What is Real Estate Syndication
A Real Estate Syndication is when a group of investors pool their money to jointly purchase a large property. As contrasted with individual ownership of a property, in a syndication the investor contributes to the syndication and owns and profits from a portion of the real estate asset while other members purchase, own and profit from the remainder. Each investor takes ownership of the investment property proportional to their capital contribution.
A syndication allows the opportunity to invest in a large apartment complex, such as a 100 to 500 unit apartment complex, that would cost tens of millions of dollars and otherwise be out of reach of the individual investor.
A real estate syndication is normally structured with the syndicating company being split between the general partner (GP) and the investors are limited partners (LP).
As the manager and operator of the deal, the General Partner is the one that invests the sweat equity. The role of the sponsor (GP) is to find the investment property for the purchase, perform the due diligence and financial analysis, obtain financing, form the GP and LP entities, purchase the property, and create the opportunity for investors to become a LP interest holder.
The GP then operates the property and takes care of record keeping and investor relations. Normally, the GP also invests their own capital in the property along with all the limited partners.
Real estate syndications are structured so that the GP is motivated to ensure the investment performs well for everyone. Distributions of income are made to each of the investors on a regular (usually quarterly) basis. After a period of time (often 3 to 7 years) the property is sold and the limited partners will realize any appreciation in value at that time.
With the current economy and housing market there is so much opportunity to invest and realize a passive income through owning multi-family property. Real estate syndication is only growing as one of the best ways to invest in real estate today.
Looking to diversify your investment portfolio and maximize your returns? Real estate syndication could be the answer you’ve been searching for. Contact us today to learn more about joining our investors network.