Mortgages & Creative Financing

What is Real Estate Syndication – Really?

Expertise: Mortgages & Creative Financing, Personal Development, Landlording & Rental Properties, Personal Finance, Real Estate News & Commentary, Real Estate Deal Analysis & Advice, Real Estate Investing Basics, Business Management, Commercial Real Estate
170 Articles Written
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

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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…

Ben has been investing in multifamily residential real estate for over a decade. An expert in creative financing, he has been a guest on numerous real estate-related podcasts, including the BiggerPockets Podcast. He was also featured on the cover of REI Wealth Monthly and is a public speaker at events across the country. Ben is the creator of Cash Flow Freedom University, the author of House Hacking, and a noted Multifamily Underwriting coach. Through his company, Source Capital LLC, Ben currently operates $40M of multifamily real estate. Learn more about him at JustAskBenWhy.com.

    Sharon Tzib
    Replied over 5 years ago
    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!
    Ben Leybovich
    Replied over 5 years ago
    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!
    Ben Leybovich
    Replied over 5 years ago
    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…
    Brandon Turner
    Replied over 5 years ago
    I’ll take the blame on the music 🙂
    Ben Leybovich
    Replied over 5 years ago
    What’s wrong with the music – I liked it…
    Sharon Tzib
    Replied over 5 years ago
    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
    Replied over 5 years ago
    What’s wrong with the music – I liked it…
    Sharon Tzib
    Replied over 5 years ago
    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!
    John Horner
    Replied over 5 years ago
    I like the video, I can listen while driving or cooking dinner!
    Ben Leybovich
    Replied over 5 years ago
    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!
    James
    Replied over 5 years ago
    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.
    Ben Leybovich
    Replied over 5 years ago
    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! Reply Report comment
    Ben Leybovich
    Replied over 5 years ago
    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!
    Jake Marmulstein
    Replied over 5 years ago
    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.
    Ben Leybovich
    Replied over 5 years ago
    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 🙂
    Matthew Robertson from New York City, New York
    Replied about 2 years ago
    Love the video idea – you can put it on double speed and don’t have to read. This is coming from someone who reads all day.
    Calvin Lipscomb from Brooklyn, New York
    Replied about 2 years ago
    Excellent video. I am just a bit fuzzy and what separates a syndication deal from GP/LP deal.
    Lisa Bruce from Clearwater, Florida
    Replied almost 2 years ago
    Hi Ben, Thanks so much for your video. I prefer written but either is fine as long as you keep sharing. Did I get this right, syndication is another word for a properly organized Limited Partnership?
    Alan Firth from Mount Pleasant, South Carolina
    Replied over 1 year ago
    Thanks for the video here Ben. That was really helpful.
    Serge Gaba from University Park, Pennsylvania
    Replied about 1 year ago
    Loved the video Ben!
    Linda Nolan
    Replied about 1 year ago
    Hi Ben, I’m new to all of this investing business, my husband Robert is totally disabled with MS & he & I just for the first time attended a real estate investing class & heard about a cash flow analyzer, I think? Would u be willing to post the cash flow analyzer in an article to help us properly analyze our cash flow on rentals please! We need help!
    Vladimir Barman Investor from Staten Island, New York
    Replied 10 months ago
    Great and informative video! Thank you so much for taking your time and sharing such valuable info!
    Rogelio Miramontes from San Anotnio, Texas
    Replied 10 months ago
    Ben, very informative video! There are times when I would rather refer to a written article, and other times when I prefer a video. Your explanation of the difference between a general partnership and a limited partnership, within the context of a syndication, was insightful.
    Rogelio Miramontes from San Anotnio, Texas
    Replied 10 months ago
    Ben, Am wondering …. with regard to limited partners, can their ‘investment’ be structured as a ‘loan’, rather than an equity investment? If this can be done, then what role does Reg D play? Do they still have to be vetted as to whether they are accredited or sophisticated investors? Thanks. Rogelio.
    Tim Bethea Real Estate Investor from Grand Prairie, Texas
    Replied 8 months ago
    Very informative information. I thought the video format was perfect.
    William Weaver Jr from Charleston, SC
    Replied 3 months ago
    Thank you for that explanation Ben! I’ve seen the term syndication thrown around so many times and interpreted in many different ways. You explained it very well and made it easy to understand. Also, thank you for differentiating and explaining the pros/cons of LLC, LLP, and simple partnership. It seems that Cardone Capital is pretty much a syndicate as well. Would you agree?