![]() Their responsibilities include: finding and sourcing the investment opportunity, performing all underwriting, putting together any renovation and operational plans, raising capital and placing debt, operating the day to day of the asset, and handling all investor relations, tax returns, K1s, etc. The deal sponsor, also called the “syndicator” or “general partner” (GP), is the active party in the investment. The 506(c) offering is for accredited investors only. ![]() ![]() The 506(b) offering is referred to as the “friends and family” offering. They are more commonly referred to by which investors are generally allowed to invest: accredited and non-accredited investors. There are two primary types of real estate syndication: 506(b) and 506(c). A limited partner is usually only contributing money as an investor, and carries less risk in several ways. In layman’s terms, a general partner holds most of the responsibility in a syndication deal. I prefer to keep my offerings as simple as possible so that there’s complete transparency and no potential confusion at any point in the process. And they can be as simple or as complicated as you would like for them to be. There are many different ways to structure real estate syndications. Investors, also called the “limited partners” (LP), are the passive party in the investment. Some common fees you’ll see in a syndication deal include: Acquisition fee, construction management fee, refinance fee, asset management fee, loan guarantee fee, and/or a disposition fee. If not, just like any other business deal, those fees can start to add up and cut way into your investment. If you’re working with a reputable deal sponsor, the fee structure should be simple and minimal. The fees in your particular deal are something you’re going to want to watch carefully. In a moment, you’ll be talking like a commercial real estate syndication pro! Fees Before we start down this road, let’s get familiar with just a few of the buzzwords we use in the industry.
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