A real estate syndication is an investment vehicle that allows for passive investors (called limited partners) to invest into a real estate deal managed by general partners.
After investing, the general Partners operate the property, well sending distributions to the limited partners. This allows for the limited partners to be truly passive in their investment and not be responsible for the day to day management.
What are the Benefits of Investing in a Real Estate Syndication?
There are many benefits of investing in a real estate syndication. When investing into a syndication (typically a larger deal), it allows for smaller retail investors to pool their resources and achieve economies of scale, such as buying an apartment building.
Some of the benefits are higher returns (when compared to traditional investments like the stock market), a lower risk profile, tax benefits, inflation hedge, and a truly passive investment.
How is a Syndication Structured?
A real estate syndication is structured as a limited liability company (LLC), it allows for passive investors to invest into a deal, limiting their liability to what they put into the deal. This means that the losses are limited to what they invest into a particular deal. The general partners are the ones who actually operate the deal.
Who are the General Partners in a Deal?
The general partners are Bronson Equity partners or joint venture partners that operate the deal, making sure the asset performs and working to resolve any issues that come up.
Do the General Partners Invest in Every Deal?
Yes, the general partners are each invested in every deal. However, GP’s often prioritize liquidity because of the banks requirements for the large loans needed for these deals.
What is the Minimum Investment?
$50,000. Many will put the minimum investment in, but some with higher net worth will consider putting more in (often $100K-$500K).
Do You Offer Preferred Return? When do the Passive Investors Start Getting Paid and How Often?
Our deals don’t offer a preferred return and will typically use a profit split. A common split is that 80% to the limited partners, and 20% to the general partners.
Distribution timing varies from deal to deal, but it’s typical to see distributions begin 6-9 months after closing. Distributions are typically paid out quarterly.
What is Your Investment Strategy?
We typically use a “value add” strategy, which means we buy a property that we see some upside (for example – being able to increase rents by $150 per unit with some upgrades) and we hold the property for 5-7 years and then sell.
What is the Investment Process?
The process is that we must have investors join our investment club before we offer a deal. This keeps us compliant with the legal rules (SEC 506B) and also allows us to develop a relationship with each potential investor. Once you JOIN our investor club, we can present you with deals when they come available (typically 3-5 deals a year).
When we have a new deal available, we will email all investors who are a part of our investor club and deals fill up on a first come, first serve basis.
What Kind of Tax Information Do I Receive and When?
After investing in a deal, you will receive a K-1 tax form (a common form handled by CPA’s) by mid-March.
Do I Need to be an Accredited Investor to Invest in Your Deals?
No, we allow for some sophisticated, non-accredited investors in our deals on a limited basis.
Do You Complete a Cost Segregation Study with Each Deal?
Yes, we do cost segregation study on each deal and pass these tax benefits to passive investors based on their investment amount into the deal.
What are the Risks Involved with These Investments?
While this is a great investment class and we do everything we can to reduce risk, there are some risks to be aware of.
Risks are disclosed specific to each deal, but the primary risk is loss of capital (underwriting or performance inaccuracies and other reasons)
Can I Invest Using my Retirement Funds?
Yes, you can invest using retirement funds. However, there are only certain types of retirement accounts that allow for real estate syndication investments. It’s important to look for retirement accounts that avoid UBIT (a tax on debt financed real estate inside your retirement account) and allow for checkbook control. Our preferred account to invest into retirement accounts is the QRP. Use this link to get a free book sent to you about it.
Please reach out to us if you have any other questions at [email protected].
