We have talked about real estate syndications in a previous blog, but today I want to dive a little deeper and explain it a little more in depth.
If you are new to investing you are probably wondering what a syndication is—well, its when a group of investors decide to work together and consolidate their money to purchase a large real estate property, i.e. multifamily housing. Syndicators are also referred to as general partners (GPs). These partners are responsible for a few things: underwriting, finding investors, raising capital for the transaction through equity investors and loans and building a business plan. As one can see, the real estate syndicator handles everything from finding the property all the way to the closing and managing the asset beyond closing.
Real estate investors in the syndication are referred to as limited partners. Limited partners are passive investors who provided a portion of the money to acquire the targeted property. In exchange for investing their money, the passive real estate investor receives ownership (equity) shares in the property. With owning a percentage of the property investors receive, monthly or quarterly (depending on the contract), passive income distributions from the asset, as well as a return on their investment upon selling it — all while achieving equity pay down, appreciation and real estate tax benefits.
But there is a catch when it comes to real estate syndication—for most, you must be an accredited investor. There are a few requirements that you need to be considered an accredited investor; you must have an annual income of $200,000, or $300,000 with a spouse, or a net worth that exceeds $1,000,000.
Some syndications allow non-accredited investors but are not permitted to have more than thirty-five. To qualify as a sophisticated investor, you must have in-dept knowledge and experience of real estate and investing, in general, and knowledge of the investment transaction.
If you think that this is something that interests you and you meet the qualifications that are mentioned above, want to know if you meet the criteria or have any questions at all, please contact us at Info@pqpllc.com or call 888-840-6612.
