How Sponsors Make Money

Acquisition fees of 1-3% charged at closing on the purchase price Ongoing asset management fees of 1-2% of invested equity annually Promote or carried interest — a share of profits above a hurdle rate Some sponsors also charge disposition, refinance, or guarantor fees

Accreditation and Offering Types

506(b) offerings allow up to 35 non-accredited investors but ban advertising 506(c) offerings permit general solicitation but require verified accreditation Accredited investors must meet income or net worth thresholds set by the SEC Minimum investments typically range from $25,000 to $100,000

Review full-cycle track record across multiple market conditions Assess GP co-investment — alignment improves when the sponsor has skin in the game Evaluate communication frequency and transparency of financial reporting Check references from existing LPs and review prior deal outcomes

Tax Treatment and Benefits

Investors receive K-1 forms reporting their share of income and losses Cost segregation studies can accelerate depreciation deductions significantly Passive losses may offset passive income from other investments 1031 exchanges are generally not available to individual LPs

Investments are illiquid — capital is typically locked for 3-7 years Sponsor risk is significant; poor management can erode returns entirely Market downturns may require capital calls or lead to loss of equity Projected returns are estimates, not guarantees of actual performance

Due Diligence Checklist

Read the full private placement memorandum and operating agreement Verify the sponsor's track record with audited financials if available Understand the fee structure, waterfall, and preferred return terms Consult a CPA and attorney before committing capital to any offering

Real Estate Syndications

Curated by: Rubric Advisors

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What Is a Real Estate Syndication?

A pooled investment where a sponsor acquires and manages property on behalf of investors
The general partner (GP) handles operations; limited partners (LPs) contribute capital passively
Typically structured as an LLC or limited partnership
Multifamily apartments are the most common syndication asset class

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What Is a Real Estate Syndication?

How Sponsors Make Money

Accreditation and Offering Types

Evaluating a Sponsor

Tax Treatment and Benefits

Risks to Consider

Due Diligence Checklist

Related Topics

Accredited Investor Overview

Delaware Statutory Trusts

Exchange Funds

What Is a Real Estate Syndication?

How Sponsors Make Money

Accreditation and Offering Types

Evaluating a Sponsor

Tax Treatment and Benefits

Risks to Consider

Due Diligence Checklist

Related Topics

Accredited Investor Overview

Delaware Statutory Trusts

Exchange Funds