Syndication is the pooling of investor money where the investor is typically a limited partner and the general partner, or active partner, puts the deal together and manages the business plan to provide a return for the benefit of all investors.
The Private Placement Memorandum is required by the SEC and describes the offering, risks, includes the partnership agreement, investment summary and subscription agreement. It is a lengthy legal document prepared by a syndication attorney. The subscription agreement section includes basic information as to amounts being purchased and percent ownership. The risk section highlights just about every possible risk that could happen.
We model each investment with a 5 year hold period. This provides ample time to execute our value-add plan and then cash flow for a few years while looking for an opportunistic sale. Some investor principal could be returned as early as year 2 from a refinancing event or we may want to continue to cash flow till year 7, if the market is down in year 5.
The minimum investment will depend on each individual deal. However, a common range would be between $25,000-$50,000.
Investor distributions vary from deal to deal but most syndications make monthly or quarterly distributions.
We’ll provide monthly or quarterly email updates on the investment’s progress including renovation status/pictures, rents we are getting, and the distribution amount for the period. You will also receive a K-1 statement from us in each year for your tax filing.
Apartment syndications are very tax efficient. As a limited partner, you will benefit from your portion of the investment’s deductions for property taxes, loan interest, depreciation, etc. We will also use a cost segregation strategy to accelerate depreciation. The tax loss can then be used to offset other income depending upon your individual tax situation. At the time of sale, the partnership gains are treated as long-term capital gains.
Disclaimer: This is not tax advice. We always recommend consulting with a tax professional
Yes – We operate on a core value of treating investors’ money as if it were our own. We invest alongside our clients in every deal.
Yes – We model different scenarios to show our breakeven point for profitability given a decline in occupancy or if rents drop below projections.
Yes – you can invest in real estate with certain retirement accounts. We are happy to discuss how to boost your IRA or 401K investing returns with real estate investing.