What is Real Estate Syndication?

What is Real Estate Syndication?

A Real Estate Syndication is a very unique opportunity that is special to the United States as most other country do not allow a Syndication to take place, so what is a Real Estate Syndication? A Real Estate Syndication is when a group of investors, or regular people, bring their capital together and purchase a piece of real estate, like an apartment building, pulling together capital helps individuals purchase a much bigger asset than they could do on their own. The Syndication company is also known as the operator, of the asset, the other investors are known as passive investors in the deal. The passive investors do not have to perform any duties inside the operation as their capital is doing the work for them. There is a property management company put in place to see the business plan is executed and brings maximum returns to investors. Think of Real Estate Syndication like buying a business that is already profiting.

Why Real Estate Syndication?

Real Estate syndication has a lot of benefits for an investor. Cash flow is what makes the investors great solid returns on their money. Rental income ,from ongoing tenants, is the main source of cash flow for the business. Investors will receive a percentage of this cash flow, from the asset, that is calculated and distributed to the investors on a monthly or yearly bases, depending on the terms of the deal. Appreciation and depreciate is something that investors enjoy about a real estate syndication as well. Not many people think about depreciation being a great tool, but some investors have cash they many want to depreciate, and not want/need to pay taxes on their cash just sitting in the bank, real estate syndication is a great way to use your cash in this manor.

Is Real Estate Syndication Legal?

In order to invest in a Syndication project, you need to be an accredited investor. An accredited investor is someone who makes over a gross amount of $200,000 a year or a combined $300,000 a year with a spouse for the pervious 2 years. Recently there have been some changes that allow for marketing of opportunities to other investors, as well. These investment opportunities use to be only opened to wealthy individuals on the inside. This means that there are other investment opportunities available for non accredited investors as well.