The investors place a considerable amount of trust in the syndicator, so it is worth reviewing the duties that a syndicator owes to them.Ī real estate syndicate is a way to finance a project or development through private investors. While the investors take a passive role, the syndicator manages the project, usually in exchange for a fee and a percentage of the profits. The person or business that initiates the project is known as the syndicator. Investors in a real estate syndicate pool their money for a particular project, which might involve improvements to an existing property or an entirely new development. ( You can read about the differences between a REIT and a real estate syndicate here). Investors who prefer a more passive role can invest in a formal business structure like a real estate investment trust (REIT), which is similar to buying shares in a corporation, or a real estate syndicate. An investor who joins a project as an owner or partner might take an active role in the project. They can invest directly in a project, becoming a co-owner or creditor. With regard to how they can invest their money, California real estate investors have many, many options. Syndicates may only allow investors to buy in at specific times. Investors can buy into an existing REIT and sell their shares without restriction. A syndicate, on the other hand, might exist for the sole purpose of developing or improving a single property, with the intention of dissolving once the project is complete.Ģ. REITs typically manage large portfolios of properties, with the goal being longer-term holdings. Depending on the type of entity, the syndicator might be liable for the syndicate’s debts and other obligations.Ī real estate syndicate differs from a real estate investment trust (REIT) in at least two important ways:ġ. Several different business forms may be used for syndicates, such as a limited partnership (LP) or limited liability company (LLC), to protect investors against liability beyond the amount of their investment. What Is a Real Estate Syndicate?Ī “real estate syndicate” is a business entity created to manage a property or project, and which seeks financing through investors. Before investing in a syndicate, investors should understand several important features. A syndicate may arise out of a group of investors looking for a project, or it may result from a developer seeking financing for a project from sources other than a bank.
The person responsible for managing the project, and the investors’ money, is known as the syndicator. This could be a new development or the refurbishing of an existing property. Real estate syndicates allow California real estate investors to pool funds to finance a project.
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