What is Multifamily Syndication
Syndication is the process and means for the investors to puddle their intellectual and financial resources in order to invest in different projects and properties which are much bigger in size and magnitude than what they can manage on their own. The concept of syndication in the domain of real estate has been there for many years, prior to the advent of crowdfunding, it was difficult for individual investors to access syndicated investments.
How to Investors make money through Syndication?
The rental income which is generated from a syndicated property is distributed among the investors by the sponsors on a quarterly or monthly basis according to the terms. With time, the value of a property tends to increase. As a result, it becomes possible for the investors to net higher rents for earning larger amounts of profits when a particular property is being sold.
How and when do investors get paid?
It is the time for the investment to get mature that determines the payment. There are some types of syndications which get over within 6 months to a year while there are others that might take as long as 10 years. Every single one who has invested gets his share of profit.
Statistics of Real Estate Syndication
- In 2017 more than 45,000 investors participating in syndication
- The average offering of real estate was more than 2.4 million
- More than 5 to 20% of the initial capital was invested by the sponsors
- 80-90% of the initial capital was invested by the passive investors
- 8% was the average preferred return
The process of syndication is one of the most effective means of allocating funds and resources and when it comes to multifamily property, it happens to be the most popular way. Multifamily properties are bigger in terms of size and hence more resources are required to invest