Real Estate Syndication and Advantages

Richard McCarthy is a resident of Scarborough, Maine, and an accomplished finance professional with over two decades of experience. In 2019, Richard McCarthy became a founding member and CFO of Avery investments, a company focused on commercial real estate and syndication investing.

Real estate syndication occurs when individuals or organizations bring together their finances and resources to invest in properties and projects that none of the parties could pay for independently.

The transaction occurs between a sponsor and a group of investors, also known as limited partners. The sponsor is responsible for scouting and finding suitable and appropriate properties, raising funds, and managing the day-to-day operations of the investment. On the other hand, the limited partners or passive investors provide 80-90 percent of the required capital to acquire the property. They are awarded ownership shares in return for their financial input, depending on the number of potential parties and the investment amount.

Although the sponsor and the investors are usually the main parties in a real estate syndicate, sometimes there is another party involved, known as the joint-venture partner or equity partner. The responsibility of an equity partner is to ensure that proper communication and transparency exist between the sponsor and the investors. They also assist the sponsor with reporting, accounting, and taxes.

Real estate syndication benefits include the ability to invest in larger projects, onsite and professional management, passive income, diversification, appreciation, and tax advantages.