Table of Contents
In private real estate investing, most groups leverage capital from many sources to get a deal to the closing table. The difference between many groups is the ability to raise capital for strong private real estate opportunities.
In this article, we’ll showcase “what is a syndicator”, and highlight some of the critical roles they have to ensure the project’s success.
Key Takeaways
- In real estate investing, a syndicator would use the investment vehicle of forming a real estate syndication, and the underlying investment would typically be a larger property.
- In private real estate investing, specifically commercial real estate, the real estate syndication company/real estate syndicator wears many different hats and has many responsibilities.
Syndicator Definition
A syndicator is a group or individual who creates an investment opportunity and uses other means of capital, such as private investor capital and bank financing, to pool funds to acquire and operate an investment instrument.
The lead syndicator or manager has the experience and expertise to properly due diligence the opportunity and create and execute a plan on behalf of the passive investors that pooled their funds together.
In real estate investing, a syndicator would use the investment vehicle of forming a real estate syndication, and the underlying investment would typically be a larger property. Any real estate asset class can be syndicated, but commercial real estate assets are generally acquired because they offer the scale of operation, tax advantages, and the ability to focus on larger-priced assets.
Next, let’s look at some of the key tasks for a commercial real estate syndicator.
Some Key Tasks of Real Estate Syndicator
In private real estate investing, specifically commercial real estate, the real estate syndication company/real estate syndicator wears many different hats and has many responsibilities. The following are some of the roles of a real estate syndicator:
- Finding the deal
- Putting together the financing
- Due diligence on the property and the opportunity
- Raising capital from investors
- Operating the deal
- Executing the business plan
- And much more!
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Syndicator of a Limited Partnership
Syndications are most commonly formed through a limited liability company (LLC) or a limited partnership (LP). In a limited partnership, the general partners (GPs) would be considered the syndicator, and the limited partners (LPs) would be the passive investors. The LPs in a limited partnership have limited liability up to the extent of their invested capital. As opposed to the GPs/syndicators who are liable for the debts and liability of the partnership.
What does it mean to syndicate a deal?
To syndicate a deal means to pool capital from an array of investors to purchase an investment instrument. Forming commercial real estate syndications are a great way to acquire more considerable assets with greater stability and a larger upside, depending on the specific opportunity.
Frequently Asked Questions About Syndicators
How do real estate syndicators make money?›
Real estate syndicators make money through fee income such as an acquisition fee, construction management fee, asset management fee, and an equity share in the project’s upside when it performs.
How do I become a syndicator?›
To become a syndicator, you must have the knowledge and expertise to get access to great deals, raise capital, get adequate financing, and create and execute a plan for the proposed deal.
What is a Syndicator - Conclusion
Working with real estate syndicators is a great way to get exposure to the most robust real estate investments without carrying the load of being an active operator. Working with a small handful of trustworthy syndicators enables you to passively grow your capital while maintaining your focus on increasing your active income from your W-2 or business.
Sources
- SEC — Private Placements - Rule 506(b)
- Investor.gov — Private Placements under Regulation D – Updated Investor Bulletin
- Investor.gov — Accredited Investors
- Cornell Law — Regulation D (Wex Legal Encyclopedia)
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Daniel Di Cerbo
Daniel is the Co-Founder and Principal of Willowdale Equity, a private real estate investment firm specializing in Class B & C value-add multifamily assets across the Southeastern U.S. He has been a sponsor on over $150M of multifamily acquisitions across Georgia and Texas.
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