These Are The Key People In A Real Estate Syndication

23March, 2020

These Are The Key People In A Real Estate Syndication

A real estate syndication is essentially a group investment. Instead of buying a single family home as a rental property on my own and being the landlord, I can put in $50,000, someone else can put in $100,000, and so on, and together, we can buy a bigger commercial property together.

We often compare a real estate syndication to an airplane ride. All of us, as the passive investors, are the passengers on the plane. We’ve chosen this plane because it’s going to get us to the destination we have in mind. However, we’re not responsible for flying the plane, directing the takeoff and landing, or troubleshooting anything that goes wrong.

That’s where the pilots come in. They are doing the active work of flying the plane. Both the pilots and the passengers are going to the same place, but they have very different roles in the journey.

And, in addition to the pilots, there are air traffic controllers, airport workers, flight attendants, and more, that all work together to ensure that the journey goes smoothly.

Let’s dive into some of these roles.

People in a Real Estate Syndication

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

Real estate broker
Lender
General partners
Key principals
Passive investors
Property manager
Golden Bridge Investments

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 on the team is crucial.

Lender

The lender is the biggest money partner in a real estate syndication. The lender not only lend us money to buy, they also do their own due diligence, underwriting on the property to make sure the property is worth what we’re paying for it.

General Partners

The general partners are the team that lead the real estate syndication (sometimes they are also called the lead syndicators). They are the ones who are orchestrating the whole thing. They lead the acquisition of the property and will head up the asset management during the life of the project as well.

The general partners work with the real estate broker to acquire the property. They also work with the lender to secure the loan for the property.

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

They are responsible for managing the acquisition and the overseeing the day-to-day operations, and they’re responsible for executing on the business plan. They are the ones who manage the property manager and make sure that the renovations are going according to schedule and budget.

Key Principals

For a commercial loan, the sponsor is required to show a certain amount of personal liquidity. This is so, in case things go wrong, the lender knows that the sponsor has some personal capital that they can put in to keep the property afloat, if it were ever to come to that.

If the sponsor’s personal balance sheet doesn’t meet the requirements needed for the loan, they may bring on one or more key principals to help guarantee the loan.

Passive Investors

The passive investors in a real estate syndication are the ones who invest their money in the project, in exchange for a share of the returns. Like the passengers on an airplane, the passive investors have no active role in the project. They get to put their money in, sit back, and collect the passive income.

Property Manager

Once the property has been acquired, the property manager is perhaps the most important partner in the project. The property manager are the boots on the ground that execute on the renovations and other parts of the business plan.

Golden Bridge Investments

In a real estate syndication, Golden Bridge Investment is part of the general partnership. Our main role, among other things, is to take the lead on investor relations and to help raise the equity needed to acquire the property and fund the renovations.

We work with the sponsors to ensure that they are structuring the deal in a way that will be favorable to investors. We advocate on behalf of our investors, to ensure that the sponsors are being conservative in their projections, that they have multiple exit strategies, and that they will preserve and grow investor capital.

After the property is acquired, we act as the liaison between the sponsor/operator team and the investors, helping to keep investors in the loop on updates, financial reports, and other important information.

I guess you could think of us as the flight attendants, who prep the passengers for the journey and help make sure the passengers are well-informed and comfortable throughout the flight.

Conclusion

A real estate syndication, by definition, is a group investment. And it’s only through coming together as a group and pooling resources that the syndication can be successful.

There are many people who come together to make a real estate syndication happen, including:

Real estate broker
Lender
General partners
Key principals
Passive investors
Property manager
Golden Bridge Investments

There are also other people not mentioned here, including the inspector, appraiser, cost segregation specialist, CPA, legal team, insurance agent, and more, who work in the background to make sure that the syndication gets off the ground.

Each of these people or groups have important roles in the process. a real estate syndication depends on all these different players in order to be successful.