What is a Syndication? It is a partnership and collaboration between individuals that pool their funds together to collectively invest in a commercial real estate property. This structure allows all involved to invest in and benefit from properties that are more expensive than each can afford or are interested to purchase on their own. It is a true teamwork approach to investing in commercial real estate.
What are the annual expected returns of a Syndication Investment? There are two (2) aspects of returns on a commercial real estate investment. The expected 20-year combined average annual return for both aspects is over 20% for each partners’ initial investment.
The first aspect of return is the Return on Cash Flow in which we strive to secure opportunities that have an estimated 20-year average return of 10%annually on each partners’ initial investment. This occurs as the property that was purchased is occupied by a tenant paying rent, typically committed to a long term lease agreement, and the numbers of the transaction calculate to a monthly Cash Flow and/or Surplus that is then distributed to each partner for their respective share. These monthly checks are distributed to each partner for the term of the active lease.
The second type of return on a commercial real estate investment, in addition to return on Cash Flow, is the Return on Equity which the estimated 20-year average returns over 10% annually on each partners’ initial investment. The properties we focus on are legitimate to attract and involve a lender to finance a majority of the purchase price. With a lender being involved it allows the partnership to build Equity in the property over time by the tenant paying the monthly rent which covers the cost of the monthly Loan Payment, all expenses for the Property, and provides Cash Flow as mentioned above. This Equity that compounds over time is realized when the property is sold, refinanced, and/or leveraged to purchase another property. This aspect of building Equity is not “liquid” like the Cash Flow aspect; however it is definitely a proven way to build wealth through commercial real estate.
What is the role of Vandaveer Commercial in a Syndication project? Vandaveer Commercial (VC) initially will act as the broker that finds and secures an agreement with the Seller for a well performing commercial real estate investment. VC will represent the partnership (Buyer) in purchasing the commercial real estate property and handle all aspects of the transaction through the Closing including: negotiating terms and documents with Seller, formalizing the new partnership entity, confirming financing terms with a legitimate lender, perform all due diligence for the property to confirm the legitimacy of the investment, coordinating timelines and details with Title Company, and everything else involved to schedule and Close on the property in an efficient and timely manner.
After the Closing of the property VC will act as minority managing partner of the syndication. In this role VC will be responsible to manage the accounts for the syndication as well as be the primary point of contact to each partner and to the tenant(s) as the Landlord and Owner of the property. VC will provide monthly distribution checks to each partner for the term of the lease, be responsible for the annual taxes of the syndication and its partners, and handle any needs related to the property and syndication for the life of the investment. In exchange for these services VC will be compensated a small percentage of Sweat Equity in the project that will be initially disclosed and accounted for to all involved.
What is the role of each Partner in a Syndication project? To provide any requested financial information to the lender involved in a timely manner. To provide the committed funds to Lender and/or Title Company in a timely manner prior to Closing, typically a minimum of $100,000 per partner, which can vary for each opportunity. To be committed to the investment opportunity in accordance with the other partners and the syndication as a whole. To enjoy the financial returns and benefits of investing in a commercial real estate property. This structure is intended to be a passive investment for each partner that will positively compound over time.
If you are interested to participate please Contact Us to discuss further.