Real Estate Syndication defined

A Real estate syndication is a group of people who combine resources for the purpose of making investments in real estate. Syndicates are formed to hold real estate for income and / or for appreciation.

A “syndicator” is a person or entity who originates and controls a syndicate

The flexibility of the syndicate makes it an excellent form of doing business. The syndicate can be set in various ways such as, as a partnership, a limited liability company, a corporation, or as a limited partnership. The publicly traded form of real estate syndication is a REIT (real estate investment trust).

State regulations:

State regulations governing syndicates are designed to protect investors. Shares of partnership units are considered securities and thus regulated. Each state has their own regulations as to the number of investors that constitute a small private syndication exempt from SEC filings. You will need to file your syndicate registration with the state as a partnership or LLC or corporation. The regulations cover advertising of the syndicate, number of investors allowed, and out of state investors allowed. As each state is different in the details of the requirements check with your states Corporate Commissioner, Secretaries Of State office or the State Board Real Estate. If you plan to advertise or have a large number of investors you will need to check with the SEC for federal filling requirements.

More then likely you will be forming your syndicate with a small number of investors and be under the the maximum number of investors allowed for filing at the state level. Filling as a limited partnership (LLP) or an LLC is fairly inexpensive and the paper work is simple. If you have any doubts hire an attorney to assist you with setting up your syndicate's organization.

The various states general requirements are that you limit the number of investors, that you do not advertise for investors, that you register with the sate using the forms provided by your state and pay the registration fees, that you file any tax returns due, that you file any dissolution of the syndicate when and if appropriate.