💰 What is a Real Estate Syndication and How to Invest?

by | Mar 8, 2023 | Investing Advice | 0 comments

If you’re interested in real estate investing but don’t want to manage a property yourself, real estate syndications might be a good option for you. In this article, we’ll break down what real estate syndications are, how they work, and how to invest in them.

 

🏠 What is a Real Estate Syndication?

A real estate syndication is a partnership between a group of individuals or companies who pool their money together to purchase a property. The group is comprised of syndicators (general partners who spearhead the transaction) and passive investors (who provide capital and receive equity in the property). The property is typically held for 3-10 years, after which it is sold for profit.

 

🤔 How is a Syndication Different from a REIT?

A real estate investment trust (REIT) is structured like a mutual fund, where investors can buy shares in multiple properties. In contrast, real estate syndications provide investors with equity in a specific property, potentially yielding higher returns and greater control over investment decisions.

 

💰 How Do Real Estate Syndications Make Money?

Both syndicators and partners make money through property appreciation and rental income. Income is distributed at regular intervals and investors receive their share of profit upon the sale of the property.

 

👍 Pros of Real Estate Syndications

  • Passive income: rental income growth provides a source of passive income
  • No hassle of managing property: benefits of owning property without tenant or property management
  • Control over investment: investors choose where their money goes and what type of property to invest in
  • Appreciation: strong management and property improvements can lead to increased property value
  • Tax benefits: potential tax benefits for investors due to syndications being structured as Pass-Through Entities

 

👎 Cons of Real Estate Syndications

  • Illiquid: syndications are less liquid than REITs and require a 3-10 year holding period
  • Eligibility requirements: investors must be accredited or sophisticated

 

🤝 Who Can Invest in a Real Estate Syndication?

Investors must be accredited or sophisticated, with an annual income of at least $200,000 (or $300,000 with a spouse) or a net worth of over $1,000,000 (excluding primary residence). Additional SEC approved criteria may also qualify investors.

 

💸 How to Invest in a Real Estate Syndication?

Invest with an experienced group with a strong track record for success. Colony Hills Capital is an expert in real estate investing and aims to provide consistent and above-average passive income to its investors. Contact us to learn more about investing in our properties or funds.

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