How long does a real estate syndication last?

Question

Unlike an online stock, ETF, or mutual fund that can be exchanged daily or more, real estate syndications come with required, projected hold times. While each real estate syndication is different, we typically see hold times of 5-7 years, sometimes longer.

Real estate syndication deals have to allow time for property renovations, management changes, occupancy rate increases, and even market conditions to adjust. This means that you should plan to invest your capital for 5-7 years (or the timeline stated on the investment summary & memorandum), because you will not be able to take your money out until the asset is sold.

Todd Dexheimer · Answer

Not sure that there is readily available data. I think the biggest change is the fact that it's all over social media, podcasts, youtube, etc. 20 years ago none of that media was around, so it was literally just your friends and family network. I know plenty of people that have been syndicating 20+ years, but they have their network and don't use social media like the younger generation of sponsors.

Bryan Mitchell · Answer

@Justin G., is there data that compares the number of syndications in the past versus those available now? It seems like there are many more today than in the last 20 years. Are there any syndicators who have been in the business 20 years or more?

Percy N. · Answer

It also comes down to the business model and the related hold period.

One of our advisors who has been in the multifamily space for over 35 years used to "syndicate" (the term did not exist in the context it does today) but hold the properties for 15-20 yrs.

William Costello · Answer

@Justin G. good point, I think it all depends on how the deal is going. Sometimes firms can refinance and extend the deal if it is going well. Some investors are also more focused on the overall return vs cash flow as well so the refinance option route could be great for some investors.

Paul Moore · Answer

I think this increase in syndications is based on a perfect storm of an 11-year bull market, the reach of social media, the impact of the JOBS act, increasing desire for alternative investments, and investors realizing how hard it is to do deals on the side on their own.

Larry Fried · Answer

Yup, what others said, and these things came together with crowdfunding which really accelerated the public access to syndication deals and funds.

Percy N. · Answer

SEC Regulation D 506(c) was introduced as part of the JOBS Act around 2012 which opened up the ability to advertise and accept accredited individuals. This was a major catalyst for many syndicators and funds.

Justin Goodin · Answer

Fantastic question. It does seem like there are a ton of syndicators around now compared to 10 years ago.

How long does a real estate syndication last?

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