Syndicated apartment investing is when an individual or a group of individuals come together in partnership to purchase an apartment complex. A purchase can consist of anywhere from typically 5 units to 100+ in a single transaction. The investor or groups of investors then manage the property and share in the cash flow and equity upon refinance or resale.
As a single investor, that person is responsible for obtaining a loan, coming up with the down payment and equity, managing the property, and handling the resale. This may be common for smaller complexes.
On a larger apartment complex, several investors are involved in the purchase and management. From finding the deal, to due diligence, to acquiring the loan, to getting the down payment and equity, to managing, to maintaining the asset, and disposition of it can take several partners.
There are active partners, called the general partners that do the hands-on work such as finding the deal or getting the loan. Then there are silent partners (also called limited partners), who participate by investing in the property but don’t take an active role in the day to day management.
Most people get involved in syndicated real estate investing by becoming a limited partner. As a limited partner, they invest in the property by purchasing a share(s), or subscription. They get to enjoy being a shareholder and having ownership but don’t have to manage the property or deal with tenants and evictions. A limited partner participates in the cash flow of the property as well as the equity upon refinance or resale.
For anyone that does not have experience in apartment investing or has no interest in finding or managing an apartment complex, a great place to be is a limited partner. Being a limited partner is a great way to diversify your portfolio by adding real estate to it.