{"id":2806,"date":"2024-01-03T10:13:07","date_gmt":"2024-01-03T10:13:07","guid":{"rendered":"https:\/\/www.alvinodesign.com\/?p=2806"},"modified":"2024-01-03T10:13:10","modified_gmt":"2024-01-03T10:13:10","slug":"how-real-estate-syndication-profits-can-draw-your-blueprint-to-success","status":"publish","type":"post","link":"https:\/\/www.alvinodesign.com\/how-real-estate-syndication-profits-can-draw-your-blueprint-to-success\/","title":{"rendered":"How Real Estate Syndication Profits Can Draw Your Blueprint to Success"},"content":{"rendered":"\n
Real estate syndications are an attractive option if you\u2019re thinking about expanding your investment portfolio. You can become a real estate investor and yet not have to deal with the complications of managing a property. Instead, a general partner will do this for you. They also locate suitable properties, negotiate the deals, and may handle financing options.<\/p>\n\n\n\n
As a passive investor, you foot a percentage of the capital needed to acquire the real estate. Your return potential is based on the percentage of the property\u2019s capital you contribute. Say you\u2019re one of three passive investors in a commercial building. Each of you has put forward 33% of the funds necessary to buy and maintain the property. Therefore, each of you would potentially earn 33% of the returns according to the deal\u2019s structure. <\/p>\n\n\n\n
The deal\u2019s structure refers to the overall percentage of profits that go to the active investor(s) versus the passive investor(s). A deal structure could involve a straight or tiered split. Straight splits are relatively uncomplicated, with a set percentage of profits allocated to the syndicators and silent partners. Tiered splits can involve preferred returns going to the syndicators, with additional profits being split among all investors according to various ratios.<\/p>\n\n\n\n
Regardless of the real estate syndication deal\u2019s structure, there is potential to use the profits to fuel further financial success. Typically, your returns will come from renting, refinancing, and selling the property. Let\u2019s take a closer look at how these profits can become your blueprint for achieving your long-term investment goals. <\/p>\n\n\n\n
One of the advantages of real estate syndications is that these investments can provide both short- and long-term cash flows. The short-term cash comes from the rental income a property generates. Whether you\u2019ve invested in a vacation or commercial office property, everyday people or businesses want to use the space.<\/p>\n\n\n\n
Your tenants\u2019 rent payments will ideally exceed the property\u2019s operating costs. Hopefully, there will be extra left over to split among the investors in the syndication partnership. The short-term income could go toward funding your lifestyle, or you could reinvest it. You could also take a split approach, designating a portion toward your household budget and some toward your savings.<\/p>\n\n\n\n
How you use short-term cash flows will depend on your financial goals. Are you investing in real estate to generate enough passive income to leave your full-time job? Or have you left years ago and want to continue to build wealth? If you\u2019re in the first camp, you\u2019ll want to invest in real syndications with high, steady rental income. Those in the second group may focus on opportunities with higher long-term payout potential.<\/p>\n\n\n\n
\u201cFor millionaires, investing in real estate has been the most popular way to preserve their wealth,\u201d observes Lifestyle Investing<\/a> expert Justin Donald. It typically makes a good investment because it tends to appreciate in value. However, real estate is not usually an investment you can turn around and liquidate quickly. Long-term gains typically come from holding the property for five years or more. This makes real estate syndications an attractive opportunity for high net worth investors, who can afford to wait if the result is wealth preservation.<\/p>\n\n\n\n As the above discussion suggests, real estate syndication profits also come from long-term cash flows. These are the gains you realize when the property is refinanced or sold. Most of the time, you\u2019ll gain more from selling the property than refinancing. The rate at which properties appreciate varies depending on local market conditions, the economy, and property type.<\/p>\n\n\n\nAppreciation in Value Can Build Wealth<\/h2>\n\n\n\n