What is Real Estate Syndication and Who is Involved?
Updated: Feb 4
What is real estate syndication, and who are the people involved?
Simply put, a real estate syndication is when a group of investors combine their money and shared skill sets together to jointly purchase and manage a large real estate property. Apartments, mobile home parks, land, self-storage units and other real estate assets are some of the investment opportunities available through real estate syndications.
In a real estate syndication, there are several parties involved. The General Partner or GP, the limited partner or LP, the Property Management company, the Commercial Broker, and the Real Estate and Securities’ Attorney.
While each party involved in a syndication plays a very specific and important role, the General and Limited Partners are the topic of this post because most likely, if you’re reading this, you will fall into one of these two categories.
The General Partners, also known as the sponsor or operator, are the managing partners and are active in the day-to-day operations of the business. While it is possible for the general partnership to be just one individual, most likely the GP is made up of multiple individuals working together.
The General Partners have many responsibilities:
Finding the deal
Underwriting the deal
Creating the business plan
Submitting a letter of intent to purchase
Negotiating the purchase price
Finding the best terms and loan product
Raising the capital
Performing the due diligence
Hiring the property manager
Closing the deal and executing the business plan
Once the transaction closes, the General Partners will manage the asset; they will oversee the execution of the business plan.
The Limited Partners are the passive investors. Their liability is limited to the extent of their share of ownership. They do not take an active role over any aspect of the business plan; they are strictly passive and are solely responsible for providing the capital to fund the equity for the purchase.
There can be one single limited partner on a deal, but more likely on larger assets, there will be multiple limited partners funding the investment.
We at Vine Capital Partners are the General Partners and operators of apartment syndications. We find great apartments to invest in, and we bring these opportunities to our investors. We make sure our limited partners stay informed along every step of the investment cycle.
If you’re interested in hearing more about real estate syndications and what we at Vine Capital Partners do as syndicators, please fill out our questionnaire to get in touch with us. We would love to learn more about you and your investment goals.
