What is a Syndicate in Real Estate?

In today's parlance, a real estate syndicate is a private securities offering. Typically structured as a limited partnership, it has two necessary components: a general partner (the sponsor or syndicator) and at least one limited partner (the investor). The general partner has unlimited risk and the limited partners bear only the risk of their financial investment. The purpose of the syndicate is to pool money and resources for the purchase of commercial property in order to share cash flow and profits according to an agreement between all the parties.  

Investing as a limited partner (LP) is the vehicle of choice for those with $25,000 or more to invest but have limited time. When you're acting alone or with a few partners in a joint venture, you are finding, underwriting, negotiating, financing, and closing the deal yourself. Most syndications are set up to acquire a single property. By the time such an offering is made to the LP, the sponsor has already identified the property, underwritten the financial plan, negotiated the terms of sale, completed inspections and other due diligence, and will already be working with a lender for the financed portion of the purchase price. All these steps take time and financial resources. One deal out of eight make it to the finish line. If you are running your own practice or business, being an LP in a syndication allows you to focus on a simple go/no-go decision rather than risking time a money on the preceding steps. As a private securities offering, real estate syndications are sanctioned and governed by the Securities and Exchange Commission.