Real Estate Syndication: What Is It And How Can You Profit?

Syndicated real estate was crowdfunding for real estate and was made possible by the Jumpstart Our Business Startups Act (JOBS) passed by Congress.

The main difference between a REIT and syndicated real estate is that a REIT consists of several income-producing properties bundled together like a mutual fund.

Syndication usually deals with only single investment property.

The real estate syndication structure defines who is involved.

Real Estate Syndication Structure

The syndicator is also known as a “sponsor.” They are responsible for finding, acquiring, and managing real estate.

They have prior real estate experience with underwriting and do due diligence on real estate. The sponsor does a lot of the legwork involved in finding the deal and putting it together.

Investors act as Limited Partners (LP) in the syndication and play a passive investor’s role. They invest with the syndicator and own a percentage of the real estate based on each investor’s amount.

The Joint Venture (“JV”)/Equity partner is a third party present in some transactions. They assist the syndicator with reporting, communications, and even tax documentation.

Although the sponsor has not contributed a lot of money, they are compensated through equity participation on the deal.

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