DW Capital may pool multiple investors together in order to purchase a specific property or set of properties. One way to pool multiple investors together is through real estate syndication.
What is a Real Estate Syndication?
A real estate syndication is when a group of investors pool their funds together to jointly purchase a large property such as an apartment complex or other large assets. In a syndication there are two classes of owners called General Partners (GPs) and Limited Partner (LPs).
General Partners are typically the “sponsors” of the deal and are tasked with identifying opportunities, performing due diligence, performing and validating the financial underwriting modeling, establishing a business plan, finding investors, completing the acquisition, managing the asset, managing the property managers, providing investor relations, and disposition of the asset once the business plan has been completed.
Limited Partners are passive investors who contribute a share of the pooled capital needed to purchase the property in exchange for partial ownership. As part of this partial ownership structure, the Limited Partners can benefit from profits from operating cash flow of the property while the asset is being held, tax benefits from depreciation of the property, and profits from an eventual sale or refinance event.
What are the top 5 benefits of being a passive investor in a real estate syndication?
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- Passive Income – Investors can earn monthly or quarterly income distributions from any cash flow of the property.
- Appreciation – Similar to most real estate, the value of the property may increase over time, which translates into potential higher returns.
- Tax Benefits – As an owner (even a partial owner) of real estate, tax benefits in the form of depreciation are passed down to investors.
- Control – Unlike real estate investment trusts (REITs), with Private Equity funds, or crowdfunding platforms, investors can choose a specific property they want to invest in based on the sponsors, business plan, and personal investing goals.
- Hassle Free – No tenant calls, no late nights. Investors can invest in physical real estate without the hassles of managing tenants or toilets while still enjoying all the benefits of property ownership (income, tax, and appreciation).
Ready to take the next step to start receiving passive income and building wealth without having to answer a single tenant phone call? Schedule an introductory call today so we can better understand how our upcoming offerings may be a fit for your future investment goals.
