Syndication
Pooling capital from multiple investors to purchase a large property, managed by a sponsor or general partner.
Definition
A real estate syndication is a partnership between a sponsor (general partner) who finds, manages, and operates the investment, and passive investors (limited partners) who contribute capital. Syndications are commonly used to acquire larger assets like apartment complexes, self-storage facilities, or commercial properties that individual investors could not purchase alone. The sponsor typically earns an acquisition fee, ongoing asset management fee, and a share of profits (called a promote). Passive investors receive preferred returns (often 6-10%) and a share of cash flow and appreciation. Syndications are usually structured as LLCs and governed by securities regulations.
Related Terms
Joint Venture
A partnership between two or more parties to jointly invest in a specific real estate deal.
LLC
A Limited Liability Company — a business structure that separates personal assets from investment property liability.
Passive Income
Income from rental properties or businesses in which the taxpayer does not materially participate.
Cap Rate
The ratio of a property's net operating income to its market value, used to estimate return potential.
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