Question 1

What is a real estate syndication?

Accepted Answer

The pooling of money from multiple investors who form a partnership to purchase real estate such as a commercial multifamily building. Typically for apartments, a syndication is a partnership between general partners and limited partners.

Question 2

What is a General Partner (GP)?

Accepted Answer

General partner is an owner in a partnership who has unlimited liability. For real estate syndications, the general partner organizes the syndication, secures financing and manages the property. The general partner is also referred to as the sponsor or operator.

Question 3

What is a Limited Partner (LP)?

Accepted Answer

A partner whose liability is limited to their share of ownership. In apartment syndications, the limited partner is a “passive investor” who funds a portion of the equity investment.

Question 4

Who can invest in a syndication?

Accepted Answer

Accredited and unaccredited investors are allowed to invest. An accredited investor is someone who has an annual income of $200,000 individually or $300,000 jointly with a spouse or a net worth of at least $1 million, not including your primary residence. Unaccredited investors or sophisticated investor is someone with sufficient investing experience or education to weigh the risks and benefits adequately of an investment. A sophisticated investor must have a pre-existing relationship with the syndicator/sponsor.

Question 5

When do the limited partners/passive investors get paid?

Accepted Answer

The frequency varies based on the project; however, we typically make quarterly cash flow distributions. The first distribution will be paid once the property is stabilized and has positive cashflow.

Question 6

What is the minimum investment amount?

Accepted Answer

Typically, $50,000, but could be as low as $25,000 depending on the deal.

Question 7

How long is the investment?

Accepted Answer

Typically 5 – 7 years. Depending on the market conditions and return projections, it could be shorter or longer.

Question 8

Is multifamily a risky investment?

Accepted Answer

Every investment has risks involved. There are no guarantees that you will lose or make money with any investment. However, multifamily has proven to be one of the most stable, lower risk investments compared to other asset classes and less volatile than the stock market. In addition, we always invest our own money into every deal and conservatively underwrite to minimize the risk.

FAQ

Frequently asked questions