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.
A syndication is comprised of general partners and limited partners. The general partner or syndicator is the person(s) that prospects investors and deals with the operations and execution of the business plan for the property. The limited partners are passive investors that provide equity and receive distributions for their contributions. Syndications are formed for commercial multifamily and other large commercial real estate transactions because the large amount of capital generally needed to purchase asset is not something that any one person can provide upfront.
Commercial multifamily (5+ units) syndication provides many advantages. One of the main advantages with commercial multifamily is that economy of scale comes into play vs when investing in residential real estate. Right of the bat you can use a single transaction to purchase a large commercial multifamily complex vs multiple transactions for residential properties. Also, multiple units in a single location removes the cost of traveling to multiple properties. Expenses, such as insurance, and maintenance, are lower on a per unit basis due to scale. Commercial multifamily generally has better amenities such as a pool, gym and community events.
Also, after purchasing a few residential properties you will likely run out of capital to deploy and you will need to syndicate. Investors are less likely to be interested in residential properties vs commercial properties. Syndication provides a method for people to invest in large and profitable ventures that is both safe, passive and lucrative.
Copyright © 2024 NuRoots Investment Group | All Rights Reserved
