Frequently Asked Questions
What is real estate syndication?
When you invest within a private real estate syndication, you are pooling your capital with that of other investors for the purpose of investing in larger and potentially more lucrative real estate projects. This affords the lone investor an opportunity to invest with a group of like-minded investors in the ownership of a revenue or development property that is too much to handle singly or in a joint venture with just one or two others. Real estate syndicates own residential, commercial, or industrial real estate, with investors having an interest in insured, tangible “brick and mortar” assets. This characteristic is untrue of many other investments and provides added security for your investment. Additionally, investing in private real estate syndication’s provides the individual investor the potential to achieve higher profits through economies of scale and diversification with lower volatility than the average real estate investment.
What are Limited Partnerships & Limited Liability Companies?
Canadian entities called, Limited Partnerships (or LPs) and their American equivalent, Limited Liability Company (or LLCs) are often used for shorter-term projects, and often do not offer interim cash distributions. LPs and LLCs are forms of syndication have many desirable features – including financial rewards, investment security and tax benefits. And, as with the REIT, the investor is spared management responsibilities, relieved of liability for principal debt, and in many cases can make cash investments of any size. Since the investor’s participation in management decisions is limited, so is his liability. The word “limited” in Limited Partnership and Limited Liability Company signifies that the financial obligation of the other partners in the group – respectively called Limited Partners or Shareholders – is limited to their initial investment. The party responsible for the conduct of an LP is called the General Partner; the one for the LLC is called the Managing Partner. The General Partner or Managing Partner is granted all decision-making responsibilities for the investment, and also assumes liability for it.
As a unit holder, what do I actually own?
In most forms of syndication, your interest in the properties is an indirect one. The legal structure is designed to protect unit holders from liability. Title to the property is registered at the Land Titles office in the region in which the property is located, and in the name of the investment entity that holds title in trust for the investors.
What powers our investments?
Three ways our investments make money over time.Market Value Growth: If the value of properties increases, so does the value of your investment. Values can increase two ways:
- Passively: the average price of real estate increases over time.
- Actively: we increase property value through renovations, changing use/zoning, improving management, or other strategies. Even if the general market is flat or declining, increased value can still be realized.