The Step-by-Step Process of a Syndicated Investment

[Jorge Abreu]

Step 1: The sponsor announces that the deal is open for funding, usually via email.

Step 2: You review the investment summary deck and decide to invest.

Step 3: You submit your soft reserve, telling the sponsor how much you’d like to invest. Real estate syndications are almost always filled on a first-come, first-served basis. Thus, sponsors use a soft reserve to help them determine who’s interested in investing. By submitting a soft reserve, you are telling the sponsor you’re interested in the deal and want to invest X amount. The soft reserve does not guarantee you a spot in the deal, nor does it lock you in. You can always back out or change your mind later.

Step 4: The sponsor will hold an investor webinar or in person meeting, where you can get more information and ask any questions you might have.

Step 5: The sponsor confirms your spot in the deal and sends you the PPM (private placement memorandum).

Step 6: After signing the PPM, you wire in your funds or send in a check.

Step 7: The sponsor confirms that your funds have been received.

Step 8: The sponsor notifies you once the deal closes and lets you know what to expect next.

Step 9: After you’ve sent in your funds for a real estate syndication deal, your active participation is done. Now you can sit back and wait for the cash flow to start rolling in. Depending on the particular deal, you may receive either monthly or quarterly cash flow distributions, and they may start immediately, or not for a few months.

Step 10: You should start receiving monthly updates as soon as the deal closes. These monthly updates will include information on the latest occupancy and progress on the renovations. Every quarter, you will receive a detailed financial report on the property, and every spring during tax season, you will receive a Schedule K-1 for your taxes, which will report your share of the income and losses for the property

👉Next: Navigating the Private Placement Memorandum (PPM)