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What is a property syndicate?

Wednesday, 2nd Sep 2015

group fundProperty syndicates are becoming a more common investment option for many, but what exactly is a property syndicate?

Typically, a property syndicate is a group of investors that pool their money to invest in either the development of a property or for the acquisition of an existing property.

If the money is invested in a property development, for example an apartment building, generally the development is sold once it’s been finished and the profits of the project are distributed to the group of investors.

Alternatively, if the money is used to acquire a property, for example a commercial building such as a warehouse, generally the group of investors will receive a regular income stream from the rent paid by the tenant.

Syndicates are an effective way for everyday investors to gain exposure to investment opportunities with higher price-entry points.

For example, a good commercial property would typically cost at least $2 million and require a significant deposit. Many investors wouldn’t have the financial capacity to purchase a commercial property on their own, however a syndicate allows these investors to pool their funds and gain exposure to the returns on offer.

Similarly, a 2 or 3-storey apartment complex, which would typically cost at least $3-4 million, isn’t financially viable for the vast majority of investors. However, by pooling funds a project of this magnitude becomes attainable.

When considering a property syndicate, it’s important to do your research and ensure companies offering such investments have a successful track record of delivering profits for their clients and hold the appropriate licences to be able to conduct syndicates.