What is Syndication
Syndication is explained by a public newsletter published by BDO Seidman, LLP. Accountants and Consultants, which elaborates: “The syndication process – aggregating capital from a group of investors to acquire & develop a property – is seeing new popularity as real estate increasingly is viewed as a fourth asset class in addition to stocks, bonds and cash. Real estate investment trusts (REITs) are an attractive way to invest in real estate, but their publicly traded shares are subject to a significant degree of price volatility that many investors seek to avoid. By contrast, shares in a private syndicate, typically real estate limited partnerships (RELPs) are not priced to market on a daily basis and in addition offer the possibility of higher returns than publicly managed real estate. Finally, private syndicates offer some tax savings unavailable when investing in a public company. “
Advantages of Syndication
- Investors get an unprecedented access to invest in lucrative real estate development projects which otherwise may be out of their reach.
- Investors do not need a big down-payment.
- Investors do not need to secure a mortgage.
- Investors do not need to be involved in the hassles of getting approvals & permits for the development.
- Investors do not need to face any construction issues related to the development.
- Investors do not have to deal with tenant & property maintenance hassles.
Everything is taken care of by the syndicate.