Back in the day, residential properties were considered a profitable option for investment. However, due to the unstable real estate market conditions, investors are turning to commercial properties.
Investing in commercial properties is a great way to secure your savings. They tend to generate higher revenues for investors. If the market crashes, you get enough time to secure your investment. However, when it comes to commercial properties, a major issue faced by real estate investors is that these properties are quite expensive, which is why small-scale investors can’t afford to buy them.
In order to deal with this challenge, investors form syndicates.
What Is a Property Syndicate?
A property syndicate is a group of investors. Multiple investors can contribute to buy a property and share profits as per the pre-specified terms of the contract. They gained popularity in the 1980’s and 90’s when investors started looking for opportunities to diversify their investment portfolio.
Depending on your goals, the lifespan of your syndicate can be between 5 and 10 years. You can prepare the legal deed after discussing the terms with each and every member of the syndicate. Once the investors reach common grounds, they need to sign the document. Each member gets a copy of the contract through which they can claim their shares.
How to Form a Property Investment Syndicate
Establishing a property syndicate may seem a challenging task, but with the right partners, you can begin your venture.
· Look for Partners
Look for investors who may be interested in forming a partnership for commercial property investment. Keep in mind that you have to be more flexible and involve your partners in the decision-making process. If your family members or friends are interested in establishing a syndicate, you may find it easier to buy and manage properties down the line.
· Set Goals
Before you invest in a property, you should have clear goals in mind. For instance, you should decide the number of properties you want to buy in the next 5 to 10 years as well as the renovation projects you want to take over the life of the syndicate.
· Develop a Strategy
Investors are basically in the business of finance, which is why it may not be easy for the members of the syndicate to make profitable decisions. You need to develop an effective strategy to leverage finances. You can acquire the services of a professional team such as Stamford Capital Investment services to significantly increase profits.
· Sign a Legal Contract
The most important step in establishing a syndicate is to put a legal agreement in place. Brainstorm every situation that may arise down the road and plan how you’re going to resolve the issue. Discuss the terms of the contract with other members and be open to suggestions.
When the terms of the agreement are finalised, all members of the syndicate must sign it and keep a copy with them as evidence.
If you have limited financial resources but want to invest in commercial properties, then forming a syndicate is your go-to option.