As an investor, there may come a time when your resources are tapped and you’ve reached the limit of how much you can grow on your own. Real estate syndication may be the answer.
Real estate syndication (or property syndication) is a partnership between several investors. They combine their skills, resources, and capital to purchase and manage a property they otherwise couldn’t afford.
There are usually two roles in property syndication: syndicator and investor. The syndicator is also known as the sponsor.
Your skills, abilities, wherewithal, and amount of available capital determine which you’re best suited for.
Other members of the deal provide the money to buy, renovate, or operate the property. Once it’s stabilized or sold in a predetermined exit strategy, the syndication is complete. Those members expect to have a passive role in which they invest their cash and receive a monthly or quarterly return.
Whether the sponsor put in money or not, he or she also gets a piece of the deal. But before getting paid, the sponsors give the other investors an annual “preferred return” as high as 10%.
