Investing in Real Estate Syndication
Investing in Real Estate Syndication
Real estate investment can be a tricky business, especially for one person looking to earn a substantial profit. But what if you do not have the capital to purchase a property? There are still ways you can profit from investing in real estate. One of the more common is investing in real estate syndication.
Real Estate Syndication
As the name implies, this is when several investors pool their capital to invest in a single property. A sponsor will create the structure for the investment, raise the capital, and secure all necessary financing to ensure things are running smoothly.
Instead of a property owner, there is the sponsor who acts as manager of the investment. They provide updates on the property, its finances, and distributing the cash flow that is generated. While the profit potential for each investor is less because of the smaller investment, the risk is also reduced as well.
Syndicated real estate investments run the gamut in terms of the types of businesses that may be on the property. What they all have in common is that they are too expensive for a single person to purchase. So, several investors get together to buy the property instead.
There are professional syndicators or sponsors who make the arrangements and do the work necessary to maintain the property. While they usually get a higher cut of the profits, they are the ones putting in the work.
Pros & Cons of Real Estate Syndication
On the plus side, the biggest advantage is that syndication allows you to diversify your portfolio with a fraction of the investment compared to purchasing a property by yourself. You invest less in each property, so you can invest in more properties to increase profit potential while lowering the risk. If one property does tank, you still have others earning a profit.
You can also invest in a wide range of properties that include industrial buildings, apartments, retail stores, and so forth. It also may be easier to sell your share of the investment assuming its an attractive offer when you want to get out.
On the down side, the profit potential is considerably less as well since you are sharing the property with others. Plus, you will need to do your research before making such an investment. This means a considerable amount of work initially, but that may pay off in the long run. Although keep in mind that there are no guarantees.
This means that to minimize the risk, you will need to properly evaluate the potential of the investment. This may require professional assistance to look at the possible risk and reward for getting into a syndication agreement.
Investing in real estate syndication offers a way for those with less capital available to invest in potentially profitable opportunities outside their financial reach. Plus, for many who use this strategy, they can invest in different real estate properties to help lower the potential risk. Real estate syndication is not as profitable as owning properties outright, but it is a means to diversify with less associated risk.
Alexander Bentley leads Remedy Investments™ a private equity fund specializing in operational real estate. Remedy Investments™ has significant expertise in developing Luxury ApartHotels across Europe and the wider APAC region.
Alexander Bentley is the creator & pioneer behind Remedy Wellbeing Hotels & Retreats. Under his leadership as CEO, Remedy Wellbeing Hotels™ received the accolade of Overall Winner: International Wellness Hotel of the Year 2022 by International Rehabs.
Because of his incredible work, the individual luxury hotel retreats are the world’s first $1 million-plus exclusive wellness centers providing an escape for individuals and families requiring absolute discretion such as Celebrities, Sportspeople, Executives, Royalty, Entrepreneurs and those subject to intense media scrutiny.