Private real estate investing is an interesting a lucrative form of investment if it is done correctly. Utilizing syndication is a great means to acquire a large buying power whilst also mitigating potential risks that could solely fall onto one person. There are many different types of real estate syndication investments and understanding each will assist you in deciding on the best investment for your needs.
Real estate investors often have to balance the risks and benefits that may exist before deciding on a potential estate asset. Investing in an estate can often be quite expensive for a single person to handle so a pool of investors and syndication investment is often an innovative solution to this problem.
The Definition of Real Estate Investing
Private real estate investing involves the process of investing in various forms of real estate. This can range from raw property holdings to developing real estate projects and injecting funds into struggling properties. When done correctly, real estate investing is an investment opportunity that can be a lucrative and effective means of investing that has many benefits.
The one downside to this form of investing is that it is quite difficult for a single person to partake in it due to the large buying power needed to secure a specific estate asset. There are many ways around this, however, and such ways include pooling money together with other trusted investors in order to raise and strengthen the total power that they have within the market.
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A real estate syndicate is an investment type in which a group of investors gets together to purchase an asset or investment together. Syndication can be used for many different forms of investment such as buying a sports team, private property, vehicles, and all other assets under the sun.
Syndication is an effective method because it shares the overall cost of the asset across a large group of people whilst boosting the buying power that they have.
To think of it in a real estate investing manner, imagine that you have 50k dollars that you would like to invest in real estate. It can be quite difficult to obtain the buying power needed to make any investment that is worthwhile and beneficial.
If 10 people were to combine 50k each, the group would have a total of 500k and a purchasing power of around 2 million. This makes a massive difference in the assets that the group is able to obtain over the individual investor. Since the real estate market is often expensive and can vary in size, having reliable syndication is an effective and easy means to beneficially invest in real estate.
There are many different types of real estate syndications that one could look at. Each investment type varies from one to another and identifying which investment would be best suited for you is a great means of securing an effective and beneficial investment.
Let's have a closer look at the real estate syndication investment types, what they are, and what they offer.
The scale of the investment is always an important factor to determine first. Depending on the scale of the investment property, the buying power needed can drastically change. A small-scale investment can include things such as a small family home or other small buildings.
These small-scale purchases often do not need that many investors as the total cost for the property is often at a realistic and affordable rate for many investors. Small-scale investments are often used in multi-rental occurrences where a syndication group will have multiple small assets that provide a larger passive income when grouped together.
Large-scale real estate market assets include massive commercial buildings and apartment buildings that may have a high acquisition fee that requires a large number of investors as opposed to an individual investor.
Since the positioning, location, and size of the building plays a crucial role in determining the purchasing power needed, a large syndication group with a high enough buying power is a good means to secure the asset.
These large-scale assets are often divided based on a percentage that is determined beforehand and investors will always know what stake in the asset is owed to them.
Multifamily syndication is just as the name implies, it deals with assets that are able to hold multiple families. These types of property are an important and great asset to any serious real estate investor.
As mentioned before, the size of the asset matters. Whilst a single-family asset may not provide a lot of return and profit, this is not the case for multifamily syndication. These large rental properties, such as apartment buildings and complexes, are often run by a team of investors who all have a stake in the ownership of the asset.
What makes this form of syndication so effective is that the rental property is able to generate a much greater monthly income that is shared across all passive investors, although the entry acquisition fee for the building is quite high.
The amount that an investor receives is based and determined on the prearranged percentage or split that has been decided, but often offers a higher return on investment. There are two types of these investors; accredited investors and non-accredited investors.
In this syndication type, there is often no prior investing experience needed as it is open to anyone that wants to invest.
Single-family syndication is often a small-scale investment project that deals with a single property. Since single-family assets are only able to house a few occupants, the total amount that the asset makes is far lower than that of a commercial or multifamily estate.
The benefit to this however is that it does not require purchasing power and investor capital that is as high as the previously mentioned two. In some cases, syndication may pool funds together in order to purchase multiple single-family assets. The main reason for this is because of high-speed house flipping and property selling.
There are two main types of single-family syndications that we will have a closer look at; house flipping and rental income.
House flipping and property reselling sometimes form the classic bread and butter of many private real estate investment plans. Although this can be done on your own, syndication provides a great means to tackle this at a larger scale.
With a syndicate that has a higher purchasing power, more property is easily attained and the speed at which the property is flipped and resold is much faster.
The other form of single-family asset is rental. This involves the purchasing of an estate asset to rent out to potential buyers. As mentioned before, syndication has the large pool of funds and purchasing power needed to acquire a large number of private single-family properties.
This means that although each asset may not generate a vast amount of returns, this is negated by the high number of assets acquired by the group.
Commercial property refers to office complexes, warehouses, and buildings within the central business district and around the chosen areas. This is another large-scale investment type that is appealing to many real estate investors.
This form of investment can have a high yield as, depending on the building type and size, can produce a large monthly income from rent. Just like multifamily estates, this is often rented out to businesses and corporations that need the space for their daily business practices.
Much like multifamily estates, this massive asset can be acquired through syndication with a large enough buying power. The profits are also split based on the predetermined amounts and percentages of the deal structure.
One key factor to be vigilant about is the current issue of working from home versus returning to the office. Since a large number of the population has opted to work from home, this could affect the performance of many commercial real estate properties.
While this form of investment is still lucrative and beneficial, it is also important for a passive investor to weigh the possible risks and benefits involved.
We are a pool of investors that seek to invest in various forms of real estate. Investing in real estate can be a tricky and daunting task to undertake.
At Saint Investment, we provide our investors with an online platform that utilizes cutting-edge technology to bring them the information and tools needed to make the right investment decisions.
Quality real estate assets are often reserved for institutional investors, but we have centered its goal around providing investors with quality estate assets that provide a stepping stone toward success.
Whether you are a new investor or an experienced investor, getting in touch with our team can give you the push that you need in the right direction toward a more successful real estate investment future.To get started on your real estate syndication investing, email us at general@saintinvestment.com or contact us at 949-881-7128 at Saint Investment today!
A master in Investment, Marketing, and Capital Raising.
Nic has honed his focus on the Real Estate and debt markets with Saint Investment Group and pursues large-scale Distressed Asset purchases with his partners and syndications.
