What is a real estate syndication and why would I want to invest in one?
What is a real estate syndication and why would I want to invest in one?
By: Sean Flanagan
Hi! Let me say I am glad you are interested in real estate syndications let alone investing period. Did you know real estate creates more millionaires than any other industry?
So real estate syndications… basically a real estate syndication is where a group of investors put their money together to buy a large apartment complex that an individual usually wouldn’t be able to buy on his/her own. Nothing crazy it’s not rocket science or anything complicated. In a real estate syndication you get to take what money you have invest in the deal and get to be an owner in a much bigger deal! (Bigger deal bigger upside!)
In a real estate syndication, there are two main groups of players. You have General Partners (GP) and Limited Partners (LP).
The GP is also referred to as the Sponsor or Operator. The GP is responsible for A LOT!
The GP works on:
1.) Putting the deal together
2.) Shopping different markets
3.) Underwriting the deal
4.) Getting a loan for the property
5.) Signing for the loan
6.) Coordinating with property management
7.) Raising capital for the deal
8.) Overseeing the business plan and managing the asset
The Limited Partner is truly plays a passive role in a real estate syndication.
The LP is responsible for:
Investing the needed equity to help fund the deal. That’s it!
Why you would want to invest in a real estate syndication is cause you are allowing your money to be deployed and go to work for you! Depending on the deal and syndicator you could be paid a preferred return. Meaning you as the LP get paid before the general partner. Also as an investor and partner in the deal you are able to receive the tax benefits of depreciation!
A lot of high net worth individuals choose to invest in real estate for the tax benefits alone. They use real estate as a tax shelter and avoid OR defer paying taxes.
In my opinion the top reasons of investing in a real estate syndication are:
1.) Preservation of capital
2.) Putting your money to work
3.) Being paid monthly while you wait in cash flow distributions
3.) Sharing in the appreciation and upside of the deal
4.) The tax benefits that are available to real estate investors.
Of course these are just my top reasons to invest in a real estate syndication.
What would be a reason you would want to invest? Let me know invest@jamesonassetmgmt.com
The best investment on earth is earth!
~ Sean