"Invest in Real Estate Without the Hassle - Syndication Made Simple"
Real estate syndication is a type of real estate investment in which multiple investors pool their financial resources together to purchase a single asset. A sponsor, also known as a syndicator, locates the deal and manages the investment once the deal has closed. This sponsor serves as the general partner (GP) who coordinates the transaction throughout the process.
Although any kind of real estate property can be used for a syndication deal, multifamily syndication is the most popular type because it is a low-risk investment. Investors benefit from a consistent stream of income through rental payments.
Multifamily properties like apartment communities and condominiums have several units that can generate cash flow. Additionally, they are not heavily impacted by vacancies, unlike single family real estate properties. Investors can steadily build their wealth through multifamily syndication.
Passive investors provide most of the upfront capital required, in exchange for a share of the cash flow. Depending on the deal structure, they may also earn a share of the equity upon resale.
Sponsors are individuals or companies who take charge of the syndication deal. Sponsors, like Driftless Equity, look for a deal, acquire the property, and manage the real estate.
These syndicators have a ton of real estate experience. They have a deep understanding of due diligence for potential deals. It allows them to handle every step of the syndication process, making it a true passive investment for real estate investors.
Helping Busy Professionals Create Passive Income through Apartment Investing
Cash Flow - Get passive income without doing a thing. Ka-ching!
Leverage - Together, we can purchase a bigger and better asset for maximum scale.
Diversification - Diversify your portfolio into a tangible cash flowing asset.
Appreciation - Land and rents usually increase over time, so property values appreciate as well.
Tax Benefits - Real estate has specific tax breaks not available in other investments like stocks.
Mission Statement at Driftless Equity :
“Where innovation and integrity meet—we empower investors to grow their portfolios through smart, sustainable multifamily syndication built on honesty, diligence, and long-term relationships.”
Our Culture:
At Driftless Equity, we cultivate a culture rooted in integrity, transparency, and service. We believe that trust is earned through consistent actions and honest communication—with our investors, partners, and residents. Our team is driven by a shared commitment to excellence, continuous improvement, and innovative thinking. We embrace challenges, celebrate wins together, and stay humble in our pursuit of long-term impact. Above all, we operate with the mindset that doing the right thing always comes before doing the easy thing.
Investor Education
Sponsor Duties
The syndicator, also known as the sponsor or GP (General Partner), is the party with the know-how to drive the deal. They handle all of the hands-on work involved in the project, including:
Finding the property
Navigating the financing process
Sourcing investors and collecting funding
Hiring a professional management company or managing the property themselves
Distributing payouts to investors based on the terms of the deal
Being a landlord sounds like—and is—a lot of hard work that can siphon extraordinary amounts of time. Many individuals simply don’t have the time, resources, or know-how to find, improve, and manage multifamily real estate properties. That’s why multifamily syndications are attractive to many passive investors. The sponsor handles all of those tasks, while investors can generate a passive income.
Investor Duties
The individual investors, or limited partners, are the people investing in the multifamily syndication. Passive investors provide all or some of the funding but are not responsible for any of the day-to-day management of the property. Instead, they receive regular returns as the property earns income according to the terms of their syndicate agreement.
The investors can also look forward to a growth in their equity throughout the life of the project. When that project terminates, usually in about 5 to 8 years, the investors receive proportionate shares of any equity growth.
Multifamily Syndication Project Timeline
When deciding whether or not to invest in a multifamily syndication, understanding the timeline of the investment can be helpful. You can expect the process to look something like this:
The sponsor finds a property suitable for investment. Depending on the goal of the project, the sponsor may be looking for an already-successful property that provides a nice monthly cash flow in an area where the value of real estate is expected to steadily increase. This gives the investors the opportunity to also benefit from increased equity. Alternatively, some sponsors look for undervalued properties for which they can add value. This may include renovating or rebranding the building to increase rent or occupancy.
At Driftless Equity, our experienced investment team thoroughly evaluates properties to find assets that have vast potential but are currently devalued due to disengaged management. Once identified, we aggressively act on acquiring and improving the asset, with a property enhancement and management plan, resulting in exceptional returns for our investment partners.
The sponsor creates a limited liability corporation or limited partnership. This company acts as a pass-through company. Multifamily syndication investors invest in the property itself, not the company.
A memorandum is drafted detailing the structure of the partnership, fees, costs, risks, and the subscription agreement.
SEC registration is filed, if required.
The sponsor finds and applies for financing for the project. The investors are not personally responsible for this loan, and the investor funds act as a down payment for this loan.
The sponsor finds and secures passive investors. Once enough investors are found, the deal is closed.
The sponsor works to renovate the property. In many syndication projects, sponsors purchase undervalued properties and perform renovations to increase the value of the property and attract more renters.
The sponsor either manages the property or arranges for a professional management company to deal with the operations of the property.
Investors receive any cash flow per the agreed-upon terms.
At some point, the property is sold. Ideally, the sale of the property is completed at profit, and participating investors get a share of that gain.
Pros and Cons of Multifamily Investing
Pros:
There are many benefits of multifamily syndication for individual investors, including:
Multifamily syndication is a convenient, lower cost way to invest in the real estate market. Depending on the project’s capital needs, entry investment opportunities could be as low as $50,000. For the average American who cannot single-handedly purchase an apartment building, multifamily syndication provides a chance to realize some great opportunities in the rental market that would otherwise be inaccessible.
After the investment is made, the project requires no maintenance for the investor. The sponsor assumes all the challenges that come part and parcel with being the owner of an apartment building or other rental unit. Investors can keep their jobs, hobbies, and other priorities in place.
Multifamily investments are considered one of the most reliable forms of passive income. This likely makes sense to anyone who has ever lived in a built-up town or city of any size. Not everyone can afford to, or even wants to, own a home, so there is a need for rental housing. Multifamily units are the most affordable way for people to access housing, so multifamily properties fill a need that is unlikely to disappear.
Even when the building is not at its capacity, investors are still earning money in the form of equity growth. In addition to sharing in any profits from monthly revenues, multifamily syndication investors may see additional return when the project terminates and the property is sold. Of course, projects can catch the real estate market at a bad time or fall prey to uncontrollable neighborhood circumstances, so equity growth is not a guarantee.
Tax laws favor real estate investment, and multifamily syndications are a way to take advantage of the many tax perks that real estate investment provides. When investing in a syndication, the syndication is a pass-through company that does not realize the real estate tax breaks. The investor gets to take advantage of their share of depreciation and other perks.
Cons:
For all the benefits of multifamily syndications, there are also some drawbacks for some investors. For all that multifamily syndications are touted as reliable and “easy” investments, potential investors do need to be educated and informed of the possible risks, so they can decide if this is the right investment for them:
Limited Control Over Investment Decisions
Investors in syndications typically have limited say in the operational and strategic decisions related to the property, which are primarily made by the syndicator or general partner(s).
Illiquidity and Longer Investment Horizons
Real estate investment syndicates, and the assets they hold, are illiquid, with capital committed for several years. Investors should be prepared for longer investment horizons and limited options for early exit.
The rental market can be uncertain and uncontrollable. Each community or metro area is its own real estate biosphere susceptible to changes much more local than a worldwide pandemic. Loss of industry, aging populations, and many, many more factors can all make the rental market far from a sure thing. Even so, real estate investing tends to be more stable than other investing avenues even in times of recession.
Contact Us
Interested in working together? For Inquiries please call or email us.
715-821-1054
kevinkillam@edinarealty.com
