What Is Multifamily Real Estate Syndication?

What Is Multifamily Real Estate Syndication?

If you’re interested in growing your portfolio of rental properties in Southern California you most likely have been considering investing in a multifamily rental property like an apartment complex because with multifamily, more doors equal more money.

Sadly, some investors may be priced out of the multifamily market in SoCal because they can’t afford to spend over $1 million on an apartment building in the Los Angeles area because prices here for an average multifamily rental property have been known to reach up to $10 million.

Thankfully, there is another option available for investors who want to own multifamily real estate without actually having to pay the hefty price tag and it’s called multifamily real estate syndication.

Return on Investment

The big question with this type of real estate investment that you most likely have is how do investors get paid? The answer to this question depends on how much time the investment is going to need for it to mature.

In most real estate syndications, it’s common for investors to get paid within six months to 1 yea while in other deals investors can expect to be paid within 7 to 10 years.

Regardless of how the deal is structured, all investors can and should expect to receive some share of the profits, especially the sponsor, who can expect to earn an average acquisition fee of 1%-2% depending on the transaction.

Learning More About Multifamily Real Estate Syndication

Quite simply, multifamily real estate syndication is similar to crowdfunding because one investor will “sponsor” the sponsor or structure the deal then invite other investors to invest their money in the property.

As an investor, you will obviously be concerned with who is structuring the deal, how trustworthy they are, how soon you will get your capital back and what your return on investment is going to be.

Depending on if you are an equity investor, you could get up to 80 percent of the deal but it’s likely that you can expect about five percent of the deal if you are co-sponsor.

Do Your Due Diligence

Before investing in a real estate syndication deal it’s important that you do your due diligence and thoroughly research who the sponsor of the deal is and also the pros/cons of the investment just to make sure that the deal makes sense for you financially.

What’s great about real estate syndication deals is that these types of investments have come under more government scrutiny in recent years since there were some fraudulent deals in the past so today’s investors can have confidence in knowing that their investment has been fully vetted by the Department of Corporations before they choose to invest in it.

Learn More About Real Estate Syndication

To learn more about real estate syndication in Southern California, or to speak with us about our property management services, contact MW Real Estate Group by calling us at (213) 927-2117 or click here to connect with us online.