Many investors have heard of syndications.  Investors who want to be limited partners need to know not only the benefits, but also the potential risks.  This week we are discussing significant pros and cons of investing in these opportunities as limited partners.

Click here to watch the YouTube video:

PROS AND CONS OF INVESTING IN SYNDICATIONS

Some of the pros, or key benefits, of investing in syndications as a limited partner are:

• Hands off investing in real estate – no tenants or toilets
• Returns typically average higher than the stock market averages
• Economies of scale are achieved in management and maintenance
• No personal credit is required to get leverage, thus boosting returns on your investment
• Preferred returns are paid, giving you cash distributions at regular intervals
• Equity split of distributions and profits with the general partners increase your total return on investment.
• Diversification can include various geographic markets, different syndicators and multiple asset classes such as apartments, self-storage facilities, and RV parks.
• Depreciation can be used as a paper loss to offset other income.

Some of the cons, or risks, include:

• No control over the investment.  The general partners have the control.
• Capital calls may require you to invest additional funds at a later date.
• The general partners decide when it is time to sell or recapitalize.  Investments should be considered as long-term investments.

Check out the video (about 13 minutes) as Harland and I go into each of these pros and cons of investing in syndications as limited partners.  Then get in touch with us.