WHAT IS A REAL ESTATE SYNDICATION?
Real Estate Syndication is the process of gathering investors into a group and channeling their funds into lucrative real estate investments. Funds can be used for Purchasing Residential Homes, Apartment Buildings, Commercial Property, Oﬃce Buildings.
At Arcadia, the Return on Investment for our participants is secured against the asset by multiple components depending on the investment type: Annual intended return, cash on cash return, where the project produces an on-going cash ﬂow and in some investments an equity participation, which may produce a capital gain for tax purposes. The combined returns are typically higher than other investment vehicles.
HOW MUCH CAPITAL DO I NEED TO INVEST IN A SYNDICATION?
It depends on the syndication and it’s oﬀering, each oﬀering Arcadia allows participation in has different parameters both related to capital required to speciﬁc rates of returns.
WHY SHOULD AN INVESTOR CONSIDER PARTICIPATING IN SYNDICATIONS?
Real Estate Syndication gives people access to private investment opportunities with a partner who has much stronger purchasing power who can provide hassle free ownership backed by a team with skills, experience, and resources. These include the day-to-day operations, due-diligence, ﬁnancing, acquisition, management, repositioning, and disposition are taken care of by this seasoned team of people with specialized skills.
At Arcadia, we conduct thorough due diligence, analyze, research and underwrite hundreds of properties to ﬁnd a hidden gem. We work with teams of contractors who will undertake remodeling, teams of property management companies who will manage tenants. We provide real estate investment experiences without the hassles of property management or project management. Now, how cool is that?
WHAT IS THE YIELD ON SYNDICATION?
The rate of return varies based on the actual property, its type, location, the amount of money required to complete the ﬁx-up and or repairs, every property performs diﬀerently. When considering participating in a syndication look at the Annual intended return.
At Arcadia, our participants, historically enjoy Annual intended returns.
HOW SAFE IS PARTICIPATING IN A SYNDICATION?
All investments carry some level of risk, by law, only an organization carrying a bank Licence can guarantee anyone’s money, otherwise, it’s unlawful.
We at Arcadia build our syndications with built in precautions. These include, carefully selecting the property, analyzing its economic stability, analyzing its physical condition & stability, considering it’s (the property) 5,7,9 year buy, lease, hold strategic plan, prior to acquiring the property its legal due diligence is completed, Title Insurance is obtained, property insurance is secured, the property is always purchased with a built-in equity position, which serves as a safety net.
WHY SHOULD I PARTICIPATE WITH A LEAD SYNDICATOR?
There are tremendous number of beneﬁts in working with an experienced or lead syndicator, consider: access to industry experts, built in equity on acquisition, capital growth, cash ﬂow (where applicable), larger purchasing power due to large pools of capital, tax beneﬁts, diversiﬁcation, reduction in debt, a team of people to manage the assets and cash reserves for any unforeseen happenstance.
We at Arcadia as the lead syndicator invest alongside our participants ( our money is where yours is ) additionally we make in-kind investments of our time – locating properties, negotiating purchases, conducting due diligence, working with Brokers and Owners, resolving legal trouble spots, engineering creative ﬁnancing solutions to our property strategic plan, negotiating leases, underwriting loans and handling property management to achieve maximum returns while ensuring capital growth through sweat equity and natural economic trend. With 36 years of experience, our credentials continue to prove themselves.
AFTER ALL THAT, I WANT TO DO THIS OWN MY OWN, AND SO I HAVE QUESTIONS, CAN YOU PLEASE ANSWER?
We are happy to point you in a direction, where we came from.
DO I NEED A BUSINESS PLAN FOR MY REAL ESTATE INVESTMENT?
Real estate investing generating revenues an active business, a solid business plan with investment criterion must become the basis of such a plan. Here are some of the things you as an investor need to spend time deciding and drafting into your plan.
- How much capital you have?
- How much down payment you can aﬀord on each acquired property?
- What are your goals as related to short term, mid term and long term?
- Will you buy, ﬁx-up and sell?
- Will you buy, lease, and hold?
- Will you buy and ﬂip?
- What areas will you buy?
- What will be the built-in equity that will ensure proﬁts?
There are in all 57 questions that are required to be answered, 47 due diligence questions to consider, 15 ﬁnancing questions we always ask, 13 legal considerations that have to be full ﬁled, 9 tax questions you must have answers to, and 6 topper questions to consider.
WE SUGGEST THESE MOST IMPORTANT KEYS…
- Work with an experienced mentor
- Surround yourself with an experienced team of professionals and then get started.
- Develop a solid real estate investment business plan, which is more important to you than ﬁnding one good deal
- Keep this plan updated based on experience and it should keep you going in the right direction.
- A team of experts should consult you on your growth strategy
WHAT MAKES A BETTER INVESTMENT, APARTMENTS OR HOUSES?
The answer to this question is depended on whether the property is bought for cash ﬂow, tax beneﬁts, long term wealth or capital growth strategy. Before purchasing your property run your analysis using relevant numbers based on the above considerations, after that, take into consideration your investment goal (short, mid, long range) and your desired return on investment, build-in and built-up equity, and capital growth and appreciation. A well-located Apartment Building will make a better long-term investment and an investment in a House or Condominium will serve as a good base to start.
IS IT MORE PROFITABLE TO MANAGE A PROPERTY ON YOUR OWN, OR HIRE A PROPERTY MANAGER?
Experience will teach you that larger commercial or apartment type properties require a property management team because the eﬀectiveness of your time is of consideration. Most new investors over time transition from managing their own properties to having a management team to do deal with tenant issues. Tenant issues are daily and time and resource consuming.
As a normal case for business vacancy and property management fees should be included in your acquisition analysis. Don’t be penny wise and dollar foolish when it comes to property management, use your time for developing your businesses.
At Arcadia, you can always have one of our executive associates work with you.
HOW DO I PICK THE BEST CAPITAL GROWTH AREAS?
Here are some of the ways to identify capital growth areas look for: transport amenities, sustainable economic uptrend, growing employment hubs as a sign, rental yield trends are moving in an uptrend (rents and sales prices are on the increase) these points will often reﬂect positive on the capital growth, of a property in an area. Have these signs as your basis for analyses.
WHEN SHOULD I SELL?
This question is reﬂective of supply and demand, in an area you’ve purchased if other homeowners get the idea to sell this starts to spiral downwards prices, pushing supply up, bring prices down.
A holder of income property has a ﬁnite timeline in which the return on capital or return on equity starts to decline, given supply and demand.
You can analyze your diminishing returns and determine if an investment with another property would be more proﬁtable (in the USA it’s known as the 1031 exchange in Canada it’s known as the butterﬂy strategy).
The market conditions play a large role in determining the appropriate time for an exchange or not.
You want to sell when there is less competition in the market. As reﬂective of rule for supply and demand, the more properties on the market for sale, the less of a demand (for higher price) you can make for your property, waiting for too long (to sell) can result in a disadvantage if you want to reinvest for longer-term capital growth.