Real Estate Syndications

Real Estate Syndication.

Real estate syndication offers the opportunity to use private savings into real estate investments for which other financing is not available. It has been a wide spread mode of financing the purchase and sale of properties in upper price brackets. A syndication can be described as an organization or combination of investors pooling capital for investment in real estate. The responsibility, obligation and relationship of the syndicator to the investment group and the investors to each other are determined principally by the form of organization. A typical real estate syndication combines the money of individual investors with the management of a sponsor, and has a three-phase cycle: origination (planning, acquiring property, satisfying registration and disclosure rules, and marketing); operation (sponsor usually manages both the syndicate and the real property); and liquidation or completion (resale of the property). Syndications offer an excellent opportunity for investors to purchase a property who may not have the capital individually to facilitate that purchase. Syndications can be used to turn an otherwise difficult transaction, into a profitable short or long term investment for syndication participants. By pooling limited financial resources with others who are similarly situated, a small-scale investor may participate in ownership and operation of a piece of property that is too much to handle singly or in a joint venture with one or two others. Syndication also offers professional management which might not otherwise be economically feasible for the small investor. Professional management, the basic commodity that the syndicator has to offer, is crucial to successful syndication.