What Is Real Estate Syndication
Real estate syndications are a way of pooling capital from various individuals to then, collectively, invest in a real estate asset. Syndications are generally a great vehicle for those who cannot or do not want to buy an investment property outright on their own – also known as passive investing.
Think of it like buying an airline ticket. Anyone who has purchased an airline ticket has participated in syndication. Each ticket sold goes toward funding the flight. Some people might pay more or less than others for their tickets. Some people might buy more than one ticket. Yet collectively, the proceeds from the ticket sales are used to pay for the trip.
Several individuals invest in the syndicate, and then the manager of the syndicate (known as the “sponsor”) will then leverage those funds to invest in a real estate deal. Syndications are the original form of real estate “crowdfunding,” a term that only grew in popularity with the advent of online crowdfunding platforms like CrowdStreet and RealtyMogul.
Syndications can be as simple as two people investing together. Others can be much more complex, with dozens if not hundreds of people investing in a specific deal or real estate fund.
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