There are many parties involved with creating a successful real estate syndication.
One of the most important teams to have is a good property management company.
They will run the day to day operations, ensure your vacant units are filled, handle maintenance requests, and make sure the bills get paid each month.
The next most important team member is your real estate broker. They can provide opportunities to find off-market deals and knowledge about the area if you are not local. They can connect you with property managers, lenders, and insurance brokers as well since they are experts in connecting buyers and sellers.
Next on the list is your lender. Without them, you won't be able to get financing for the remainder of the purchase price. In a syndication, we typically raise the 20%-25% of the purchase for the down-payment. The remainder amount we get financed through the lender. As this mortgage gets paid down by the tenants each month, we build equity in the property.
Last but not least are the type of partners that put everything together. The General Partner (GP) is the syndicator who manages the asset and brings all these players together. We also have the Limited Partners (LP) who are the passive investors. They contribute the down-payment, operating reserves, and repair funds. A Key Principal (KP) sponsors the loan by having a high-net worth and liquidity equal to or above the loan amount.
As you've learned, there are many players that make up a syndication team. Each of these team members are essential for success.
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