Passive Income Pro Series, Simple Syndication
What in the hell is a syndication? A syndicate? That sounds like something illegal.
Well, guess what? It’s not.
In fact, quite simply, it is the, single, best, investment vehicle available today.
A syndicate, or a syndication, is a general term describing a group of people or companies that come together for a particular business objective.
When we’re talking about a real estate syndication, the best way to understand it is this.
For any real estate deal, you need 3 big picture things.
Typically, real estate developers have time and knowledge. Real estate is what they do and its what they know. At some point, they run out of their own capital.
Typically, we, as busy as hell, high income professionals, have no time. No real estate investing knowledge. But, we do have capital.
THIS, is where the magic happens.
A real estate syndication is a partnership between investors that combine their time, knowledge and capital together to purchase and manage a property or properties that they otherwise could not as individuals.
Those investors are primarily split into two categories, passive investors who have the capital, and active investors (referred to as developers earlier) who have the time and the knowledge.
Real estate syndications are investment offerings of securities, and therefore they are governed by the Securities and Exchange Commission, the SEC. That’s why it’s always a good idea to have a great attorney involved with these types of transactions, and that’s a good question to ask your active investing partners before getting involved.
I want to keep it short and simple today.
Syndication is a scary word to some. I even know some active investors that won’t even use that word because they don’t want to overwhelm or scare passive investors away.
But I know you guys. Y’all are smart. You are intelligent, and I know you can handle the truth.
At the end of the day, real estate syndication is simple a vehicle for you as a passive investor to partner with active, expert real estate investors who will find, finance, close, rehab, manage, and sell quality commercial properties that otherwise you may not have the ability, desire or time to own and operate yourselves.
By partnering, you’ll be able to bypass that “turn key” 1200 SF single family house in Detroit and instead acquire a 300 unit apartment complex in Charlotte.
You’ll get access to larger, higher quality, commercial properties, economies of scale, superior contractors and property managers who hold themselves accountable, diversification of markets and asset types, stable and consistent cash flow, forced appreciation and one of the most important things that people overlook, the tax benefits.
I hope that helps.
Until next time, enjoy the journey.