If the answer is “yes,” it’s a syndicate.Ī syndicate is considered a security. There is a four-part test to determine whether something is a syndicate, but the most important question you need to ask is whether the anticipated returns on an investment will come from a third-party. SyndicationĪs you can probably guess, a syndicate allows for passive investors. There is no room for passive investors in a joint venture. Everyone has a defined role, and each must take part to give the project a shot at success. Another partner may take on the role of property manager, and the third may secure financing.

You may be great at doing remodeling and rehabilitation of properties. You can’t just sit around and wait for a return based on the work of others.įor example, let’s say you partner with two other investors. The linchpin of a joint venture is that each investor must take an active role in the investment. In a joint venture, two or more investors partner together. Understanding how the two operate can help you better plan your venture and ensure that you keep yourself out of legal trouble. But how do you raise capital to acquire a significant asset? Most people in the real estate game opt to do so through either a joint venture or a syndicate.Īt first glance, there may appear to be little difference between joint ventures and syndicate. An influx of capital is crucial to keeping your investments running smoothly. It takes time, money, and effort to build and maintain a successful real estate portfolio.

Few people have the type of capital to invest in real estate on a whim.

Joint venture definition real estate