Three Ways to Profit from Real Estate Syndication
1. Acquisition fee
Real estate syndicators get paid for finding deals, conducting due diligence, and structuring deals. These fees range from 1% to 5% of the project size. For example, 5% of a $50 million deal is $250,000. On the other side, you can choose a flat rate of $25 or $50,000. These fees are usually negotiable with the investors joining the company, but be careful not to overcharge them.
2. Asset management fee
Property management fees are typically 1% to 5% of the monthly gross income from the property. Your role in it is to manage partnerships and trading syndicates to receive asset management fees. You must necessarily keep investors informed, oversee wealth management, and help with tax preparation. This role is not just about wealth management; it oversees the overall structure of wealth management and partnerships. Assuming all of these roles will make you eligible to receive a good monthly wealth management fee.
3. Investment
You can receive rewards by investing in projects. This is not necessarily an ownership stake in the project. Ownership can range from 5% to 50%, depending on your experience and what you bring to the business. You can also participate in stock splits at the backend. On the other hand, the sale of real estate is meant to be between you and the investor. You decide how much to give them and how much to leave for yourself. For example, your business may stipulate that if it is sold, you will receive 50% of the profits and the remaining 50% will be distributed to the investors. This can sometimes almost double or even triple an investor's return on investment.