Real estate fund ( syndication )

[Jermaine Johnson]

How does a real estate fund or syndication work? looking to chat and gather information 

[Greg Scott]

All funds are syndications but not all syndications are funds.

In a syndication, the General Partner or Sponsor collects money from investors to purchase an asset.  The General Partner must comply with SEC laws.  They manage all aspects of the investment on behalf of the investors until the investment is wound up.

In many syndications the General Partner is trying to buy a specific asset. A Fund is simply where the General Partner is collecting a pool of money, often a large pool of money, to invest in future investment opportunities they may find.

Personally, I don't like Funds for a lot of reasons. Here are a few... First, since a Fund is often raised over a long period of time, you have to trust the GP is doing the math right on who "owns" what profit. Also, I've seen a lot of Funds buy properties I wouldn't touch or I've seen them dramatically overpay for others. Since you are investing in unknown assets when you send in your money, you are unable to underwrite the deal yourself. I've seen a lot of Fund people say the reason you want to get in the Fund is because they typically have 3 base hits for every grand slam so if you are in a Fund, you are almost guaranteed to get at least one grand slam. Since I've gotten good at underwriting deals presented by a GP, my passive investing track record is better than that. My average is about 200% profit in 36 months for an IRR of around 50%.