In common parlance, any kind of reference to the word ‘syndicate’ would occur under hushed whispers and with a certain degree of awe for the criminal underworld. However, when it comes to real estate among other organizations, the connotation of the word used is for lack of a better word, a law abiding one.
There’s no doubt that in today’s scenario of the real estate market, investments can be complex and thus this word is used when it comes any organization that allows two or more investors to participate in the ownership of an interest in real estate, not necessarily the property itself.
So, the asset is normally divided into ‘investment units’ that can be acquired by individual investors and this solely depends on the type of syndicate itself. In addition, investment units can also mean ownership in one or more interests in real property rather than directly owning an entire interest.
Now, why would investors like to do this?
Mostly, this is to provide some form of tax shelter, for individual investors who have to formalize their relationships with the syndicate by signing a contract which indicate their interest in real property.
Even though there are different principles on which a syndicate is built, the normal structure is normally based on the legal relationships that already exist legally such as co-ownership, divided ownership, corporation, trust, general partnership and limited partnership.
The people who play a role as a part of a syndicate are the syndicator (who creates the syndicate), the syndicate manager (who manages and promotes it) and most importantly, the individual investors.