Benefits to the syndicator

Real estate syndicators' can make good profits from starting a syndicate, locating a suitable property, promoting the syndicate, managing the syndicate and dissolving the syndicate at the appropriate time.

• The syndicator gets a share of the syndicates capital gains.

• The syndicator gets a share of the rental income.

• The syndicator gets tax advantages.

• The syndicator has leverage.

• The syndicator gets a promotional fee.

• The syndicator gets management income.

• The syndicator gets a real estate brokerage income if he is a licensed agent.

   The syndicator gets a share of the syndicates capital gains.

The syndicate agreement should be drawn up to provide that the syndicator receive a share of the project's capital gain or a percentage of ownership. The syndicator does not usually pay for his share of the profits or of the project, or he pays at a reduced amount. The syndicator subordinates his share of capital gain profits to the repayment of the investors, thus giving his share capital gains status.

If the syndicator invest his own capital on the same terms as the other investor that portion of his investment is treated the same as the other investors.

The syndicator gets a share of the rental income.

The syndicate agreement can provide that the syndicator gets a share of the net rental income earned by the property. The syndicator's share of net profits is most often subordinated to the investors getting a certain return on their investment, so that the investors get a return on their investment before the syndicator gets anything.

The syndicator gets tax advantages.

The syndicate agreement can provide that any capital gains paid to the syndicator is treated as long term capital gains. A clause in the agreement should provide that a percentage of the properties depreciation pass to the syndicator. All matters concerning income tax should be verified with a competent tax attorney as the tax laws tend to change over time.

The syndicator has leverage.

Because most or all of the capital needed to pay for the syndicates equity in syndicate owned real estate is provided by investors, that gives the syndicator a leveraged position. The syndicator controls the property and participates in the profits with little or none of his own investment capital.

The syndicator gets a promotional fee.

A promotion fee of up to 10% of the amount raised is customarily paid to the syndicator for the selling of securities and for promoting the syndicate.

The syndicator gets management income.

The syndicate agreement often provides for the payment of a management fee to the syndicator or to a real estate management service. A real estate license is needed to manage income property for a fee in most states unless the syndicator is also an owner of the property.

The syndicator gets a real estate brokerage income if he is a licensed agent.

A licensed real estate agent can make commissions when a property is purchased or sold so long as the provision for such payments are fully disclosed in the syndicate agreement.