Have you ever driven by a large apartment complex and wondered who owned it? The thought to yourself might be some really rich people must own it and not likely something you have ever thought you could get involved in? We are going to show you a few different ways you as an everyday investor could also own an apartment complex.
You may have heard the word “syndication” thrown around in the real estate arena, but many people may not understand what that means. Syndication is a fancy word for people coming together to purchase real estate, often large properties such as apartment buildings, self-storage businesses, industrial spaces like warehouses, and so much more. Like a fund, various investors pool their money, time, and expertise together to be able to purchase the desired real estate. Each investor has their role in finding, negotiating, closing and managing that real estate asset, but they come together collectively as a team to do it.
In syndication, the investors purchase the property using a process the SEC (Securities and Exchange Commission) calls Rule 506. This process allows investors of certain net worth and real estate experience to invest in these types of purchases, without the company purchasing the property going through the process of approval with the SEC. Because there is not a broad approval process due to this 506 exemption, it limits the people who can participate. In one form of the exemption, there is a maximum of 35 investors who do not have a high net worth. That causes the minimum investment to be quite high because the investors must raise a large amount of capital from a smaller pool of people capable of investing. In syndication, the traditional minimum investment is $50,000 which can be a very large amount of money for most military and veteran families.
In part 2 we will walk through how this is now possible for to be a part of for as little as $5,000!