Frequently Asked Questions

With syndication you’re investing in a specific property; with a fund, you’re investing in the many assets of a real estate company.

Besides receiving passive income, the benefit to the investor is they don’t need to be an expert in real estate investing or property management, they have limited liability, and they can invest in multiple properties.

There are 2 roles in real estate syndication:

1. the syndicator (also known as the sponsor or operator)
2. the investors.

The role of the syndicator or sponsor is to find the investment property and determine if it’s a sound investment with the possibility of substantial returns.

The sponsor’s day-to-day experience with property investment and management allows them to identify valuable opportunities. To determine the viability of the investment, they may do an onsite visit, check property records, check bank statements, examine bookkeeping records of the current owners, check local zoning laws, analyze local market volatility, how the property’s occupancy rate compares to others in the market, a rent roll (list of the property’s tenants and how much rent they pay), and a number of other factors.

If the sponsor decides to move forward with syndication, they create an offering document for the property, organize a group of investors, acquire the property, manage the property, and disburse quarterly profits and sale profits to investors.

The sponsor is also responsible for deciding on the most favorable time to sell the property.

The role of the individual investor is to place their investment with the sponsor for a specific property and then do little else.

The investor makes passive income from the property – they receive quarterly distributions and their share of the profits and have no input on the day-to-day operations.

By law, investing in real estate syndications is limited to:

Accredited Investors: those who have an income of at least $200,000 individually or $300,000 jointly for each of the past 2 years, or who individually or jointly have a net worth of at least $1 Million, excluding their primary residence.

And

Sophisticated Investors: those who have some knowledge and experience in financial and business matters and are capable of evaluating the merits and risks of an investment.