You may have heard of syndication in real estate and how it can be a great investment strategy. But, how to find real estate syndication deals and how to know if an opportunity is right for you?
In this article, we will discuss what this strategy is and walk you through the process of finding and evaluating the types of deals. So, whether you’re a new investor or are looking for new opportunities, read on for useful pieces of information that you will need.
What Is Real Estate Syndication
Before you start your search, it is important to first know what this form of investment is. In short, real estate syndication is the pooling of money from multiple investors to purchase one or more properties. This can be done in two ways.
1. Pooled Investment Vehicle
In this method, the investors come together and form a partnership or LLC to purchase a property. This entity will then own the property and all of the investors will be shareholders in it. This type of structure can offer several benefits, including:
- Reduced Risk – By pooling their money together, investors reduce their risk exposure on any one deal. This also allows for more diversification of their portfolio.
- Increased buying power – Pooled funds allow for larger purchases, which can lead to a higher return on investment.
- Hands-off approach – Once the property is purchased, the day-to-day management and maintenance are handled by the syndicator. This can be ideal for investors who want a more passive role in their investments.
2. Individual Investment
This method, on the other hand, is where each investor would purchase their own share of the property through real estate syndication companies or other legal entities. The main advantage of this structure is that it offers more control to the individual investor. If you’re someone who likes to be more hands-on with your investments, then this may be the right option for you. Other benefits of an individual investment include:
- Increased liquidity – If you need to sell your share of the property, it can be easier to do so with individual investment.
- Tax benefits – There may be some tax advantages to owning your own share of the property.
The main difference between these two types of syndication is how the ownership is structured. With a pooled investment vehicle, all investors own a piece of the property together, whereas, with individual investment, each investor owns their own share of the property.
There are benefits and drawbacks to both structures, but ultimately it comes down to what you as the investor are looking for. If you want more control over the property, then an individual investment may be right for you. If you’re looking for more liquidity or a hands-off approach, then a pooled investment vehicle may be the better option.
How to Find Real Estate Syndication Deals
Now that you know what real estate syndication is, how do you find deals? There are a few different ways that you can go about it. Here are a few of the most common methods.
Working with a Broker
This is probably the easiest way to find real estate syndication investment deals, as brokers already have access to a large network of potential investors. In working with these professionals, be sure to ask about any upcoming real estate syndications that they may be aware of.
There are many websites and online forums that list syndication deals. This can be a great way to find out about new opportunities, but be sure to do your due diligence before investing.
Attending Industry Events
There are often industry events and conferences that you can attend to network with other investors and learn about new deals. This is a great way to get started in real estate syndication if you’re not already working with a broker.
There are many online and offline groups where you can meet people who are interested in real estate syndication.
As you can see, there are many different ways to find real estate syndication deals. The most important thing is to do your due diligence and only invest in opportunities that you’re comfortable with.
The key is to be patient and do your research before investing in any deal. It’s important to remember that not all deals are created equal, so take your time gathering more tips on how to find real estate syndication deals and make sure you’re getting a good return on investment.
What to Look Out For in a Real Estate Syndication Deal
When you’re looking at different real estate syndication deals, there are a few things that you should keep in mind. Here are a few things to look out for:
- The property – The first thing you should do is take a close look at the property itself. Make sure that it’s in a good location and that it’s well-maintained. You’ll also want to make sure that the property is leased to quality tenants.
- The financials – Always review the financials of any deal before investing. Make sure that the numbers make sense and that you’re getting a good return on your investment.
- The syndicator – It’s also important to research the syndicator themselves. Make sure they have a good track record and that they’re reputable.
- The terms – Be sure to read over the terms of any deal before investing. Make sure you understand how the investment will work and what your responsibilities are.
Benefits of Real Estate Syndication
There are many benefits of a real estate syndication investment. Here are just three of the most common benefits.
One of the biggest benefits of investing in a pooled investment vehicle is that, again, you can have a hands-off approach. You don’t have to worry about managing the property or dealing with tenants.
Another benefit of pooled investment vehicles is liquidity. This means that you can easily sell your shares if you need to liquidate your assets.
When you invest in a real estate syndication deal, you’re automatically diversifying your portfolio. This is because syndicated deals typically involve multiple properties, which reduces your risk exposure.
Basic Steps to Getting Started in Real Estate Syndication
Here are the fundamental steps in getting started with real estate syndication.
1. Educate yourself.
The first thing you need to do is educate yourself on the process of real estate syndication. Make sure you understand how it works and what the risks are before investing any money.
2. Find a deal.
Once you’ve educated yourself on the process, you’ll need to find a deal that’s right for you. There are many different ways to find deals, so be patient and do your research.
3. Partner with a syndicator.
Once you’ve found a deal, it’s important to partner with a syndicator who has experience in the industry. This will help ensure that the deal is executed correctly and that you’re getting good returns.
Syndication can be a complex investment system, especially for new investors. However, if you take the time to educate yourself and find a good deal, it can be a great way to earn passive income and build wealth. With the information provided in this article and some due diligence, you now know how to find real estate syndication deals that will help you attain your investment goals.
For more tips on real estate investing, feel free to check out the rest of our articles!