Real Estate Syndication
Real Estate Syndication is the partnership between a group of investors pooling their resources into a single investment. Organized by a syndicator, also referred to as the sponsor or general partner, who deploys the capital, syndication is an opportunity for accredited investors to earn passive income from commercial real estate without the hassles of being a landlord or property manager. The amount an accredited investor can invest is dependent on the size of the deal.
Syndication is often used in real estate transactions through companies such as EquityMultiple. This is due to the amount of capital required being beyond the means of most individual investors. By pooling resources into a single fund, investors are able to own a share of a property that they might not be able to otherwise.
Benefits of Real Estate Syndication
There are several benefits to investing through syndication, most notably access to deal flow. Because they are professionally managed, syndicators are responsible for the research and underwriting that goes into finding a deal, leaving passive investors to only worry about personal due diligence and identifying offerings that fit into their investment strategy.
Investing through real estate syndication also leads to greater diversification. With pooled capital, each investor is able to partake in deals they could not on their own, as well as gain greater exposure with more investments across different types of real estate. At the same time, they retain control over which properties their money is invested in, unlike investing through REITs.
Real estate investment is often associated with the inconveniences of being a landlord and the need for in-depth industry knowledge. Investing through syndications, however, offers all the benefits of real estate property ownership, without the day-to-day management. Real estate investors can receive passive cash flow and tax benefits without ever dealing with the operations of the commercial property.
Bottom Line
While there are several benefits, every investment carries risk, so due diligence is a critical piece of investment decisions. EquityMultiple is committed to working with experienced sponsors to offer the highest quality investment opportunities.
Made possible by the JOBS Act in 2012, real estate syndication has changed the real estate industry, making investing accessible to more than the ultra-wealthy and connected.
Note: In a strict legal sense, The JOBS Act’s Title iii exemption – the so-called “crowdfunding exemption” – led to crowdfunding platforms that offer investments to non-accredited investors. While EquityMultiple is frequently referred to as a crowdfunding platform, we only offer investments to accredited investors, facilitating and participating in real estate syndication.
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