Real estate is all about profit and money and a real estate syndicate is always about creating value in terms of profits and minimizing tax liabilities (usually).
In the syndicate, the real estate asset is divided into two or more ‘investment units’ which are acquired by the individual investors. It is important to realize that the investment unit refers to the particular asset that is acquired by the investors, and not the underlying real property itself. The precise nature of the investment unit will depend on the form of the syndicate. In essence, investment units represent a fractionalized ownership of one or more interests in real property rather than direct ownership of an entire interest. While real estate syndicates are formed for a variety of reasons, the typical reason is to create a tax shelter. At the base of the syndicate is the relationship among investors. In all real estate syndicates there is some form of contract specifying the relationship between the individual investors and the underlying interest in real property.
As a real estate professional your ability to put together syndicates and front them should be a parallel, constant part of your real estate activities and it can provide a useful level of income for you at almost next to no risk for you and without putting up any money of your own.
In order to create a syndicate you need to find a group of people willing to put up some money. These can be friends, colleagues, family members or people you have met professionally. They can come from almost any walk of life and can be willing to put up any amount. The amount of money they put in will usually reflect their share (and they do not all need to be equal) and the amount of the profits they will each be entitled to at the end.
In creating a real estate syndicate you need to be able to drive a good deal that will minimize the costs and maximize the potential pay-off for everyone and you need to be able to control the terms and conditions so that everyone feels comfortable with the way the syndicate operates, the way profits are apportioned and the way decisions are taken.
As the leader and executive man of the syndicate it will be up to you to drive all the deals necessary to create the profits. Real Estate syndicates are not suitable for every deal but when the right deal comes along they allow you to operate in the best way possible doing what is arguably the best job in the world.
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