. Higher value translates to more money in investor pockets during a refinance or eventual sale. The same is true in times of inflation since everything goes up in cost, including rents! As income goes up, no matter the reason, so does the value of the property. This makes multifamily real estate the ultimate inflation hedge.

Plus, multifamily has been proven to have a lower risk profile than residential real estate, the stock market, and cryptocurrency. In short, multifamily is less volatile and more recession resistant. As a result of the 2008 financial crisis, single family homes loans with Freddie Mac soared to a delinquency rate of 4% in 2010. Delinquency rates on multifamily loans peaked at 0.4%, or a full 10 times less! We all know how the stock market performed during that time period - massive losses, retirements delayed, and lives ruined. Meanwhile, multifamily kept humming along, providing reliable returns for investors. Simply put, there is not a better option out there for low risk, high return wealth building than apartment buildings.

Why be a Passive Investor?

Right now, you probably have a job. In exchange for your work and time spent, you receive income. Many people opt to create income streams outside of their current job by having a "Plan B," but this often results in just trading time for money in other ways such as creating a side hustle, multi-level marketing, fixing and flipping real estate, or being a landlord for a few single family homes or duplexes. The idea of not putting all of your eggs in one basket is spot-on, but you shouldn't have to burn the candle at both ends for financial security.


Passive income, on the other hand, typically refers to an income stream that requires little-to-no work on your behalf. You make an upfront capital investment, receive an ownership stake in the company, and you are paid dividends or other types of income in return. You are hands-off while someone else manages the business so you can enjoy your time doing what you want. Dividend investing in the stock market can fit this bill, but we're here to show you a better way through apartment investing.

If financial freedom is your goal, then you need a focused plan for creating passive income streams that outpace living expenses. You also have to be cognizant about the level of work or amount of time you actually have to put into an investment.

Have you looked at how much cashflow are your investments currently producing? If you're in stocks and bonds, then that number is probably between 1-2% in dividend returns. Those dividends are then subject to capital gains taxes at a 15-18% rate, leaving you with even less. Multifamily syndications just produce more cashflow: to the tune of 6-8% distributions monthly or quarterly, which are much more tax-efficient as well (see below to read why). This is the kind of passive income that leads to financial freedom and flexibility. As you are getting paid, the property operators are busy adding value over time to the property, which leads to significant profits when sold. The combination of passive income and appreciation is powerful. This is how you create generational wealth to pass on to your children. 

Massive Tax Benefits

Real estate is now the most tax-advantaged investment available, period. Many folks think of the IRS as a boogeyman because they always take your money, but the IRS is really just a rulebook of tax incentives that are written into law. Standard W-2 and 1099 work are the least tax-advantaged methods of income production, taxed at levels between 25-35%. Stock market investing is more tax advantaged, with capital gains on dividends and sales taxed between 15-20%. Before the Tax Cuts and Jobs Act of 2017, oil and gas were the most tax-advantaged investments with multiple subsidies and deductions.

But now, the IRS is clear: the U.S. government wants people to invest in real estate to stimulate the economy, and they will provide massive tax incentives to do so. Some of the most common deductions are depreciation (often accelerated), mortgage interest, property tax, operating expenses, and repairs. When you are an equity investor in an apartment syndication, you are actually a limited partner in the partnership. While limited partnership is considered to be passive, you still get all of the associated tax deductions based on your proportional ownership of the property. This makes commercial apartment assets incredibly tax efficient. 


As a passive investor, you receive a K-1 for tax reporting purposes. Due to massive tax incentives, you'll most often see a passive (or paper) loss while your property is actually cash flowing. This can be used to offset passive gains in other parts of an investor's portfolio. On top of usual business deductions, most operators will conduct a cost segregation study which provides bonus depreciation of an apartment asset. As a result, it's common for properties to look like they are losing money (again, on paper) while they are actually cash flowing. This translates into real income for your wallet that you don't have to pay taxes on.

Other tax benefits include cash-out refinances that return most of your principal investment, 1031 exchanges that defer capital gains taxes from property sales, and the use of Self-Directed IRAs and eQRPs as savings vehicles. Contact us for more information on these options, and feel free to contact your CPA to discuss the best options for your particular situation.

True Diversification

Diversification is a big topic these days. When we get our first job and we're finally making enough to be able to save for retirement, we are taught that you have to diversify. This means different things to different people, but the generally accepted version goes like this: you hand your money over to an expert (such as a financial advisor) who places your money into stocks that differ in size, industry, geography, and corporate strategy along with a percentage of bonds that do the same. This is the generally accepted version of diversification, and if you do this, then your investments are as safe as they can be, right?


Eh, not really. The problem with traditional diversification is that everything is tied to the emotions of the market. You may own stock in a great company such as Amazon or Microsoft, but they can still lose value when the overall market takes a hit. Commercial real estate values are based solely on the income they produce, while stock values are often subject to the bullish or bearish nature of the current market. 

True diversification looks more like the pie chart here, with around 50% of your investments in the stock and bond markets and 50% in real estate. Your real estate investments can include any blend of the following:

  • Single-Family Residential

  • Self-Storage Facilities

  • Performing Real Estate Notes

  • Office Space

  • Mobile Home Parks

  • Multifamily Property

Multifamily properties provide a wonderful hedge against inflation. While bond yields may go down, everything else goes up in price according to the Federal Reserve's inflation target of 2% each year - this includes rents! Conveniently, as rental income rises, so does the value of an apartment building. The same can't be said for stocks or bonds.


By adjusting your portfolio with inflation-hedging, cash flowing apartment buildings, you can continue to see substantial gains during the good times and the bad. You can put passive income into your pocket, even if you experience job interruptions during your career. That financial security alone is worth its weight in gold. 

Invest with a Self-Directed IRA or eQRP

There are multiple ways to invest in apartment syndications. You can use:

  • Cash

  • Self-Directed IRAs

  • eQRPs

  • Solo 401k

  • Simple IRAs

  • Trusts

  • LLCs

Many bank and brokerage firms offer "self-directed" retirement plans, but they only allow you to invest in the products that they sell, limiting you to Wall Street stocks, bonds, and mutual funds. By utilizing a partner such as Midland IRA (, you will have the opportunity to invest in alternative assets such as real estate, private equity notes, hedge funds, LLCs, and more. This allows you more control over your retirement funds and investing decisions.

The most intriguing and perhaps most beneficial option on this list is the eQRP, which stands for Enhanced Qualified Retirement Plan. The eQRP allows you to invest almost identically to a Self-Directed IRA and the like, but has additional benefits such as checkbook capability (no need for a custodian), protection from UBIT taxes that can eat away at profits within your IRA or 401k, and so much more. Damion Lupo is the eQRP expert, and he has been on numerous podcasts such as The Real Estate Guys and Apartment Building Investing with Michael Blank espousing the benefits of this obscure retirement plan. The good news is that your Traditional IRA, 401k, TSP, 403B, or 457 may be eligible to rollover into an eQRP. Contact Damion and his team at for more information.

Investing Risks

Low risk doesn't equal no risk. Private Placement Memorandums, or PPMs, are created to outline the risks of any particular investment. During the Great Recession, the loan delinquency rate on apartment buildings was approximately 0.4% vs. 4% for single family homes, but that 0.4% wasn't zero. Occupancy rates in Class B and C holdings remained steady around 92%, which is well above the breakeven mark of 60-65% for most investments. Also, real estate is generally illiquid because it cannot be quickly sold or traded like stock for fair market value. If you seek more liquidity over a five year period, other investments may work better for you.


Lenders have become more strict, which is a safeguard for investors. Most banks will not provide funding for first-time apartment investors. The lending requirements of presenting a solid business plan using conservative underwriting, utilizing appropriate insurance, and thoroughly inspecting the multifamily property also leads to mitigated investor risk. At On Call Capital, we only work with experienced operators who have a proven track record of success.

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