First, let’s define what a real estate syndication is. When a real estate investment company like IWN Capital™ organizes a group of individual investors to purchase a property, it’s called a syndication. This type of investment is very attractive to individuals, family offices, trusts, and other investors who do not wish to be the sole owners of a large property. Syndication allows an individual investor to take a passive role in the property investment and avoid the responsibility of managing the property. In exchange, each investor receives a percentage of tax deferred cash flow on a quarterly basis, and a share of the profits when the property is either sold or refinanced.
A real estate syndication differs from a real estate investment fund: with a syndication you’re investing in a specific property; with a fund, you’re investing in the many assets of a real estate company.
Besides receiving tax deferred passive income, the benefit to the investor is they don’t need to be an expert in real estate investing or property management, they have limited liability, and they can invest in multiple properties.
Real estate syndication usually involves two classes of people: sponsors (or general partners) and investors (the limited partners). Sponsors contribute more to the project than just capital, they are the ones responsible locating the property, negotiating the purchase and financing, managing the property, and otherwise handle all of the details of the investment. Investors contribute the necessary finances to cover the costs of the investment.
The role of the sponsor is to find the investment property and determine if it’s a sound investment with the possibility of substantial returns. The sponsor’s day-to-day experience with property investment and management allows them to identify valuable opportunities. To determine the viability of the investment, they may do an onsite visit, check property records, check bank statements, examine bookkeeping records of the current owners, check local zoning laws, analyze local market volatility, how the property’s occupancy rate compares to others in the market, a rent roll (list of the property’s tenants and how much rent they pay), and a number of other factors.
If the sponsor decides to move forward with a syndication, they create an offering document for the property, organize a group of investors, acquire the property, manage the property, and disburse quarterly profits and sale profits to investors. The sponsor is also responsible for deciding on the most favorable time to sell the property.
The role of the individual investor is to place their investment with the sponsor for a specific property and then do little else. The investor makes passive income from the property – they receive quarterly distributions and their share of the profits and have no input on the day-to-day operations.
By law, investing in real estate syndications is limited to:
Accredited Investors: those who have an income of at least $200,000 individually or $300,000 jointly for each of the past 2 years, or who individually or jointly have a net worth of at least $1 Million, excluding their primary residence. For more information on what an accredited investor is read more at this link.
And
IWN Capital™ organizes real estate syndications for investments in multi-family properties (apartment buildings). Every real estate syndication organized by IWN Capital™ is structured as a Limited Liability Company (LLC).
The LLC is a combination of the general partners and the limited partners. The property is owned by the LLC and the passive investors are part owners of the LLC and consequently the property. The passive owners cannot be held personally responsible for the debt on the property.
All syndications through IWN Capital™ are separate LLC’s established per property, so an investment offered today will not be the same LLC as one offered previously. IWN Capital™ invests in the property as a limited partnership. Each of the investors is also a limited partner. The goal of structuring the syndication in this way is to create a clean entity for management and control of the property and to protect investors from liability beyond their single investment.
Our targeted syndication structure is 75/25 – IWN Capital™ owns 25% of the property and individual investors as a Limited Partnership own the remaining 75%.
How long will my money be invested?
Each syndication deal is different, but we target to hold properties for an average of 3-5 years. The number of years or months we anticipate we will hold the property will be clearly stated in the offering documents.
Investing involves risk, including loss of principal. Past performance does not guarantee or indicate future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. While the data we use from third parties is believed to be reliable, we cannot ensure the accuracy or completeness of data provided by investors or other third parties. Neither IWN Capital nor any of its affiliates provide tax advice and do not represent in any manner that the outcomes described herein will result in any particular tax consequence. Offers to sell, or solicitations of offers to buy, any security can only be made through official offering documents that contain important information about investment objectives, risks, fees and expenses. Prospective investors should consult with a tax or legal adviser before making any investment decision.
For our current Regulation A offering(s), no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth (excluding your primary residence, as described in Rule 501(a)(5)(i) of Regulation D). Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.
For additional important risks, disclosures, and information, please visit iwncapital.com/disclosure
