Real estate syndications are ways for the everyday investor to gain access to exclusive investment opportunities that ordinarily wouldn't be found on the open market. At a basic level, it involves pooling capital with other individuals for a common purpose or a common goal. In real estate, that common purpose is the purchase of a real property, a physical building you can see and touch. Here at Momentum Multifamily, we focused specifically on multifamily apartment buildings.
WHY DO PEOPLE INVEST IN REAL ESTATE SYNDICATION?
The biggest reason investors invest in a real estate syndication is access to larger investments than they could typically afford on their own. Not every investor has the time to manage a rental property and they are also looking for more passive income (mailbox money). Additionally, by choosing to invest into real estate syndications, you can access deals all across the country. You can opt to invest alongside experienced operators that have built companies with the infrastructure to manage larger assets.
WHO IS INVOLVED WITH A REAL ESTATE SYNDICATION?
There are typically two groups that are involved in real estate syndications. General Partners (GPs), also known as syndicators, and Limited Partners (LPs), also known as passive investors. The general partners are the ones who go out and put the deals together, while the limited partners get to invest once a deal is under contract and most of the heavy lifting is already complete. Passive investors are the individuals who invest with the general partners/syndicators and own a percentage of the real estate as a result. They get all the benefits of property ownership, but they are not involved with acquiring the property, arranging financing (if there is a loan on the property) and doing day-to-day management.