What Is Real Estate Syndication? How It Works, Benefits & Drawbacks

Owning real estate for investment purposes can be a great path to wealth. Depending on the property, it can generate predictable cash flow, capital gains and provide tax benefits.

Real estate syndication may be attractive to someone with capital who prefers to be a passive investor rather than getting involved in an investment property’s operational aspects.

Yellow Bridge

What Is Real Estate Syndication?

The structure of real estate syndication consists of two groups: syndicators and investors.

The Syndicators

Syndicators are sponsors of the real estate syndication, organized as a Limited Liability Company (LLC) or partnership.

Passive Investors

Passive investors or limited partners (LPs) receive proportionate ownership interests and get monthly or quarterly income distributions from the rental income of the asset

Individual properties may work as part of a real estate syndication, including:

– Single-family or multi-family rental properties – Commercial property – Industrial buildings and parks – Hotels

Becoming part of a real estate syndication was challenging unless you knew someone in the investment company or had a financial advisor who opened the door to real estate investment opportunities.