Every industry has a collection of terms and phrases, and the real estate industry is no exception.
Many real estate investors, or would-be investors, have heard about terms such as multifamily and/or build to rent, single family rentals (BTR-SFR) or real estate private equity (REPE) syndications… but how many really know what these and other related terms are all about?
Indeed, many of those who have invested in such syndications are familiar with the basics of how multifamily syndications work, how they raise the capital or debt financing to acquire properties, or how the syndications are structured…
Yet the subject of multifamily syndications is an expansive topic with much of the available information fragmented or in project prospectus' focused on encouraging potential investors to invest.
In this book we’ll go through some of the better known terms, explain what they mean and add a little background as appropriate. We’ll also explore some of the more lesser known, slightly more complicated terms such as “capital stack” and “dual tranche equity”. Invariably, you’ll find that some terms are broadly similar or even interchangeable (ie syndicator or general partner), but this largely depends on the context or who is doing the talking!
Where to start? Well, first let's recap what multifamily is and then take a look at some of the key terms used for the deployment of private equity capital into real estate investment.
Multifamily syndicated investments have become increasingly popular in recent years due to the stability and potential for high returns they offer. Unlike single-family homes, apartment complexes generate consistent cash flow from rental income, making them a great long-term investment. Additionally, as the US population continues to grow, the demand for rental housing is expected to increase, providing investors with a steady stream of tenants and potential for capital appreciation.
For those who don't know, multifamily syndications are a type of real estate investment that involves pooling capital from multiple investors to purchase and operate a large apartment complex, occupied by a number of tenants.
These investments are typically structured as limited partnerships, with the investors acting as limited partners and a sponsor or general partner managing the investment.
So, let's get started in bringing much of the important relevant information about multifamily syndications together in one place so that readers can have a better understanding of the subject and, who knows, perhaps, decide to become an investor!