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Doctors Investing in Real Estate: A Physician's Guide to Passive Multifamily

Physicians are the most common first-time limited partners we talk to. High income, no time, and a tax bill that grows every year make a passive stake in an apartment community attractive. It is also where the worst marketing in this industry is aimed, so this guide starts with what the numbers can and cannot promise.

Why syndications appeal to physicians

A syndication lets you own a share of a 100-plus-unit property without managing it. The sponsor finds the deal, raises the equity, runs the business plan and reports to you. Since 2019 we have sponsored over $150M of Class B and C value-add multifamily across Georgia and Texas on exactly that model, and we underwrite 100 or more deals to close one.

What a preferred return actually is

Preferred equity in a stabilized deal pays a guaranteed annual return of 8% before the sponsor takes a share of profits. The rest of the waterfall, the split above the preference, is where the sponsor is paid for performance, and it is the part a physician investor should read twice.

Where the tax advantages come from

Depreciation on the building passes through to limited partners on a K-1, which is why a year with positive cash flow can still show a paper loss. That is a timing benefit, not a permanent one: recapture applies when the property sells.