The Lazy Investor’s Guide to Real Estate Syndications (Passive Income)

Ashley:
If you’ve been around real estate investing for more than five minutes, you’ve probably heard the word syndication thrown around. And if you’re a rookie, you’re probably thinking, “What is that? And should I even be paying attention to it? ”

Tony:
Yeah, it’s one of those terms that gets sauced around like everyone’s just supposed to understand it, but no one explains it in plain English. What it actually is, how it works, whether it even makes sense for where you’re at right now. So today we’re breaking it all down. What a syndication actually is, how people make money with them, what risks are there, and then how it compares to owning rentals yourself.

Ashley:
And we’re also going to talk about the other side of it, what it really takes to run a syndication, because that part gets glamorized a lot and the reality is very different than what you see on social media. This is The Real Estate Rookie Podcast. I’m Ashley Kehr.

Tony:
And I’m Tony J. Robinson. And with that, let’s talk about what a syndication is like in plain English. So a syndication without any of the crazy jargon is basically a group of people pooling their money together to buy something together. You can technically syndicate anything. You could syndicate a racehorse. Our friend Mauricio Raul talks about syndicating race horses. You can syndicate a restaurant. You can syndicate buying a business. That’s what private equity is, is basically a big syndication of people pooling money to go buy businesses. But obviously this is the Real Estate Rookie Podcast. When we talk about syndications in our industry, it’s a real estate syndication. So generally speaking, you have two groups of people inside of a syndication. We talk about who’s involved. The first group of people are your general partners and the second group of people are your limited partners. Your general partners are the folks doing all of the work associated with the deal.
And your limited partners are the people bringing the capital to the deal. So generals are the ones doing all the work, limited are the ones bringing the capital. Those two groups work together to buy whatever asset it is being purchased through that syndication.

Ashley:
So the next thing is a syndication, just a fancy word for using someone else’s money. If you’re pooling money, can you just say, “Hey, everybody, give me your money and I’m going to go and buy something.” But really there is a lot of more to that. There is the general partners and there are the limited partners. And depending what side you’re on, this could be a passive investment versus more active. When we think of your normal day real estate investing, you’re going out and buying. It is more active. When you are investing in a syndication, you are passive. You have no control. You may have some voting rights, right? Tony, compared based on different things in a syndication, depending how it’s structured. But other than that, you are not operating the deal, you are not finding the deal, and you really don’t get a say in much at all.
Also, there’s a difference in kind of control versus convenience. If you’re just buying a property yourself or maybe you’re in a small partnership with a syndication, you have no control, but it’s also convenient. You just give your money and you let them do all the work and hopefully you’re getting some dividends, you’re getting a return or you’re getting a big cash out when they sell the property in the end. So there are differences as far as that as to investing. So when you think of a syndication, really think about, first of all, what side of the syndication you would rather be on. And we’re going to break into that more as to what each side looks like. But first we’re going to talk more about the passive side when you are invested as a limited partner and you’re just giving money to be in the deal.
So this is a question that’s probably popping into your head. Do I need to be rich to invest in a syndication? We often see if somebody posts about a deal that’s saying it’s a $50,000 minimum, $100,000 minimum to invest. And there’s two different … Actually, there’s probably more that I don’t even know about, but there’s usually two SEC regulations. Okay? So that’s another thing we haven’t talked about is that syndications are regulated by the SEC. Where if Tony and I just went and partnered on a deal, we are not obligated to follow the SEC regulations. It’s when you pool a large group of people’s money and there are people that are not active. So even if it is a couple people, if they’re not active in the property, like Tony and I, if we invest in a deal, we both need to actually materially participate.
Even if that’s just Tony reconciling the bank account every month and me doing the rest, they have to have active and material participation in the deal to not be under … Sorry. To not be under the SEC rules and regulations. Tony, do you want to break down the two kind of … What is 50? Yeah, these are those.

Tony:
Yeah, I’ll break down the differences between the types of syndications that are most commonly used. So again, Ash and I are not securities attorneys, so go talk to someone who’s qualified. We’re just giving you some general education here, but there’s a 506B and a 506C506B, 506C. I like to think of the 506B as the 506 buddy, and the 506C is like the 506 commercial. So on the 506B, as Ashley said, you can raise money from people that you are already buddies with, your friends, your family, people who you have preexisting relationships with. Where if someone from the SEC came and said, “Well, hey, Tony, Ashley gave you a million dollars for your deal.” I can point to 700 plus episodes that we’ve recorded together, all of these text messages and emails, all the meetings we’ve been on together, the vacations we’ve gone on together. I have a preexisting relationship with Ashley, so it’s okay for me to raise money from her under this 506B.
Now, if I just met someone today and then they gave me a million dollars, well, it’s a little bit harder to establish that preexisting relationship. So 506B is for people that you already know. These are warm contacts. These are friends, family, people that you have a relationship with. Under a 506B, you can’t go and advertise on social media or any platform. There’s no general solicitation is what it’s called. So I can’t go send out a mass email to 80,000 people. I can send one email to one person, but if I send it to a big list, that’s soliciting. If I post on my social media, that’s soliciting. If I buy a billboard, that’s soliciting. Any type of general marketing activities that’s one to many is considered soliciting. So that’s not approved through a 506B. A 506C allows for general solicitation. So I can go and get on a podcast.
I can get on YouTube short form. I could put it in a magazine ad if I wanted. I can do whatever I want, right? But there are limitations around who can invest in a 506C.
And you have to do what’s called an accredited investor, which takes me to my next point that you have to be what’s called an accredited investor to invest in a 506C. And that’s basically kind of like a fancy way of saying you have to have some level of income or net worth to be able to prove to the SEC that you’re what they call a seasoned investor. So the requirements for being an accredited investor are either $200,000 if you’re an individual of annual income over the last, I think it’s like two or three years, with reason to believe that that will persist going into next year. Or if you’re a married couple is $300,000 or a net worth of at least $1 million, not including your primary residence. So it can either be based on income or based on net worth. I’ve heard rumblings of them changing those figures because it’s been the same for a while now, but I believe as of today, that’s still what it is, but that’s the trade-off.
506C, I can go in mass markets. So if I’ve got a big brand or a lot of folks, I can go market it, but I can’t get the kind of everyday investors. 506B, I can’t market it, but I have maybe a wider demographic of folks that I can then go market it to.

Ashley:
So then the next question is, what do you actually own in a syndication? And you’re actually owning a percentage of the property or properties that are in the syndication deal. You’ll notice that your name isn’t specifically in the deed because there will be some kind of company set up that you will be a limited partner in. You are going to most likely put your money into the syndication, so give your money, and then they are going to go and buy the property. So you’ll mostly commit to the purchase of the property before they actually own it. Then you’ll buy the property, and then when they go and refinance or sell the property, that is oftentimes when you’re going to be repaid or even bought out of the property. So it will really depend on the term you sign on for when you’re doing the syndication.
Oftentimes you’ll see it’s a three-year commitment where they’re going to hold onto the property or they’re not going to refinance for three years and they’re going to stabilize the property. Tony, how do you have your hotel set up? Do you have a certain timeframe as to when investors will be paid back where you’re going to refinance or sell the property?

Tony:
Not explicitly stated. Our note is a 10-year note, so that’s kind of the timeframe that we’re up against more than anything, is just making sure that we either refinance or exit within the first 10 years of owning it. So we’ve got some flexibility there, but just going back to your point earlier, Ash, on the structure piece, just as an example, let’s say that I’m the general partner and I need to raise, just for basic numbers, let’s say that I need to raise $10. And of that $10, all of that’s coming from my limited partners. If I buy, say Ashley is a passive investor and Ashley buys two shares, so she spends $2, that means she owns 20% of that limited partner pie. But remember, the limited partner pie is not the entire pie because me as a general partner, I own, call it maybe 30%.
So Ashley, with her $2 investment, owns 20% of the 70%, 20% of the 70%. So on a property that’s maybe worth, again, for just round numbers sake, let’s say the property’s worth $100, 70% of 100 is $70, 20% of 70 is seven times 0.2, which is 1.4. So Ashley owns $14 out of that $100 pie based on her 20% ownership. So I know the math gets a little tricky, but just trying to break it down for you as best as we can that when you invest in a syndication, your ownership is based on the amount of money that you put into the deal for your investment. So unless you put up 100%, you’re typically not going to own 100% of that deal. It’s some smaller percentage.

Ashley:
And you have to look for what percentage is available to the limited partners. In your example, you would use 70%. So there is no way that you would be able to own 100% of the property because it is two separate pools there. Okay. So now that you’ve invested your money into the syndication, I put my $2 into Tony’s syndication, how do you actually make money in a syndication and when? So now, Tony, this is on the passive investor side, and we’ll go and we’ll talk about the general partner side later and how they make their money, but what is your first opportunity when you put money into a syndication to actually seize some money back to you? Yeah.

Tony:
Well, first I’ll say that most syndications, at least in the real estate space, probably aren’t returning anything for the first couple of years. They’ve spent in the first couple of years to really stabilize that property and stabilize that asset, improve income, decrease expenses to be able to eke out profit and improve that profit as time goes on. So 2025 was our first operating year, our first full year operating in the hotel, and we didn’t do any distributions. All of the cash stayed within that business, but we did a really, really good job, especially on the back half of 2025 of starting to reduce our labor expenses and increase our income. We’re recording this right now in February of 2025. January and February are the slowest months of the year for a hotel, incredibly, incredibly slow. But we doubled our January revenue year over year, but we also cut our labor expenses at half for January of 2025.
So those are the things we’re really working on in a syndication is trying to improve operational efficiency, increase revenue and all those things. So first, it takes some time to really get to that point. But usually the first opportunity you have to realize any sort of return from a syndication is through distribution. So it means that there’s cashflow being produced by the property, that pile of cashflow gets to a point that’s big enough to say, “Hey, we’ve got enough in this pile here to start sending money back to all of our limited partners.” And it’s usually a very small percentage as you start. And again, that number starts to ramp up as that deal matures and progresses. So cashflow would be the first. The second, and this is where a lot of those bigger chunks of cash start to come back, is if there’s a refinance.
So let’s say that someone buys a deal initially maybe on some sort of bridge debt or basically like hard money, and then they refinance at year two or year three. And during that refinance, because they’ve, again, increased the income, decreased the expenses, increased the profit that’s being produced, a bank looks at that and says, “Hey, you bought this for two million, but now I think it’s worth four. So I’ll give you a loan for three million.” So now there’s a million dollars that they just made that they can go send back to a lot of their folks who have invested into that deal. So that’s one way. And then the biggest thing that we typically see is that the biggest payday comes when that property sells. So they buy it for two, maybe 10 years later, five years later, it’s worth 10. And now they just made eight million bucks and that’s when those private money investors get a really big check at the end.

Ashley:
We are going to take a quick break, but when we come back, we’re going to cover what it is like to be a GP, a general partner of a syndication and running the deal. We’ll be right back. Okay. Welcome back. So what’s the big difference between being a passive investor in the LP side or being the sponsor and being part of the general partnership? So sponsors, Tony, what is the actual duty and responsibility of a sponsor of a deal?

Tony:
Basically everything. They’re the ones that are sourcing the market, deciding on the market. They’re the ones that within that market. They’re the ones that are sourcing the deal. Once the deal is found, they’re doing the underwriting. Once the underwriting is confirmed and they’re negotiating on the contract, once the contract is signed, they’re doing all of the due diligence. Once the due diligence is done, they’re the ones that are going through the managing the rehab, repositioning the property, whatever it may be, and then managing the property long-term oftentimes comes down to either the GP or they’re maybe managing a property manager as well. So every single part of the transaction falls under the responsibility of the general partner. Again, the limited partners are really there just to bring the capital, the GPs do literally everything else.

Ashley:
And when we say the sponsor, that’s not necessarily one person, that’s a group of people. Tony, how many people are actually in your general partnership?

Tony:
So for us, we actually set ours up slightly differently because there’s only four of us involved on that deal. We didn’t actually syndicate this deal. We did this as a joint venture. Now- Oh,

Ashley:
I didn’t know that. Oh, then we can cut this part out or we can

Tony:
Keep. So because there’s only four of us, we actually didn’t run this as a syndication. We did it as a small joint venture. Now, the difference here is that one, all of our partners have voting rights. So I’m the manager of our NC and I’m also the property manager, but I can be voted out at any time by my other three partners because they have the voting rights to say, “Tony, you’re actually doing a really poor job managing this. We want to hire someone else, so I can be voted out at any time.” So we meet quarterly to discuss performance and do all those things. So there’s a certain level of involvement that all of our partners have. I’m still responsible for the majority of the day-to-day, but all of the major decision-making. I can’t sell it on my own. I can’t refinance it on my own.
I can’t even replace myself on my own. I’d have to get buy-in from all of our other partners. So we structured ours as a joint venture, making sure that they were voting rights, making sure that everyone had an actual say on the different actions that go into it, and then keeping each other in the loop and leveraging each other’s expertise to make those decisions around what we do at scale for the property. Yeah.

Ashley:
I honestly had no idea this whole time I thought you did a syndication, but honestly, a joint venture, I would way rather do that than just a syndication deal all day long. Let

Tony:
Me just hear that because we had attempted two syndications prior to that. And neither one of those were able to raise enough money to actually closing those deals. First deal, I think we raised four million out of six million that we needed. The second deal, we got halfway on a $3 million raise.

Ashley:
And I think clarify that when you mean raised. It’s not like you had people give you money and then you sat with it in your bank account. No,

Tony:
That’s exactly what happened. That’s exactly how it happened. So we raised everyone’s money, right? So we had all these different webinars and-

Ashley:
Oh, okay. I thought you would’ve just got commitment, but you actually got to the point of taking their money. Wow.

Tony:
We had money wired in the bank. We had four million bucks sitting in a bank account for this deal. And then as the funds kind of dried up, we had to go back and wire all those funds back and have people to say, “Hey, we didn’t get to the raise.” So it was a very, I think a lot of learning, obviously very frustrating, but we learned a lot through both of those processes, which is why for the third go around, we’re like, “Hey, let’s just go a little bit smaller. Let’s try and simplify this process.” And that was one that we were finally successful with, but that’s how we set up the hotel to make it easier on ourselves.

Ashley:
I was going to do a syndication too. I think probably it was around the time maybe when you were going to do the West Virginia one. Was that the one of them? Okay. Yeah. And mine was a campground and we got the campground under contract. I put a $100,000 earnest money deposit down, but gave myself 60 days due diligence period or something like that. But I met with attorneys, everything like, “Okay, what do I need to do for a syndication?” And then during my due diligence period, I just found so many more issues than I expected with this campground and we ended up getting out of the deal, getting our earnest money deposit back. And I am so thankful because I don’t think that I understood the responsibility of being a GP and how much you are responsible to other people. And I just don’t think that I have the … First of all, I don’t like to take a phone call.
So having to … First of all, pitch to investors, following up with them, what’s going on with the property. And I know there’s all systems and processes to set up like that, but I really like the fact that if I make a mistake or I decide against something or I don’t take action on something, and if I lose money because of it, it’s me losing money and I’m not losing it for anybody else. If I decide to go hang out with my kids for one day and it’s going to lose me a hundred dollars because I’m not doing something one day sooner, that’s okay. It hurts me. I’m taking the laws because I want to do that. But I learned a bunch of things about the syndication process, but not to the full extent that you definitely have going through the deals.

Tony:
Yeah. So I do think that 4A Ricky, doing a syndication on the GP side as your first deal would probably be a bigger undertaking because there’s a lot that goes into it. So if you are interested in syndication as a GP, as a general partner, the person putting the deal together, my strong recommendation would be to find someone who’s already done a few successful syndications and see what value you can bring to them. So if someone came to me with the hotel and said, “Hey, Tony, I’ve got a great hotel that it’s under contract. I just need your help with everything else. I need your help raising the capital. I need your help managing the rehab. I need your help managing it once we get it. I need your help with all these different pieces.” I would love to give someone a piece of the pie because they brought together the deal that maybe they can execute on themselves.
So if you are a Ricky that’s listening, one, send me a DME on Instagram @TonyjRobinson if you find something, but second, partner with someone who I think can fill those gaps for you to make it a little bit easier to get that first one done.

Ashley:
Yeah, it’s definitely a lot of things to figure out and a lot of legal implications. And also a big thing is having someone sign for the debt. If you’re doing a huge deal, they’re going to want, what’s the word for it, the person that’s going to sign on the debt that has the high net worth-

Tony:
A KP, a key principle.

Ashley:
A KP.

Tony:
Yeah. And what they’re looking for is someone who’s like, “Hey, if we’re going to write you a loan for millions of dollars, we need someone on your team who has the net worth to cover this debt that we’re giving it to. ” Because even if you find a great deal, even if the numbers look fantastic on paper, who knows what could happen in the future? So the banks want to make sure that they have some form of guarantee to say, “Hey, the buck has to stop somewhere. We got to get paid.” So the buck’s got to stop somewhere. But what I will say also is that depending on what size of property you go after, our buy box specifically asked for our hotel was we wanted seller financing. And while that limited us on some options, it also gave us incredible flexibility in that initial acquisition because we were able to negotiate terms that really played, really it was a win-win.
It worked out really great for the sellers, but also worked out really well for us. It wouldn’t have to jump through the hoops that a traditional bank might’ve made us jump through. So there are other levers there I think that might work as you’re looking to put the deals together also.

Ashley:
Okay. Then kind of another topic if you are thinking about being a sponsor of a deal is, do you need your own money in the deal? And technically, no, you could raise all the money, but I would say probably anybody that’s teaching or talking about investing in a syndication, when they talk about how to vet the sponsor, how to vet the deal is one, I would say this is probably in the top five of the first questions you should ask, is are they putting capital into the deal themselves? So are they having some skin in the game? And I think that just shows they believe in this deal too. They’re committed to this deal, that they’re investing their own capital. So I would say yes, you’re going to have an easier time finding people to invest in the deal if you’re showing that you’re committing your own money and putting it into the deal too.

Tony:
I will say, even if you are able to find a deal, raise all the capital without putting any money into the actual deal yourself, there’s still other costs that you as the general partner are responsible for. I mean, just putting together all of the paperwork for a syndication is tens of thousands of dollars. It’s not a small expense to put together this paperwork for the deal. I think on our last indication, we spent like 30 or $40,000 on paperwork just on the paperwork that people are going to sign was 30 or $40,000.

Ashley:
And just think that’s not even like it wasn’t guaranteed either. You ended up sending money back and it didn’t happen. Yeah.

Tony:
That’s a college tuition that we just spent on paperwork.

Ashley:
Sorry, Sean, you’re not going to college. Here’s some documents that we blew up.

Tony:
Here’s the TPMs that you can go through. So there’s that, right? There’s the legal cost. There’s the due diligence, just getting out to the property, paying for inspections. Even just like an appraisal on a commercial property is significantly more expensive than an appraisal on a single family home. An inspection on a commercial property is significantly more expensive than a single family home. Even your earnest money deposit. The first syndication that we attempted, we put in about 50 grand for our EMD. Our EMD alone was 50 grand, and then we spent, I believe, another maybe 50 or 60 grand between our legal docs and our initial due diligence. So we were all in for about a hundred grand on this deal that did not close. So you’ve got to make sure that someone’s got to foot that bill. So if it’s not you, that you have a partner who’s willing to commit that sort of capital, but it is definitely a more capital intensive game to get into.

Ashley:
Now let’s talk about why a lot of people want to be a sponsors and how they get paid. So here’s the important thing to know right here is that they make money on the purchase and the sale, but during the actual operation, it’s very minimal that they end up making, especially if the property isn’t performing well, if you’re not seeing distributions, they’re not getting distributions. They can be the operator or the property manager and charge fees for that, but it tends to be very minimal compared to the money that they make upfront. So there’s usually an acquisition fee, which is a huge chunk of money. And that is for paying them for their time to source the deal, to get it under contract, to cover some of those upfront expenses for their time to do the due diligence and the time to collect everybody’s money and get all the paper signed, everything like that.
There’s usually a huge sum that they’re making upfront from just the acquisition of the property.

Tony:
Yeah. So the acquisition fee is definitely one big piece. And then to your point, Ash, there’s the asset management fee that a lot of syndications will charge where that’s on a regular basis, could be monthly, could be quarterly. The general partnership is charging the syndication of fee for continuing to manage this asset on an ongoing basis. And that’s separate from the property management fee. There’s usually, again, a separate property management fee. The asset management fee is for being the person just overseeing the property to make sure that everything’s moving correctly. And then the third fee would be the property management fee. Some syndication or syndicators do this in- house, others farm this out, but for the ones that really want to make sure they’ve got cash flow coming in, they’ll do property management in- house. So they collect the property management fee, they collect the asset management fee, they get the acquisition fee upfront.
And then if there’s a big capital event, sale, refinance, et cetera, they’ll get some percentage of the proceeds from that as well.

Ashley:
Okay. Then kind of the last piece here for, if you’re going to be a sponsor is you need a team along with any other partners you have on the deal. You need an attorney, a CPA, you need a lender, property managers. You need somebody who’s going to be able to support you in different elements. You cannot do all of this yourself. And if you’re buying a multimillion dollar property, sorry to say it. I really, really love Tony’s short-term rental calculator. I really, really love the BiggerPockets calculator That’s not going to cut it to underwrite a $100 million multifamily property. You’re going to need something more complex. And then also just asset management support. My one really good friend is the sponsor for a syndication and there was this one time we went on a family vacation and literally half the time she was on the phone trying to get insurance quotes for these properties and negotiating the insurance and figuring all this out.
So there definitely is a lot of work that goes into the deal upfront when you’re acquiring it and like throughout. So if there are things that you don’t want to manually do or take care of, you’re going to need to hire somebody on your team to take care of those things. All

Tony:
Right. So we’re going to take a quick break, but while we’re going, if you’re not yet subscribed to the Real Estate Rookie YouTube channel, you can find us there at realestaterookie that way you can not only hear money nationally’s voices, but see our faces every Monday, Wednesday, and Friday, and we’ll be back with more of it after this. All right, we’re back. So we talked about the syndication from the side of the limited partnership, the people putting money into the deal. We talked about it from the side of the general partnership, the folks who are actually managing and putting everything together. Well, let’s kind of finish off by talking about how do we know if a syndication is a good deal or just total garbage. So what are some of the red flags look out for, why sometimes projected returns can be a little misleading, and just the importance of focusing on the operator’s track record.
So red flags and pitch deck, I think first and foremost, it’s maybe the underwriting piece that Ash talked about before we took our last break. We want to make sure that there’s a level of realism, I guess, inside of the projections that we see. It’s almost like when you see any deal and you see a pro forma from the person that’s selling it, those are always the rosiest, most optimistic, sometimes unrealistic projections that you could see. And if some Someone’s pitching a deal to you based on the proformas that were given to them by the seller, by the broker who’s on the deal, that will be a big red flag for me. I want to see a lot of research that went into how this deal was actually put together.
For example, when we pitched our hotel to our potential partners, one of the things that we did to put all of our data together, we did not use my Airbnb calculator, like Ashley alluded to before, because to her point, that doesn’t work on a big deal. What we used was a custom underwriting tool that we paid someone a few thousand dollars to build out for us for all of our hotels, because that was the strength that we needed in our underwriting. We went through and we looked at every single calendar for all of the comparable hotels in that same town, and we manually clicked through their calendar for 12 months out to get a sense of how their pricing was. We got data from the brokers on what is the average ADRs in the market and what is the average occupancy in the market. We looked through all of the one bed and single room Airbnb listings to see what they were charging both historically and looking for to give us a better understanding of what the property could do.
So you just want to see a level of rigor in their underwriting to make sure that they’re presenting the right data. The second thing is you also want to see that they’ve stress tested this deal.What happens if the assumptions are off by 5% or 10%? What happens if they’re off by 20%? Did they just assume best case scenario or did they give some variance in how that property might perform? The last piece that you want to see is what is the actual business plan? What are we trying to execute on here? Is the goal that, hey, this is actually a really good property, but it’s just maybe being mismanaged. Do we need to improve the marketing? If I’m buying a hotel, are they only on their own direct booking website and they’re not on booking.com or Expedia or all these other travel platforms? Is there an opportunity there just to exact same property and maybe get more distribution?
Is it a heavy rehab? Are we going through and are we rehabbing every single property? Is it maybe an expansion? Is there room to add more units? What is the business plan and what are the underlying economics that make that business plans down? And then the final piece I think would be the team. Who’s on the team? What’s their track record? How much of this have they actually done before? What was the level of success on those deals? Or if there were failures, what did they learn? And how were they incorporating that into this deal? So those are the things I’m probably looking for, Ash.

Ashley:
I think one thing too that we’ve seen more and more often is, oh, they have a social media following that they’re probably good to invest with. And I think that’s for all things, not just syndications as, oh, this person has a following. They must be trustworthy. Other people must believe in them or they must be good at what they do if they have a huge following. So I think make sure that you’re not basing, doing a syndication off of popularity, I guess, and really doing your due diligence on the person and the deal and the team members. So the last thing here before we wrap up is, what is the worst case scenario in a syndication? If you are investing in a syndication deal, the worst case scenario is you lose it all and you get nothing back. So if you’re looking at $100,000 minimum and you put in $100,000, that can mean over a two, three year span that you are getting nothing.
You don’t get any payouts, no dividends, nothing disbursements over that period of time. And then the property fails and it could be foreclosed on by the bank, taken by the bank, and you are left with nothing. There could be sold at a loss where maybe you get part of it returned. So there are different outcomes, but when you are doing a syndication, you have to understand that you are not in control. So if the property does fail, there’s nothing you can do about it to turn it around and you have to rely on the people that are the operators that are part of the GP. So make sure you are doing your due diligence because in the end, you can blame the people who brought you the deal. You can blame the sponsors as much as you want, but this is a risk you have to know can happen when you are investing in a syndication that you could not get any of your money back.
And I think that’s one thing that I really like about being a smaller investor is that I have control over the deal and that if the property is poorly performing, that I feel like I could do some things to at least get a partial return on my investment. And I think that’s a lot harder to do when you’re talking huge multimillion dollar properties to be able to turn them around quickly or to exit quickly. I think we’ve seen a lot in the last several years. In 2021, it was everybody became a syndicator. I mean, I almost became a syndicator. Tony almost became a syndicator. It was like the next, you got to do it. Once you’re investing in real estate, the next step up is doing a syndication. And that’s the next big thing. And it was deals were just flowing and there was so much opportunity, there was low interest rates, and we could do a whole nother episode on what happened during the last several years.
And if that’s something you would be interested in, go ahead and put in the comments here on YouTube. We can kind of go over how so many syndication deals have struggled the last several years of what they went through. And a lot of it obviously has to do with the change in the market, the change in rates. And don’t worry, we’ll bring an expert on for you guys to talk about that and dive deep into the numbers on that if you guys are interested. Well, thank you so much for listening. I’m Ashley. He’s Tony and rookies. Remember, syndication, not the best way to start out in real estate investing as a rookie, get some experience under your belt or partner with someone like Tony. Find him a hotel and D him at TonyJRobinson, or you can DM me if you find a lake house at Wealth Room Rentals.
Okay. We’ll see you guys next time. Thanks so much for listening.