FAQs

A real estate syndication is where a group of people pool their resources to purchase real estate – often a large property such as an apartment building – which would otherwise be difficult or impossible to achieve on their own.

A real estate syndication typically involves “General Partners” who are active investors, and “Limited Partners” who are often referred to as passive investors.

An active investor does all the work of finding, structuring, managing, and exiting investments. Limited Partners are passive investors who only invest financially in a deal. In return for their investment, Limited Partners receive an equity share in the syndication along with cash flow distributions.

Investor funds are used for the total acquisition cost of the property. This includes, but is not limited to, the down payment for the actual purchase of the property, acquisition fees, legal and transaction costs, capital improvements, and reserves.

An accredited investor, in the context of a natural person, includes anyone who:

--> earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR

--> has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).

In addition, entities such as banks, partnerships, corporations, nonprofits and trusts may be accredited investors. Of the entities that would be considered accredited investors and depending on your circumstances, the following may be relevant to you:

--> any trust, with total assets in excess of $5 million, not formed to specifically purchase the subject securities, whose purchase is directed by a sophisticated person, or

--> any entity in which all of the equity owners are accredited investors.

A sophisticated Investor doesn’t meet the requirements of an accredited investor, but they have investor experience. This could mean the person believes they have sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the prospective investment.

Distributions are planned quarterly along with reports on the physical and financial status of the property.

As a partner in the LLC that purchases the properties, you will receive a K-1. A K-1 is a tax form used by partnerships to provide investors with detailed information on their share of a partnership’s taxable income. Partnerships are generally not subject to federal or state income tax but instead issue a K-1 to each investor to report his or her share of the partnership’s income, gains, losses, deductions and credits. The K-1s are provided to investors on an annual basis so that each investor can include K-1 amounts on his or her tax return.

Absolutely! “Open Houses” are scheduled allowing investors to visit the property before investing and during the life of the project.