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What is Real Estate Syndication – Really?

by Ben Leybovich on April 29, 2014 · 12 comments

  
What is Real Estate Syndication

I think I’ve said it before, though I don’t remember where or why – world of Real Estate Investing is a confusing one.

Have you noticed this?  All of the double meanings, ambiguities, and every kind of uncertainty that one can think of is presents in abundance.

The same term can and often does mean different things to different people, depending on their background and training, and different terms can in reality represent the same – it’s downright silly at times…

“Television preachers with grey hair and dimples, God’s honest truth is it ain’t that simple…” ~ Jimmy Buffett

One of the flavor of the month buzz words flying around on the BiggerPockets forums lately is Syndication – everyone wants to know what it is, everyone wants to do it, and a bunch of people claim that they have done it.  Let’s talk about it – shall we?

What is Real Estate Syndication?

In principal, to syndicate, as this relates to real estate investment, is simply an act of pulling money together from partners/investors to accommodate acquisition of assets.

RelatedTo Syndicate or Not – This is The Question (What Would You Do?)

This is the basic premise, but there are many ways to accomplish this stated objective, each with accompanying benefits, and drawbacks.  I explore some of these similarities and differences in the forthcoming video – please enjoy…

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{ 12 comments… read them below or add one }

Sharon Tzib April 29, 2014 at 11:50 am

Hey Ben! I definitely prefer the written word because it’s easier to refer to later, but once in a while, seeing your smiling face is nice :) I will say that whatever that music was in the background was a tad annoying…

So question. I also see on the forums that the days of non-recourse are gone for syndicators, so you’re saying the sponsor must provide recourse for all their deals? Or are you finding that statement not to be true (i.e. there are lenders offering non-recourse). I’ve also heard you can offer an investor 2-5% to provide recourse on a deal. Not sure if you’ve ever heard of that either. Thanks!

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Ben Leybovich April 29, 2014 at 12:10 pm

Hi Sharon – I would think that my smiling face is way better than a boring article :)

The recourse, if there is recourse, is most often to the syndicator(s)/general partner(s), but not to the LPs. Read next week :)

Thanks so much Sharon!

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Brandon Turner April 29, 2014 at 4:37 pm

I’ll take the blame on the music :)

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Ben Leybovich April 29, 2014 at 7:34 pm

What’s wrong with the music – I liked it…

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Sharon Tzib April 30, 2014 at 7:50 am

Honestly I thought it was your cell phone going off or your kid in the background playing with their xylophone lol! It wasn’t obvious to me it was production music. Since I hang on your every word, Ben, any little distraction is hard to tolerate ;)

Looking forward to next week’s article about handling recourse as it pertains to syndication deals. Thanks guys!

Ben Leybovich April 30, 2014 at 10:19 am

Sharon – you flatter me!

Joshua and Brandon – please take note. I believe this showcases the extent to which I am totally indispensable to the BP Nation; just sayin’…:)

Sharon – the only constant in my life is that I am always cognizant that I don’t know what I don’t know. Everything else comes and goes, but this reality is always present. Keep an eye out for next Tuesday please…

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John Horner April 29, 2014 at 11:54 am

I like the video, I can listen while driving or cooking dinner!

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Ben Leybovich April 29, 2014 at 2:17 pm

Nice – I should put a nice bottle of wine right next to me when I do the next one :)

Thanks a lot for watching John!

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James April 29, 2014 at 12:00 pm

Ben, great topic! In regard to the video, I found it even better than an article, because the level of communication is at a higher level. I like using different mediums/technology for enhanced communication also. It was just the right length of time too…about 10 minutes.

Syndication has been a burning question of mine, so your information is very timely. I have been in the rental market for years and am comfortable with that area of real estate. I now want to branch out and have started doing research. Wholesaling is not for me and neither is flipping houses, so your explanation about syndication is exactly what I was looking for. Now I will need to look for others in my area who are also interested in this. Thank you for the timely information.

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Ben Leybovich April 29, 2014 at 12:15 pm

Hey James!

I actually tend to agree with you about the different mediums, though I think that we are in the minority. I think most folks reading BP are doing so at work where they would get in trouble for watching a vid, but can sneak a few articles :)

I’ll do a few vids from time to time, and I’m excited to hear that you found thins one useful!

Thank you indeed for watching!

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Jake Marmulstein April 29, 2014 at 12:59 pm

Ben, great video! When do you think it becomes worth it to take out time and money to set up a syndicate? Even after the initial time investment to get things up and running, we found out that you still have a lot of administrative burdens that continue to cost you money.

We ended up creating our own in-house technology to take advantage of 506c solicitation and reduce some of these costs. Would love to show it to you at some point.

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Ben Leybovich April 29, 2014 at 2:19 pm

Hey – I would love to see! Look me up and let’s chat for sure Jake.

When is it worth it – when this type of “cover my ass” becomes important to you :)

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