Real estate syndication has recently gained popularity among accredited investors who realize they can often significantly improve cash flows and diversification by investing with a skilled operator on larger projects. Working with best-in-class sponsors, it is now possible for investors to access institutional-quality real estate deals anywhere in the country. Saint Investment Group is your inroads to investment in syndication.
A real estate syndication is a process by which a group of investors pool their money together to buy a property or properties. The group is typically made up of a syndicator, who is the person responsible for putting the deal together, and a group of limited partners, who invest the money.
Syndication is similar to the difference between stocks and mutual funds. In single property syndication, like stock in a single company, all investor risk hinges on a single investment. On the other hand, like a mutual fund, a real estate syndication fund allows investors to buy a share of multiple properties, which spreads their risk around for better stability, more diversification, and a higher likelihood of quality returns on the property syndication fund.
In this real estate project, multiple individual investors combine their capital to buy, build, and often renovate a commercial property. With a real estate syndication fund, multiple commercial properties are included in a portfolio that syndicate investors buy into.
Funds like those offered by Saint Investment Group provide more robust capital preservation and lower volatility than investing in a single property. More importantly, we’re seasoned experts at managing a collection of properties within real estate funds, freeing your time and energy. Real estate syndication examples include multiple commercial properties, such as offices, retail space, industrial buildings, apartment buildings, and even student housing on college campuses.
Real estate syndication isn’t a new form of commercial real estate investment — it’s been around for centuries, just not with the use of the internet as a way to learn about them and get involved. Until now, real estate syndication has been mainly operating out of the limelight, especially after the Securities Act of 1933 began regulating them. Before that Act was passed, syndicate organizers, also known as sponsors, could advertise and sell their syndication real estate to anyone.
The regulatory structures set forth by the Securities Act of 1933 allowed for new ways for investors to work together. The Act drove syndication real estate sponsors to build private networks of investor relationships. Often, these networks included successful individuals in their communities, along with successful professionals such as doctors and lawyers. These real estate syndications were built on quality personal relationships.
Perhaps the most famous example of how property Perhaps the most famous example of how property syndication provides more options for purchasing real estate is the syndication investment group that bought the Empire State Building in the early 1960s. Around 3,300 shares of ownership at $10,000 per share gave the syndication the $33 million it needed to purchase all 102 stories of the highly desirable Manhattan property. Each investor had access to significantly larger opportunity zones than they would have had on their own, and the benefits were massive.
There are a few different types of properties that are typically syndicated. The most common type is the multifamily property, which is usually a large apartment complex or group of buildings that contain a number of units. These types of properties are usually syndicated in order to raise the capital necessary to purchase them, as well as to provide a return on investment for the investors. Another type of property that is often syndicated is commercial real estate.
Real estate syndication is a process by which a group of investors pool their money to purchase a property or properties. The group is typically managed by a syndicator, who is responsible for finding and vetting investment opportunities, negotiating deals, and managing the property or properties.
The syndicator typically raises money from a number of different investors, each of whom contributes a certain amount of money to the deal. The syndicator then uses that money to purchase the property or properties.
Real estate syndication can provide a unique investment opportunity, but it is essential to comprehend the legal and regulatory ramifications before investing. Real estate syndication may be considered a security offering, so compliance with securities laws is a crucial factor. This necessitates that the syndicator comply with federal and state securities laws, which may include registering the offering with the Securities and Exchange Commission (SEC) or qualifying for an exemption.
Formation of the syndication entity is an additional essential legal consideration. The most prevalent structure is a limited liability company (LLC), which offers investors liability protection and management flexibility. Additionally, the syndication agreement must define the duties and responsibilities of the syndicator and investors, as well as the terms of the investment and profit distribution.
In addition to legal considerations, it is important to understand the potential regulatory requirements, such as zoning and land use regulations, environmental regulations, and tax laws. Investors should work with experienced syndicators and legal and financial professionals to ensure compliance and minimize risks.
A massive opportunity for accredited investors opened up in 2012 when the JOBS Act was passed. Under the Act, the SEC was directed to begin allowing syndications to engage in public solicitation more openly, with the requirement that nonaccredited investors must be accredited first. This rule change is often cited as the true beginning of the real estate crowdfunding industry, making it far easier for passive investors to gain access to real estate investment opportunities they’d otherwise never know about.
By leveraging new technologies online and connecting people better than ever before, investing platforms for real estate crowdfunding have grown, providing investors with excellent access to quality real estate assets. There’s also the ability to build more transparency, with solid reporting and easy-to-access financials. This offers real estate investors a smarter, better informed, and more secure option for real estate investing than in the past.
The true beauty of real estate syndication is the ability to spread risk over a much larger pool of investors while considerably increasing the potential deal size. Real estate crowdfunding platforms for investment are raising the bar for the level of property investors can buy into.
Another benefit of real estate syndication online is the possibility of investing in syndicate deals anywhere across the country, regardless of where the investor lives. This is a major opportunity for those investors who happen to live in more rural areas or areas with little real estate investment options locally. Some areas of the country are experiencing multiple times the growth of other regions, making some markets significantly smarter and more secure investments than others. Investing in quality syndication affords much greater access for investors.
Managing syndication real estate online lets operators instantly update reports with key performance metrics that provide deep insight into real estate syndication deals and even key decisions. Transparency and reporting through online platforms are light years beyond previous methods of investment in syndication, enabling greater efficiency and scale. Leading real estate syndication platforms include highly optimized workflows, from property acquisition and advanced reporting to collecting rents more efficiently.
When you’re seeking diversification that offers more stability along with raising money, commercial real estate syndication funds are one of the smartest options available to accredited investors. Saint Investment Group can get you started with a solid foundation of passive real estate investment. Reach out to a member of our team today for a step by step guide to real estate and how you can get involved in the commercial real estate market. Saint Investment Group is here to provide you with portfolio diversification and our track record of success.
Frequently Asked Questions:
Real estate syndication offers access to professionally managed real estate assets and the potential for passive income, diversification of investments, and economies of scale through bulk purchasing. Additionally, it allows investors to share risk and cost with others, and to invest in larger properties that may be too expensive for an individual to purchase outright. Check out our article for more resources on real estate syndication as part of a balanced investment portfolio.
Investing in real estate syndication can carry risks such as market fluctuations, property management issues, lack of control over decision making, potential legal disputes, changes in economic or market conditions, changes in laws and regulations, unexpected expenses or repairs, and difficulty in selling or liquidating the investment. It's important for potential investors to thoroughly research and understand the potential risks before making an investment.
In a real estate syndication, investors become limited partners or members of a limited partnership or limited liability corporation. The sponsor is responsible for the acquisition, management, and sale of the property, while investors provide funds and receive a portion of the profits and cash flow generated by the property. The specifics of the investment, such as the form and conditions, may vary depending on the transaction and the sponsor and investors' preferences. Real estate syndication offers investors the opportunity to gain experience in real estate basics and benefit from potential appreciation.
Real estate syndication opportunities are available through online investment platforms, REITs, and connections with sponsors and real estate professionals. Thorough research is crucial to understand the basis, profits, equity, information, and role in any potential syndicate before investing.
The length of a real estate syndication can vary depending on the project and the goals of the syndicator. Some syndications may be short-term, lasting a year or two, while others may be long-term investments lasting five years or more.
The precise form and conditions of the investment might vary depending on the specifics of the transaction and the preferences of the sponsor and investors.
