A real estate syndication is a type of investment in which group of people pool their money to purchase and manage a property.
What is a Syndication
A real estate syndication is a type of investment in which group of people pool their money to purchase and manage a property. By pooling the money, the group is able to buy a much bigger property than they would as an individual.
Benefits of Syndication
Investing via syndication allows an individual to generate passive income as day-to-day management is handled by professionals.
One gets steady rental income as well as chance to make further profit from property appreciation at the time of selling.
By investing with a group, one can diversify the risk of investing as an individual. Additionally, one can get a chance to purchase multiple properties or a bigger property.
One gets all the tax benefits of property investment without the hassle of managing it.
Generally real estate returns are more steadier than stock market returns.
Challenges of RE Syndication
- Syndication company must manage the physical property and the investment pool
- Money invested in syndication is tied to the length of investment which can be multiple years
- Though passive, it is preferable to have basic understanding of real estate finance
- Finding trusted partners is easier said than done
RE Syndication difference with REITS
RE syndication is not same as investing in REITs.
In syndication, a group of people invest in a physical property, manage it, and may sell it in the future. In REITs, one buys shares of a public company that manages real estate portfolio.
Final Verdict
Though RE Syndication allows an individual to reap benefits of passive RE investing, there are chances of losing money in it. Make sure you discuss your financial situation with a registered financial advisor before making any investment decision.
We hope the information in this post will be helpful in your journey of aspiring nirvana!