Small syndication? What is it?

[Kevin Glassberg]

What are the benefits to small syndications besides the access to knowledge and funds? Are the profits worth it if let's say you divide it between 3 parties?

[Benjamin Aaker]

Hi @Kevin Glassberg. Depends on what you mean by small syndication. The syndication structure allows a principal, or manager, to put together a deal with investors. The investors typically have no vote in the operation of the syndication. They have few liabilities if the deal fails. The principal takes on the liabilities, but gets a share of the cash flow and equity for his or her work.

With 3 parties, one would be the principal and the other 2 would be investors. Syndications are fairly complex and should be assisted by an attorney. The fee for this is minimum $10,000, so a 'small' syndication might not make this fee worth it. I've done what you might call small syndications with < 10 investors and think they are fantastic. The deal should be around 1M purchase price before it's worth it to do this type of deal, in my opinion.