Real estate syndication is a strategy where investors pool their money to invest in larger property projects. It can be a great addition to your investment portfolio for passive income. A sponsor, or General Partner (GP), leads the syndicate and is responsible for identifying investment opportunities, raising capital, managing the property, and selling the asset.
Investors, known as Limited Partners or LPs, contribute capital and receive income distributions from the GP regularly. LPs are typically accredited investors, institutions, or both, and their involvement in the property is limited. It’s important to carefully evaluate the terms of any syndication and research the sponsor and investment opportunity before investing.
Syndications offer regular cash flow and tax advantages like owning property, with the liquidity of Real Estate Investment Trusts (REITs). Compared to owning rental properties or REITs, syndications can provide the best of both worlds. However, they are typically illiquid and have high minimum investments.
To choose the right syndicator, consult a licensed financial professional, research the sponsor and investment opportunity, and engage with the syndicator on social media. Syndications typically provide returns through cash flow and appreciation. Returns can vary, but a strong annual yield is typical and is paid out in monthly, quarterly, or annual distributions.
At AARE Real Estate Services, we can pair you with an investment group and manager that meets your investment goals. We will ensure you have a competent, trustworthy, flexible, and skilled investment professional at your side. Before committing funds, do your homework and evaluate the terms of any real estate syndication carefully.
