By Fuquan Bilal
Real estate syndications are a term that is trending again. What are they?
Among the real estate investment opportunities on the landscape today are real estate syndications. How do they work? What are the advantages of syndicated real estate deals? How are they different from other investment strategies, and who are they for?
Real Estate Syndications 101
Syndications is basically another word for partnerships.
A syndication is an industry or technical term for when investors partner together to acquire, improve, manage and dispose of real estate assets together.
The one main difference between syndications and other types of partnerships is that there is generally one active partner to the deal. Also known as the ‘sponsor’. The sponsor is the one with the experience, connections, teams and systems to handle everything. The other partners bring their capital. Everyone shares in the rewards.
Syndications can be large or small, have few or many partners, and can partner on everything from pools of mortgage notes to value add multifamily apartment deals to ground up new construction projects.
Who Are Real Estate Syndications For?
Real estate syndications are typically reserved for accredited investors. Meaning those with higher levels of income or solid net worth.
This can include highly paid professionals like doctors, lawyers and tech workers. As well as celebrities, athletes, lottery winners and heirs to sizable inheritances. Entrepreneurs, family offices and real estate or private equity funds also often participate.
How Are Syndications Different?
The main differentiator of a syndication is that everything is done for you and you tend to get a split of all the profits, in contrast to investments where you may just receive a yield.
For example, a syndication for mortgage notes or apartment buildings may pay out cash flow dividends as income comes in, and then distribute a share of the gains on exit. So, you may get a percentage of the rents every quarter, and then a slice of the pie when resold. There are many combinations possible. For example a 90/10 split would mean the sponsor gets 10% of the profits and the other partners split the first 90%.
If you are an accredited investor, syndications can be highly attractive in providing a more direct investment and larger share of profits than simple investing in a fund or stock, and yet don’t require the time and headaches and risk of flipping houses or managing your own rentals or note workouts.
Find out more about investing in secured debt and real estate, go to NNG Capital Fund
Fuquan Bilal founded NNG in 2012 with the principal mission of capitalizing on the growing supply of mortgage notes in the interbank marketplace. Mr .Bilal utilizes his 17 years of residential and commercial real estate success to identify real estate opportunities and capitalize on them. To date, he has successfully managed three private mortgage note funds that primarily invest in singlefamily performing and nonperforming mortgage notes. His financial acumen and proprietary set of investment criteria enable him to purchase underperforming real estate assets at a deep discount of face and market values, thereby increasing the value of the assets. This, coupled with his ability to maximize the use of leverage, enables him to build strong, secured portfolios with solid passive income flows.