How DO multifamily apartment actually syndications work?
Simply stated – Passive investors invest by contributing funds together alongside the general partnership team acquire properties in solid, strong markets. The general partnership team identifies a property, performs the underwriting, conducts the due diligence, handles the full acquisition and pre-operations then utilizes the money to purchase properties. We consider Class A, Class B or Class C properties.
The general partnership team consists of experienced real estate professionals who identify investment opportunities and manage the property.
Passive investors are paid through distributions of cash flow and/or appreciation in value when the property is refinanced or sold.
There are basically 3 steps to multifamily apartment syndications – Acquire the Property, Stabilize the Property, Exit by Refinancing and/or Selling the Property.
HOW ARE PROFITS REALIZED?
•By streamlining operational expenses, increasing rents, raising occupancy, and making renovation upgrades, the property’s value is increased.
• When the property is stabilized and the property value increases, it will be refinanced and the appreciated value will be realized.
• The funds will then be distributed to our investors (you & I).
• Depending on market conditions, we will sell the property or refinance again to return all of our investor’s initial capital.
If refinanced, investors maintain initial equity and continue to receive recurring income from the cash flow. If refinanced, typically this occurs in year 2 or 3, of the property hold period
While investors receive monthly or quarterly distributions, it’s very important to note that your initial investment will generally be illiquid throughout the hold period of 3 to 5 years, of most deals.
Interested in learning more? Visit my website at kelsiemansray.com/investing to level up, and learn how other passive investors and ordinary syndicators, like myself, are building wealth for our families and how you can too. To learn more about the process, you can also click here.
If you are interested in future investment opportunities, click here.
By Kelsie Mans-Ray
KMR Multifamily Acquisitions / Syndicator
NOTE: This information is of a general, educational nature and may not be construed as tax, financial, or legal advice pertaining to a specific offering, exemption or situation.
