A real estate syndication is an efficient way for investors to pool their money together to purchase larger real estate assets that they typically couldn’t manage or afford to purchase as an individual investor. Generally, by leveraging and raising additional funds from outside investors to purchase it, we force appreciation and then actively manage the asset. Typically 25%-30% of the funds are pooled together from the syndicator and the passive investors, and the other 70%-75% of the funds come from the lender/bank. There are many parties involved in syndication, including, but not limited to, CPAs, lenders, real estate brokers, attorneys, property managers, passive investors (you) and the syndicator who puts the whole deal together and manages the asset.

The General Partners are the individuals who are putting the multifamily syndication opportunity together. They then manage the asset, execute on the business plan and then offer that investment opportunity to passive investors. They are interchangeably referred to as the syndicator, the sponsor, or the operator. Limited Partners or passive investors have no active investor duties in multifamily syndication. The distributions that an LP earns either monthly or quarterly, or any return for that matter are truly passive in nature. The GP or sponsor group is simply providing an opportunity to investors to invest alongside them, into a stable and appreciating asset with no active real estate investing role whatsoever.

There are factors that are beyond our control (e.g., market conditions). There is a risk that you can lose your investment just like the stock market or investing into a new business. However, we believe this to be highly unlikely for several reasons. Firstly, the approach used to underwrite these deals are very conservative and gives us plenty of room to weather a down market. Secondly, we are buying proven assets that provide a return month-to-month or quarter-to-quarter. We are not purchasing a property to tie up all of our cash and hedging that the asset will appreciate. These are cash-flowing properties that provide frequent returns and the appreciation is a bonus.