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

Real estate provides one of the best returns on a risk-adjusted basis among different income-producing assets.

Real estate syndication offers all the benefits of real estate without needing to be involved in the day to day operations.

What Is A Real Estate Syndication?

A real estate syndication is a legal structure for individual investors to pool money together for investing in large real estate deals.

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.

Real Estate Syndication Vs. Real Estate Investment Trust (REIT)

Real Estate Syndication Structure

The real estate syndication structure defines who is involved. Ensure an experienced real estate lawyer creates the contract and is fair to all parties.

Who Is The Sponsor In Syndicated Real Estate?

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

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.

Since they are passive investors and not involved in the acquisition or day to day operation or disposal of the investment property, they pay the sponsor fees.

Who Is The Joint Venture (“JV”)/Equity Partner?

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.

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