WHAT IS A SYNDICATION?
​A real estate syndication is the pooling of funds from many passive investors to purchase large real estate assets that would otherwise be impossible to acquire individually. By being in a syndicate, investors can share in both the risks and the potential returns.
What are the PROS of a syndication?
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Completely passive real estate investing, while still receiving cash flow, appreciation, and equity.
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Simple way to diversify your portfolio
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Access to large opportunities
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More stability due to higher unit counts.
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Management by experienced asset managers.
Who can invest in a syndication?
Most syndications are available only to accredited investors, which is an investor with a net worth of at least $1,000,000, excluding the value of your primary residence, or have income at least $200,000 each year for the last two years (or $300,000 combined income if married) and have the expectation to make the same amount this year.
What are the main roles in a syndication?
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The General Partners ("GPs" or the deal sponsors) are the active partners that are hands-on managing the property.
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The Limited Partners ("LPs" or passive investors) invest money, sit back, and receive distributions.
What are the CONS of a syndication?
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The money in the investment is illiquid until the property is sold and profits have been distributed.
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With the investment being passive, you give up control over the property.
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The hold time for a syndication can be a drawback for some. A typical hold time is 5 years.
What are my risks?
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There is no guarantee of distributions, but your total potential loss will not exceed your investment.
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Market volatility can decrease the property value, but apartments are historically more stable than stocks. Be sure to choose stable markets.
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The property may not be managed to your liking. Ensure you know, like and trust your sponsors.
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You should only invest in real estate if you can afford to lose your investment and are willing to take on these risks.
