Blog Highlights:

 

In real estate syndication, each person plays their own part. Each role is important, and they all need to work cohesively to make the real estate syndication run smoothly and be successful!  

Although I am the technical-type, having been in IT for many years, I do enjoy beautiful art and excellently coordinated productions. So, let’s compare a real estate syndication team to the people who help make a musical production run smoothly. 

The sponsors of the syndication are like the directors of our musical, and the passive investors are like the actors and singers. They all want the play to run smoothly and successfully but have very different roles in the process. 

If there is an unexpected set change, if the lead actor gets sick, or any other number of surprises, the director is the one responsible for the musical production. The director will most likely update the actors, but the actors don’t have any active responsibilities in making decisions about who will play which part or when the production will be audience-ready. 

A real estate syndication is a lot like this. The passive investors, sponsors, brokers, property managers, and others all share a vision. They all want to invest in and improve a particular asset or piece of real estate. But, each of their roles is different. Let’s break down exactly who each of these important players is and what their roles are in a real estate syndication. 

In this article, we’ll talk about exactly who those players are, as well as their respective roles in a given real estate syndication.

People in a Real Estate Syndication

Here are the key roles that come together to make a real estate syndication happen:

  • Real estate broker
  • Lender
  • General partners
  • Key principals
  • Passive investors
  • Property manager
  • Exponential Equity
 
Real Estate Broker

The real estate broker is the person or team who surfaces the property for sale, either as a listing or as an off-market opportunity (i.e., not publicly listed).

Having a strong real estate broker is crucial, as they are the main liaison between the buyer and the seller throughout the acquisition process.

 

Lender

The lender is the biggest money partner in a real estate syndication because they provide the loan for the property. The lender performs their own due diligence, underwriting, and gets a separate appraisal to make sure the property is worth the value of the loan requested.

In the airplane analogy, neither the real estate broker nor the lender are aboard the plane. They have important roles in bringing the project to fruition, but they are not part of the purchasing entity, nor do they share in any of the returns.

 

General Partners

The general partners synchronize with the real estate broker and lender to secure the loan and acquire the property in addition to managing the asset throughout the life of the project, which is why they are often also called the lead syndicators. 

The general partnership team includes both the sponsors and the operators (sometimes these are the same people).

The sponsors are the ones signing on the dotted line for the loan and are often involved in the acquisition and underwriting processes.

The operators are generally responsible for managing the acquisition and for executing the business plan by overseeing the day-to-day operations. Operators guide the property manager and ensure that renovations are on schedule and within budget.

 

Key Principals

For a commercial loan, the sponsor is required to show a certain amount of personal liquidity. This reassures the lender that the sponsor can contribute additional personal capital to keep the property afloat if things were to ever go wrong.

One or more key principals may be brought into the deal to help guarantee the loan if the sponsor’s personal balance sheet is insufficient.

 

Passive Investors

A real estate syndication’s passive investors have no active role in the project. They simply invest their money in exchange for a share of the returns. Like the passengers on an airplane, they get to put their money in, sit back, and enjoy the ride.

What a great position!

 

Property Manager

Once the property has been acquired, the property manager becomes arguably the most important partner in the project because they are the “boots on the ground” who execute renovation projects according to the business plan. 

The property manager works closely with the operator (i.e. the asset manager) to ensure the business plan is being followed and that any unexpected surprises are addressed properly.

Stryker Properties 

In a real estate syndication, Stryker Properties is an essential part of the process. We have partnered with 1000+ Investors and since 2016, over 1000 investors have trusted and invested with Stryker in 18 different projects in 4 US markets. We give personal attention to all our investors and stay accessible throughout the course of the project.

Stryker has delivered stellar results to its investors. On the completed projects, Stryker has grown investor equity by an average of 95% at 41.67% IRR and never lost Investors’ original investment.

We are here to help you make passive income, and invest in smart real estate! 

The Role You Play In A Real Estate Syndication 

Real estate syndications are group investments. Syndications will not be successful without all parts/people of the process working together for a common goal (to make money). 

The five roles discussed above are not the only ones who are important in a real estate syndication, inspectors, appraisers, cost segregation specialists, CPA, legal team, insurance agents, and more, are like the stage crew, they often work in the background to make sure the syndication gets off the ground and runs smoothly. 

Your role as a passive investor in a real estate syndication is to contribute investment capital so that, in combination with the funds from other passive investors and effort from the general partners, the business plan will be fully funded, providing the syndication deal the greatest opportunity for success.

You may not be involved in the financing decisions, underwriting process, or the day-to-day property management, but without you, funding goals cannot be reached and the project, no matter how promising, may never get a chance.

While every role is different, each one is needed for the syndication to be successful and for everyone involved to reach their metrics for success!

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