What is real estate syndication?
Real estate syndication allows investors to pool their money to purchase a single property — often a large commercial property like an apartment complex, office building, retail center, or industrial facility.
Syndication investors do not directly own the real estate itself, but rather they own a share of an entity — a corporation, trust, or LLC — and that entity holds the investment property. In this sense, a syndicate is a kind of capital fund backed by real estate. It resembles a REIT in the sense that investor capital is pooled, but most REITs hold many properties, sometimes hundreds or thousands, whereas syndicates are typically just one property. REITs are also subject to disclosure, distribution, and tax related regulations that syndicates are not.
A syndicate is usually created and managed by an active partner called a sponsor. Other participants subscribe to (i.e., invest money in) the syndication as a passive investor, with no operational responsibilities for the property.
