edited in 2021
Simply put, a real estate syndication is a group that pools capital together in order to purchase and manage a real estate asset.
Step 1: Establishing investor relationships and finding the right deal.
Multifamily deals require a large capital and typically any single person would have a hard time providing that capital upfront. This is where NuRoots Investment Group as the syndicator would interview potential investors for relationships on upcoming deals. For established investors, NuRoots Investment will interview them and should there be a good fit, we will share details of the deal. For potential investors who have never invested in multifamily assets, our main focus is to educate them first. At the same time, NuRoots Investment works with our networks to find the right deal (in our case, we focus on asset where we can add value) and perform all the due diligence to make sure the deal is one we want to invest in.
Step 2: Going through the purchase.
NuRoots Investment works through the deal purchase process with our partners. Once the deal is ready to go through, documents would be shared with our investors. This is where the capital that was built comes in. NuRoots Investment would provide the bank loan while investors for the deal would provide the down payment and other upfront expenses.
Step 3: Manage asset.
Post-purchase, NuRoots Investment’s partner assumes management responsibility of the property. Tenants pay their rent and the business operates on a positive cash flow. NuRoots pays the mortgage and operating expenses while sharing cash flow with investors (who remain passive, unless they are general partners) in quarterly basis.
Step 4: Add value to the asset.
During the ownership of the asset, NuRoots Investment works to lower expenses while also gradually making value-add improvements that add to the community and increase the value of the asset.
Step 5: Sell the asset.
Typically in year 3-7, when the timing is right and value-add improvements have been added, NuRoots Investment will look to put the property back on the market and sell. Once the sale of the asset goes through, profits are shared with the investors.
Step 6: Cash out or re-invest.
At this point, investors will have the option to either cash out or re-invest in future opportunities using a 1031 exchange. Choosing the 1031 exchange option allows for the entire amount to be reinvested into the next deal, all with capital gains taxes being deferred.
The cycle begins again on another deal, another asset and another investment opportunity to build value for our community and our investors!
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