In this interview, Ted answers explains real estate syndication, what it is, what it takes to get started, and the pros and cons of real estate syndicate investing.
The topics to be covered in “Real Estate Syndication – What is It?” are:
What is Real Estate Syndication?
What is real estate syndication? First of all, I’d like to say, I’m not a junior player. I’ve got some gray hair, and I’ve been doing this for a long time. I used to be a real estate syndicator.
Real estate syndication is nothing more than you in the middle, and you’re getting money from all of the people that you know. You’re putting that together as a package, making you a syndicator.
There are a lot of legalities to cover here. I’m not an attorney or a real estate broker, but I’ve done this, so let me show you what’s good.
Now you understand that real estate syndicators put a lot of people together. Why? because they want to buy expensive real estate, which requires several investors. These could be condos or an office building, but they need a lot of money to do it.
A Syndication is a Securities Business
If you become a real estate syndicator, you’re no longer in the real estate business. You’re in the Securities business.
What is a Security? A Security requires an agreement called a “prospectus.” It’s a large document that would cost $50,000 or $75,000 to make with an attorney. Anytime you have a Security, you have to make sure that you meet all the requirements.
Let me tell you the positive and the negative. The positive is the Security and Exchange Commission protects all people in the United States. It also goes after crooks.
Anybody who tries to put a lot of deals together must have a well-planned real estate syndication structure and a Securities license.
You can’t be a syndicator unless you have this license because they don’t want you to do anything unless you have a prospectus, and you have to have every single risk listed in it. If you miss one, someone’s going to sue you.
Also, the Security Exchange works this way. If they find out you did something wrong, first they put you in jail then they ask the questions.
Everybody’s terrified of the IRS. Don’t be terrified of the IRS, just pay them. The IRS will ask you questions first, but the Securities and Exchange will put you in jail first.
Being a Syndicator vs Investing in Real Estate Syndications
Real estate syndication is worth the effort for the syndicator because the one putting it together can make substantial profits.
For example, if you bought a $3 million property, you would get an acquisition fee of 6%. 6% of $3 million is $180,000. If you did a $30 million deal, it’s $1,800,000.
It’s great for the syndicators, but what about real estate syndicate investing? As an investor, you’re destroying your chance to make big money. If everybody else is involved, then you have to pay the syndicator, and you have to pay management fees.
Is There a Better Way to Profit Than Real Estate Syndicate Investing?
I teach people to go buy basic real estate, bricks and mortar. Let’s stay in the business that we know, bread and butter housing.
I can drive by a house, and I’m either going to buy it or not buy it. If it’s sold at a tax defaulted property auction, I can buy the house for 10 or 20 cents on the dollar.
How much of a decision did I have to make? How much trouble am I going to have selling it? If I bought it for 10 or 20 cents on the dollar, then I can sell it for 50 cents on the dollar. That’s how complex my business is.
I’m not paying a lot of people. There aren’t a lot of people involved. This is something the average person can do.
Get a list of tax deed auction properties, and go look at them. If it’s a decent deal and the profit margin is there, just buy it low and sell it for a discount. That’s how simple the business of tax delinquent property investing is, and this has been going on for 200 years.
What do I care about syndications? I spent 15 years of my life doing syndications. Buying and selling tax defaulted property is easier.
My Tax Deed Investing Course Will Let You Know if This Business is for You
If you’re interested in tax defaulted property investing, just go to tedthomas.com to sign up for the six-hour virtual workshop. You’ll actually see people who are buying tax liens and tax deeds.
I’ll teach you all the steps of buying and selling tax delinquent real estate, and then you can decide if it’s a business you want to do. It’s only $47 for the six hour class, and you’ll get a lot out of it.
We hope you enjoyed Ted’s lesson, “Real Estate Syndication – What is It?”
Real estate syndication is a way to purchase expensive real estate by bringing a group of investors together to pool their funds. Becoming a real estate syndicator requires you to enter into the Securities business and to have an attorney draw up a prospectus. You must have a Securities license to be a real estate syndicator, and there could be serious liabilities if your prospectus is not very well planned. However, you can make a lot of money as a real estate syndicator if you do it right.
As for investing in a real estate syndicate, there are fees you will need to pay to the syndicator, and you’d be splitting the profits with a lot of people. It would be much more lucrative to do your own investing rather than getting involved as an investor in real estate syndication.
For example, with tax delinquent property investing, you can generate massive profits purchasing mortgage-free real estate for pennies on the dollar at tax defaulted property auctions, and Ted can show you how.
If you’d like to learn more, Ted Thomas provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops, web classes, personal coaching with certified coaches, and Ted offers an interactive map auction calendar research tool that allows you to visit states online and see where all the auctions are taking place.
If you’d like to start out with a free auction list of tax defaulted properties that are currently for sale, go to TedThomas.com/freegift. See the great deals for yourself.