A real estate syndication is when a group of investors pools
together their capital to jointly purchase a large real estate property. The
syndicator(s) and the passive investors are the two key players in a real
estate syndication investment.
Syndicator(s), also refer to as general partners (GP), are
responsible for structuring and operating the real estate syndication. Their primary
duties are:
- Underwriting
the deal.
- Completing
thorough due diligence on the property.
- Arranging the
financing.
- Negotiating
with the seller.
- Building a
business plan.
- Finding
investors.
- Raising capital
for the transaction.
- Working with
the property management team.
- Asset
management.
- Handing
investor relations.
Passive investors are also referred to as limited partners (LP),
are providing a portion of the capital needed to acquire the property. In
exchange, passive investors receive ownership shares of the property. Passive
investors receive quarterly or yearly passive income distributions from the
asset, as well as a return on their investment upon selling it.
