Commercial Syndication Deals
Real Estate Syndication has an interesting sounding name but it really is just the pooling of resources amongst investors to complete projects. As an investor it's a great way to stay involved in numerous projects without devoting all your time to each of them. Syndication deals are generally long term.
A real estate syndication deal generally has two types of parties involved in it: the syndicator, or the person who finds and operates the deal, and the investors. When it all boils down, the syndicator is effectively paid by the investors an acquisition fee and/or asset management fee, for their efforts in finding the project, conducting due diligence, gathering investors, hiring a property manager, etc. They are the point person for all aspects of the project and are generally either paid a flat fee or as a percentage of the acquisition costs (acquisition fee) or gross revenue (asset management fee).
The investors are paid for their equity participation in the project, and receive a preferred rate of return of 6-12%. This is the first payment that is made to those involved.
This is a very simplistic explanation of a syndication deal. They can be very complex, depending on the parties involved, but are a great way to invest in long term real estate projects without having to commit a lot of time as an investor. For a syndicator, it's a great way to invest in a long term real estate project without having to put up much, if any, capital.