Condo vs Real Estate Syndication with a pile of stones

Case Study: Condo vs. Multifamily Real Estate Syndication

In 2009, I helped my mom buy a condo in Washington, DC, after she and my dad separated. It was a one-bedroom condo in a brick building in the trendy Columbia Heights neighborhood of DC, just a block over from the Metro station, Target, and, my mom’s favorite, Panda Express. (Yes, even Chinese people appreciate Chinese fast food sometimes.)

Admittedly, she made the purchase primarily for her to live in, and not strictly as an investment property, but we had always planned for her to eventually move out and rent it out.

My mom would go on to live in that condo for just two years, followed by seven years of renting it out as an investment property. She never lost any money, but she also didn’t make a ton of money either, and so, earlier this year, she decided to sell.

This is her story. This is the story of how she sorta, kinda, became a real estate investor, most definitely by accident and with much anxiety and trepidation along the way, what she and I have learned over the years, and what she’s up to now.

My Mom the Saver

My mom has always been a saver. She was the one who first taught me the value of saving my allowance, and of keeping a balance sheet. She diligently saved a portion of every paycheck for my college education, which ultimately allowed me to get an Ivy League education, entirely debt-free.

When it came to investing, however, my mom just didn’t have the experience or, frankly, the interest. No one had ever taught her what it was all about or how to get into it, and given that English was not her native tongue, she found the whole thing just too darn intimidating and risky.

So, savings account it was.

When I was growing up, I remember touring different houses with my parents on a number of occasions. They had always intended to buy their own home, but for one reason or another, it never came to fruition. Throughout my childhood, we were serial renters.

My Mom the Homeowner

Once she and my dad separated, however, my mom was ready to buy a place of her own. I helped her look at a number of options all around DC, and ultimately, she settled on a nice one-bedroom condo with a balcony, her own washer/dryer, and, as stated previously, close to Panda Express.

The year was 2009. The condo was listed for $309,000, and she ended up purchasing it for $305,000. She put about $60,000 down (roughly 20%), and for the first time in her life, she became a homeowner.

I helped her pick out her own couch and move it into her new living room. She and I spent many evenings out on her balcony. It was a great little condo.

My Mom the Landlord

Two years later, I had moved across the country to pursue a career change, and she decided to move closer to me, which meant that, just two years after purchasing her condo, she had to decide whether to rent it out or sell it.

Given that the condo hadn’t appreciated much in those two years, and also given that she would receive some cash flow each month if she were to rent it out, she decided to become a landlord.

We helped her find a terrific property manager who took care of everything, including paying her mortgage and all the utility bills. After mortgage, bills, and condo fees, she was cash-flowing about $200 per month. Not too bad. At least, that’s what we figured at the time.

Things were going swimmingly, until a couple years later, when a flood from the unit upstairs caused significant damage to her unit. Thankfully, insurance came to the rescue on that one, but when the washer/dryer broke shortly after that, those expenses had to come out of pocket, meaning six months or more of cash flow was wiped out.

Not long after that, the condo association decided to increase the condo fees, tacking on an additional fee for owners who were renting out their units. Then, the property management company pivoted their business, passing my mom onto a less hands-on property manager, meaning more hassle for her each month.

Year by year, what was supposed to be a fairly simple investment property started turning into more and more work (which really meant more work for me, being the dutiful Chinese daughter that I am).

Selling Her Condo

So, when her tenant decided to move out earlier this year, we jumped at the chance to sell the condo. Surely, we thought, given its prime location in such a great metro area, the condo would have appreciated significantly over the nine years my mom had held it.

Turns out, there were a number of condos on the market at that time, and a number of those were in the same building my mom’s condo was in. My mom’s condo was nowhere near the biggest, nor the one with the most upgrades.

Ultimately, she ended up selling the condo for a profit of about $30,000, including principal paydown. The $200 per month in cash flow over the seven years she’d rented it out, when adjusting for maintenance and repairs, came out to roughly $15,000.

In other words, over the nine years she held the property, she had made a total of about $45,000, or about $5,000 per year on her original $60,000 investment. This comes out to about an 8.3% annual return.

$45,000 total profits / 9 years / $60,000 original investment = 8.3% average annual returns

Not too shabby, right? Eight percent certainly beats what she would have made over that same period of time, had the $60,000 sat in a savings account.

Of course, over the last nine years, I’d learned a thing or two about real estate investing. Things I wished I had known back when she first purchased the condo, or when she had first rented it out.

You see, my mom is the quintessential passive investor. She wants nothing to do with the investment, except to park her money there, and receive ongoing cash flow distribution checks.

As such, owning a rental property isn’t actually the best fit for her, because it still involves managing the property manager, which takes some work, especially when things inevitably go awry.

For someone like my mom, being a passive investor in a real estate syndication is the perfect fit. She can put her money in, get monthly updates and regular cash flow distribution checks, and not have to deal with any tenant issues.

What If…

So, let’s rewind for a minute, back to 2009, when my mom first bought that condo.

Now, let’s take that same $60,000 that she’d put into the condo, and let’s put it into a multifamily real estate syndication instead.

Let’s say that the syndication had planned to hold the asset for five years, with an 8% cash-on-cash return over those five years, and an equity multiple of 1.75x.

Remember, the equity multiple is a projection of how much you’ll make over the course of the investment. If you were to invest $100,000 in a project with a 1.75x equity multiple, that means that you would end up with $175,000 at the end of the investment (when you factor in both the cash flow distributions, as well as the profits upon the sale of the asset).

Had she invested in a syndication like that in 2009, she would have come out of that investment in 2014 with $105,000.

$60,000 original investment x 1.75 equity multiple = $105,000 total amount returned at the end of the syndication

This means she would have made $45,000 over the course of just 5 years (rather than 9 years). This comes out to an average annual return of about $9,000, or about 15%.

Fifteen percent – that’s almost double the average annual return she had made with her condo.

$45,000 profit / 5 years / $60,000 original investment = 15% average annual return

But Wait, There’s More…

Remember, in this scenario, it’s still just 2014. Let’s say that she rolled that entire $105,000 into another investment in 2014. Same projected returns, same equity multiple, same hold period. That means that, if all goes well in this hypothetical scenario, she would end up with $183,750 in 2019.

$105,000 investment x 1.75 equity multiple = $183,750 total amount returned at the end of the second syndication

That means that she would have more than tripled her initial $60,000 investment within ten years, and her profit, not counting her original investment, would have been $123,750. This means that her average annual return over the ten years would have been $12,375, or about 20.6%.

$123,750 profit / 10 years / $60,000 original investment = 20.6% average annual return

Now, to compare apples to apples, let’s be fair and account for the initial two years that she lived in DC (2009-2011). If she hadn’t purchased a condo, she would have had to rent out an apartment. Let’s say the rent was $1,500 per month, or about $36,000 over the two years.

Factoring that into the total profits from the hypothetical syndications, she would still have made a profit of $87,750.

$123,750 net profit from both syndications – $36,000 rent for two years in DC = $87,750 adjusted net profit

Condo vs. Syndication

The difference between this hypothetical real estate syndication scenario and what actually happened with her condo, is staggering.

With her condo, she made a total of about $45,000 over nine years, or roughly $5,000 per year, which comes out to 8.3% per year.

Had she invested in a multifamily real estate syndication instead, she would have made a total of about $87,750 over ten years, or roughly $8,775 per year, which comes out to 14.6%.

If she had invested in syndications, she would be roughly $42,750 richer.


Enough to change the course of her life? Probably not. Enough to buy her some additional peace of mind as she continues to get older? Absolutely.

As they say, you don’t know what you don’t know.

In 2009, neither my mom nor I had any idea that such a thing as real estate syndications even existed. I knew enough to know that real estate was a great investment, but I thought that having a rental property was the only way to go about it.

I didn’t know anything about passive investing. I didn’t even know what amount of cash flow was considered “good.” I figured, as long as she wasn’t losing money, that it was a decent investment. And I was right, to a certain degree, but not as right as I could have been.


Nowadays, given all that we’ve learned about real estate and real estate syndications, my husband and I have changed our own real estate investing strategy, and I’ve helped my mom to change hers as well.

My mom has now invested a good chunk of her savings passively into real estate syndications; no more rentals for her. She gets regular cash flow distribution checks, amazing tax benefits, and the added benefit of knowing that her money is making a difference in local communities.

She doesn’t get any phone calls or emails from the property manager about broken toilets (which, let’s be honest, she would have just forwarded to me to deal with anyway).

She can go on living her life, spoiling her grandchildren, and doing what she loves, all while her money is working for her, hassle-free. This is the essence of passive real estate investing, and it’s something I wish my mom and I had known about when she first put in her offer on that one-bedroom condo back in 2009.

But, there’s no use rehashing the past, except to share lessons learned with great people like you. I hope that this story has given you some insight into things to think about when considering investing in real estate, and that it has inspired you to take action to ensure that your money is working as hard as it possibly can for you, today and every day.

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