Multifamily Syndication Explained

Multifamily Syndication is a group investment opportunity for people to pool their resources and purchase larger assets (apartments buildings) that would be difficult to acquire individually. 

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How does a Multifamily Syndication work?

The key players in this partnership are the General Partners also referred to as GPs and Limited Partners or LPs (aka the investors).

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The General Partners put the deal together and are responsible for managing the investment. A General Partnership team is comprised of individuals who contribute on different aspects of the syndication. Typical roles include: deal sourcing, underwriting, secure financing, capital raising, negotiating, and performing due diligence.

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Limited Partners are passive investors who invest their money in return for equity in the deal. LPs will receive a cash flow disbursements each quarter or according to the management plan. Investors also receive monthly and/or quarterly reports about the performance of the property.

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The Property Management Company is also vital part of the syndication but may or may not be part of the GP team. The property management company handles all of the staffing, leasing, rent collecting, etc.

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When a property is under contract, the Due Diligence phase begins. GPs will review leases, check units, and work with a trusted management company or third party due diligence company to evaluate the physical condition of the property. At the same time the GPs will work with the lender ensuring all requirements are met.