Syndicators will find that working with Pacific-Realtors.net to acquire or sell syndicated apartment buildings, rental homes, or commercial properties has great advantages.
When a syndicator acquires an income producing property, utilizing the brokerage services of Pacific-Realtors.net (upon prior approval), our firm will do the following:
- Convert 100% of our real estate brokerage commission to a limited partnership interest so the syndicator has use of the cash that would otherwise be paid to the company, and
- Manage the property, if desired, deferring 100% of the management fees until the property is sold.
When a syndicator sells an investment property utilizing the real estate brokerage services of Pacific-Realtors.net, Pacific will do the following:
- Conditioned upon a down payment of at least 25%, Pacific will convert its equity and any deferred management fees into a seller carry-back second trust deed loan, at the then market rate of interest for such loans for a term of ten years.
Real Estate Syndications
Real estate syndication creates an opportunity to channel private savings into real estate investments. It has been a popular method of financing the purchase of investment properties for many years.
The term "syndication" has no precise legal definition. It is a descriptive term for an organization or combination of investors pooling capital for investment in real estate. The responsibility, obligation and relationship of the syndicator to the investment group and the investors to each other are determined principally by the form of organization created.
By pooling financial resources with others, a small-scale investor may participate in ownership and operation of a property that is too large to acquire and manage individually.
Syndication also permits professional property management which might not otherwise be economically feasible for the small investor. Professional management, a service offed by syndicators, is crucial to the successful syndication of investment property.
Selecting the form of organization involves practical as well as legal and tax considerations. Each of the available entities has advantages and disadvantages. The corporate form insures centralized management as well as limited liability for the investors but is seldom utilized in modern syndicates because of its negative tax consequences. The general partnership, or joint venture, avoids the double taxation normally involved by utilizing a corporate entity, but the unlimited liability characteristic and lack of centralized management is a major detriment. The limited partnership combines many of the advantages of the corporate and partnership forms. It has some of the corporate advantages of limited liability and centralized management and the tax advantages of a partnership.
A limited liability company (LLC) is a hybrid business entity that combines aspects of a corporation with a partnership. This entity form permits active participation in management and control by the members along with limited liability. Properly created and operated, an LLC may be taxed similar to a partnership and avoid some of the taxation problems of a corporation. It should be noted that LLCs as an entity cannot hold a real estate license.
Most syndications in California are limited partnerships.