Reason 6 - Risk Reduction

[Jorge Abreu]

Reason 6 Why the Wealthy Invest in Real Estate!

✨ By investing with other investors through a syndicator, that you have vetted and has a proven track record, investment risk is dispersed among all the investors. Syndication allows you to adjust your investment to a more comfortable risk level. 🙌

We all know that using an entity such as an LLC is advisable when investing in real estate. However, when you invest in a real estate syndication, you add another layer of protection between you and any liability resulting from actions taken from the deal sponsor or debt obligations.

In real estate syndications, there are typically at least two different type of shares in the operating agreement: the “B Class,” which lists the managing members who are responsible for the decisions behind the fund, and the “A Class,” which lists the investors who bring only capital to the table. There shouldn't be any circumstance that “A Class” investors would be responsible for making management decisions of the fund, and, therefore, under no circumstance would a judge find the “A Class” investors liable for decisions made during the fund’s performance. This way you are completely removed from any lawsuits that may arise due to fund-related activities. 🙌