What is Real Estate Syndication and How Does Work?

Real estate syndication is an investment method that allows investors to pool their money and share in potentially massive profits.

At some point in your life, you may find it hard to generate more cash flow on your own. This could be when real estate syndication comes into play.

What is Real Estate Syndication?

In short, real estate syndication is when a group of investors comes together to pool money and efforts in order to invest in real estate. By forming these kinds of partnerships, real estate syndicators achieve more together than what they could as individual investors.

When a group of real estate investors comes together to partner up and take on a large project, it’s called a real estate syndicate. In real estate syndicates, there are usually two parties involved: the sponsors and the group of investors.

Commonly, the sponsors put in around 10-20% of the equity but are in charge of almost every part of the deal. On the other hand, the group of investors need to put up 80-90% of the money in the deal but are otherwise very passive investors.

How Does Real Estate Syndication Work?

Usually, real estate syndication deals are structured as a limited liability company or a limited partnership. The sponsors act as the general partners (or GPs) and the investors are limited partners (or LPs).

This setup is very similar to that of private equity funds. In fact, there are some private equity funds that focus exclusively on real estate syndication!

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