In a syndication, a general partner (sponsor) sources the deal, arranges financing, manages the property, and handles all operations. Limited partners (passive investors) contribute capital and receive a share of cash flow and profits without active involvement.
Typical syndication structure:
- Minimum investment: $25,000–$100,000 per investor
- Preferred return: 6–8% to LPs before sponsor profit share
- Equity split: 70/30 or 80/20 (LP/GP) after preferred return
- Hold period: 3–7 years typical
Most syndications are offered only to accredited investors (net worth $1M+ or $200K+ annual income) under SEC Regulation D. Investors receive K-1s and can benefit from pass-through depreciation.
Related Terms
Internal Rate of Return (IRR)
The annualized return rate that makes the net present value of all cash flows equal to zero.
Equity Multiple
Total cash returned divided by total cash invested — shows how many times you multiplied your money.
Passive Activity Loss (PAL)
Tax losses from rental properties that can only offset passive income — unless you qualify as a real estate professional.