How To Start A SAAS

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                                            Real Estate Syndication Structure
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                                         First, let's outline what Real Estate syndication is. When a real estate investment company organizes a group of individual investors to purchase a property, it is called a syndication. This type of investment is very attractive to sole owners, family offices, trusts, and other investors who don't want to be the sole owner of a large property. Syndications allow a single investor to play a passive role in real estate investments, thus relieving you of the headaches of property management. In return, each investor receives a portion of the quarterly cash flow and a portion of the profits when the property is sold.
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                                          Let's look at the two most common real estate syndicate structures and do the breakdown of each type of return.
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                                           Real Estate Syndication Mapping #1: Straight Split
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                                         Start with a straight split. This is probably the easiest real estate syndication structure to understand. As the name suggests, this transaction structure uses the same allocation for all returns (cash flows and gains from asset sales). For example, if a company uses its 70/30 split, 70% of all earnings (cash flows and profits from the sale) will go to the restricted shareholders (i.e., the group of investors who have passively invested in the company). That means 30% is invested and passed to the general partner (aka deal sponsor — the person who syndicates the real estate deal). This is true whether your earnings are $1 or $100,000. In a 70/30 split real estate syndicate, the passive investor receives 70% of the proceeds and the general partner receives 30% for his role in the real estate syndicate. This trading structure is especially beneficial for passive investors in high- yield trading.
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                                             Real Estate Syndication Mapping #2: The Waterfall Structure
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                                         Another common real estate syndicate structure is the waterfall structure, which often uses a preferred rate of return preferred by many investors. If the syndication includes a 7% senior yield, it means that the first 7% of the yield (cash flow or profit on sale) will be paid directly to you and the other limited liability shareholders. That is, the investor receives 100% of the first 7% of the return. The General Partner only receives a 7% sales share of sales.
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                                             Preferred Return Example
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                                         For example, say you invest $100,000 in a real estate syndication with a preferred yield of 7%. The first year's return is 7%. So, the investor gets a full first veto over that 7%. So, from an initial $100,000 investment, he would receive 7% or $7,000. GP gets none of this. This does not guarantee that you will receive the full 7% of returns, but it is a guarantee that you will receive preferential treatment for the first 7% of returns. Also, fires are lit among your general partners to ensure they are working hard to deliver returns over 7%.
                                         
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                                         <b>What Happens Beyond the Desired Rate of Return?</b>
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                                         So, what happens when you hit the 7% threshold?
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                                         The waterfall model activates further allocations of real estate at the following percentage rates of return: For example, earnings between 7% and 14% result in a 70/30 split (70% to Limited Partners, 30% to General Partners). In this example, the allocation may change again as soon as the 14% threshold is reached. It could be a 50/50 split this time. Because of this use of different thresholds or gates, this model is often called a waterfall structure. The waterfall structure is often a win-win because it represents a conflict of interest. General Partner will not acquire any property unless it is reasonably certain that the property is likely to generate income over the priority. General partners also have incentives to do what is best for their wealth and investors. The better your property performs, the more you earn, and the more your general partner earns. If the general partner can only return small or medium returns, most of those returns go to the investor. But when the general partners go all out, everyone wins. Investors can use their preferences and some additional features. The higher the return, the more the General Partner will be rewarded for their efforts.
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                                         <b>Time When the Waterfall Structure Is Best</b>
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                                         Let's say the investment pays for itself in 5 or about 10 years. Which property structure would be better for the investor in this case? Preferred-yield properties may be cheaper for the investor, as the majority of the cash-on-cash return is sent to the limited partners in this property. For a $100,000 investment with a 10% annual interest rate, the straight split is 7% of $100,000, or $7,000. On the other hand, the same 10% is equivalent to 100% at $8,000 plus 70% at $2,000, or say $9,400 in the preferred yield structure.
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                                         <b>Times When the Straight Split looks better</b>
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                                         However, let's consider the case where the return is higher. More specifically, when selling assets, a straight split is especially effective if the profit from the sale is high. For example, if the profit from the sale is 50%, a direct split of the $100,000 investment will give 80% of $50,000, or $40,000. On the other hand, the desired return for the waterfall structure is 100% at $8,000 + 70% at $6,000 + 50% at $36,000, or say $30,200. Investors get a bigger piece of the pie because they can get higher returns by selling assets.
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                                         <b>The Structure of Real Estate Syndication</b>
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                                         One of the most important issues to be aware of as an investor in a real estate syndication is the structure of the syndication. Real estate syndication occurs when different investors pool their resources, capital, and skills to acquire real estate. Real estate contracts can be concluded with different types of real estate, such as:
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                                           <li> Residential Tower</li>
                                           <li>Portable Indoor Park</li>
                                           <li>Floor</li>
                                           <li>Private Repositories</li>
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                                         The two parties to a real estate syndication, the general partner (colloquially called a real estate partnership) and the limited partner, are often referred to as passive investors. Syndication GPs are responsible for finding deals, raising capital, and, once the deals close, ensuring an attractive return on investment for investors. Limited partners are responsible for funding real estate syndicates. Passive investors are not responsible for active asset management once the transaction is complete. When it comes to real estate syndication, there are many ways to structure your project. Structures will vary depending on the general partner's experience, track record, specific deals, markets, and many other factors. Passive investors (LPs) need to understand the type of distribution structure, as the structure of the distribution structure affects the returns of passive investors.
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                                         Real Estate syndication is an incredible moneymaking investment opportunity. Remember, while there are great ways to diversify your portfolio, no particular real estate syndication structure guarantees high returns. One of the most important aspects of investing in real estate syndication is choosing the right RE syndication company that you like the most, know and trust. In addition to working with the right team, before investing in a real estate syndicate, you should ensure that the investment meets your individual goals and risk appetite.
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                                         Syndication (or real estate syndication) is a partnership between multiple investors. It is a combination of your skills, resources, and capital to buy and manage properties you otherwise couldn't afford. Real estate syndicates usually have two roles:
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                                         Syndicator and Investor. A syndicate is defined as a temporary alliance of companies coming together to manage a large business that would be difficult or impossible to achieve individually. Setting up a fund follows the same definition. You can pool your resources to buy a business, a real estate project, or any project you want to expand through the fund first. The most popular is real estate syndication. Some investors, to make money, pool their capital and buy large complexes to force their appreciation in value (or simply realize dividend income from them).
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                                         Here’s what it looks like
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                                         Syndication is set up in a Limited Liability Company, but it can also be set up like a fund in a GP/LP structure.
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                                         Remember step 1?
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                                         1. Find offers
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                                         The first step in syndication is finding a deal. It doesn't matter if it's real estate or a good business project. Once you find a good property, you can incorporate the LLC and complete the LLC Operating Agreement. Most LLCs have so-called "sponsors" or "managers." Sponsors primarily invest in Sweat Capital, while investors provide capital. Sponsors typically invest 5-20% of their own, and the investor holds the rest of the capital. Real estate syndication can take from just a few months to several years. However, it depends on the property and investment strategy.
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                                         2. Form a Deal
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                                         Once you close a deal, think about how you want to do it. At this point, you can analyze the deals and find out how much the manager owes the sponsor. Know what types of submissions you need to submit and make sure you understand them. Also, learn what must be included in the LLC Operating Agreement.
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                                         3. Collect money
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                                         Get soft capital commitments from investors. If money doesn't come to mind, you probably didn't get a very good deal and should go back to step 1
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                                         4. Fill out legal documents
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                                         Once you've found a deal, traded it, and raised the money, form an LLC for it. All investors who invest money in an LLC become partial (equivalent/proportional) owners of that LLC.
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                                        Here are some quick financial stats from real estate syndication that I found interesting:
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                                          <li>Over 120,000 investors participated in syndication in 2019.</li>
                                          <li>The average list price was $3 million.</li>
                                          <li>Passive investors get 80-95% of the initial capital investment.</li>
                                          <li>Sponsors contributed between 5% and 20% of the initial capital investment.</li>
                                          <li>Investors received preferential returns of 5-10%.</li>
                                          <li>The average senior return was 8%.</li>
                                          <li>Sponsors were charged an acquisition fee of 0.5- 2%. The average closing fee was 1%.</li>
                                          
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                                         Property management fees for investors range from 2% to 9%. If someone controls less than 51% of the transactions in the syndicate, a person risks being banned. Investors can pool their shares and quickly squeeze out the "sponsor" (you). You need to please your investors, but you also need to avoid being bought by your own company. Syndication doesn't need to be a real estate project. It can be almost any kind of business. Also, you can only receive money from accredited investors in syndications or higher. The decision to accept dollars from unaccredited investors can be confusing. Syndication is a good choice if you're just starting, but it can be difficult to scale. This process should be repeated each time a new offer is found. A better option is to form a fund instead.
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                                         Holding Interest in a Syndication
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                                         How do you so swiftly maintain interest in syndication? Should you consider it a legal entity? What is the best structure for a real estate syndication? It is not that difficult if you apply the same principles to all other investments. Syndication is an REI in which multiple investors combine their funds to acquire a single property. Multifamily syndication is a syndication deal that includes every multifamily home. In a syndication investment, the sponsors find the deal, coordinate the deal and financing, find passive investors to participate, and manage the property once everything is in place. A general partner, who is also known as a syndicator, acts as a sponsor.
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                                         Passive investors, on the other hand, receive interest in an asset in return for providing the majority of the funds needed to secure the asset. Investors and syndicators often form a limited liability company (LLC) or limited partnership (LP) for multifamily syndication arrangements. Each party to a multi-family syndication investment owns a part of the property. In some cases, where ownership is divided equally between all partners, a syndicator may own a greater percentage of the shares.
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                                         Real Estate Syndication includes Two Parties:
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                                         General Partner and Limited Partner. The Syndicator acts as the General Partner for the Multi-Family Syndication Agreement. So, they are the pilots of the airplane and the limited partners are the passengers. The syndication leader can either take over property management himself or outsource it to the manager of the property. Either way, the investor will enjoy the benefits of multi-family syndication without having to assume the role of a lender. When a syndicator hires a property management team, they usually work closely with them to ensure that the property investment is properly managed.
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                                         Limited partners play an important role in syndication investments, albeit in a more passive way. You should invest your money in stable and growing real estate investments. The main advantage of this is that you don't have to spend the time and effort required to manage your assets. Limited Partners should exercise caution when considering syndication investments, but otherwise sit back, relax, and enjoy the cash flow. With the Multi-Family Syndicate, you don't have to worry about property management at all. A syndicator manages an investment property or hires another person to manage it. You have no problems in any way.
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                                         A real estate syndication can be a simple agreement between investors to pool resources for a single real estate investment, but there are legal considerations regarding syndication investments that help establish a syndication structure. Depending on the structure of your syndication business, there are many ways to divide the profits. One approach to reducing risk is to diversify syndication investments. In other words, do not try everything at once. Instead of investing with just one sponsor, you can try investing with two or three. That way, if something in the case goes wrong, you won't lose all your money. Additionally, syndication can be prioritized for transparent and effective communication.
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                                         On the other hand, general partners in multifamily syndications generate revenue through asset management fees. It can be collected in two ways. You can claim it either as a percentage of your income. You can also use it as an annual unit price. General partners can also make through percentage ownership. If this is your first time investing in syndication, please do your due diligence and seek advice from other investors. Accredited investors simply pool resources with other investors to provide passive income and stability.
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                                         What is The Best Strategy to Invest in Real Estate?
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                                         A Real estate investment is an ideal investment. But a real estate investment fund includes a variety of ways (i.e., strategies) to make money. Being a new investor and having so many options can be overwhelming. The strategies given all give you a better idea of how to make money from your real estate investment. Hopefully, one or more strategies are right for you.
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                                         Start by learning the difference between goals, strategies, and tactics.
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                                         Real estate investing and building wealth can be viewed as climbing. And of course, you are a brave climber! Mountain tops are like your financial and life goals. And there are & will be many milestones (or subgoals) along the way.
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                                         Strategy is a game plan, a method for climbing mountains. These are the pre-defined routes to reach the summit in the fastest and safest way possible, and tactics are like climbing tools (ropes, ladders, binoculars, etc.) that help you scale those routes. There are many articles on real estate investment tactics, such as examining the market, finding good deals, analyzing numbers, financing sellers, negotiating techniques, etc. But too many real estate investors get caught up in tactics without understanding why they`re using them in the first place. Being good at tactics without a strategy will only take you straight off the financial top! That's why I recommend first clarifying your basic real estate investment goals. For example, if you have financial independence or an ample number of free and manageable rental properties, then go and decide on a strategy or two that you like. After all, the tactics you learned will be much more useful.
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                                         The coolest factor approximately in real estate investing is that you have numerous alternatives. When considering an investment property strategy, you should ask yourself what path you should take and whether you have a real estate license. One of the best ways to start your real estate investing career is through wholesale real estate. A great advantage of this strategy, especially suitable for beginners, is that it requires very little initial capital. The only cost you will have to bear is the cost of finding the property for sale and placing it with an interested buyer. So, while wholesale works perfectly without a license, an investment property license can make you more competitive with this strategy.
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                                         Another great way to start someone's real estate investing career is Fix and Flip. A fix-and-flip is the purchase of an investment property (usually in poor condition) at a low price, making the necessary repairs, and finally selling the property at a higher price. Again, corrections and flips are available to just about anyone, but being licensed and being an agent is a huge plus for this strategy.
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                                         The buy-and-hold strategy is one of the long-term real estate investment strategies. Buy and hold means buying an investment property to hold it for the long term until the time of sale. This is called "natural appreciation" and is a great way to make more money passively from real estate. You can rent real estate or make money quickly. In addition to this, as a real estate agent, you know very well where the local market and housing demand are, so you can find viable rental properties to invest in.
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                                         All you have to do is decide which of the above top investment strategies is the right choice for you and start making money as a real estate investor.
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How To Start A SAAS

Chapter-1

Chapter-2

Chapter-3

Chapter-4

Chapter-5

Chapter-6

Chapter-7

Chapter-8

Chapter-1

Chapter-2

Chapter-3

Chapter-4

Chapter-5

Dan Lesniak

Cody Davis

Samuel Zell