Real estate tends to be one of the most valuable assets in an investment portfolio. Unlike stocks and bonds, it’s a tangible asset that remains standing regardless of market conditions, which is why syndicated real estate funds have become a popular type of passive real estate investment for building wealth.Â
How does this work? The syndicator/sponsor opens up a large real estate project, usually commercial or multi-family, to multiple investors who pool their capital to jointly purchase the property. As the manager and operator of the deal, a sponsor invests not only sweat equity but also a portion of the equity capital needed. Â
For developers, it offers new options to fund and build their projects. It also makes real estate investing less cost-prohibitive and more accessible to individual investors. Real estate syndications can help investors reap the rewards of owning an investment property—without the hassle and hands-on commitment of being a landlord themselves.Â
Here are some of the most important rules, benefits, and risks to keep in mind when considering investing in syndicated real estate funds:Â