As a real estate investor, it is vital that you have access to the capital that you need, when you need it. Having to wait around for funds to come through can truly ruin your best deals, and your plans for the future. This is why being part of a real estate syndication is incredibly important and can give you some of the stability that you need when looking at commercial real estate.
What is it?
To put it simply, real estate syndication is the pooling of funds from multiple investors to funnel into real estate acquisition. Funds used from the syndicate can be used to purchase a property in its entirety, or it can be used as equity in addition to the commercial mortgage which would cover the majority of the project’s cost and overhead. This process allows you to acquire more properties and to grow profits faster than you would AllAtraditionally be able to.
What’s in it For You?
Not only is being part of a syndication beneficial for you as an investor, as someone who is looking to buy property. But it is also beneficial in that you get a lot of perks from being part of this kind of group. One of the benefits is that the return on the investments is usually a percentage of what has been invested by each investor. Depending on how the deal has been structured, the return on investment is realized in the buy and hold process of the property for 3, 5, 7 or 10 years. All of this is based on many factors in the underwriting, lending, and making sure it is a cash flowing asset. The internal rate of return on cash flow paid to investors is based on their percentage of the investment that we project to be strong and they provide steady returns that are typically paid out in quarterly distributions.
There is also something called the Asset Management Fee, and you are paid to not only manage the property that you are working to acquire, but also the actual syndication partnership. It is your job to make sure that the property is running smoothly, and also that your partners are doing their jobs accurately and within the time frame that the syndication has set. The typical fee for this is about 1% of the gross revenue.
These are just a couple of ways that you can benefit from a syndication. But in our experience, it is the best way to acquire property, build your portfolio, and gain access to properties that you would otherwise find outside of your reach. At Magnolia, we seek to work and establish known relationships with accredited investors, who have invested in real estate before and understand the process and risks associated with investing in multifamily assets. We are here to help and can discuss the potential of bringing investors into upcoming properties. Please leave us your contact information and one of our acquisition team members will get back with you quickly.
