In this episode of Coffee with Carl, attorney Carl Zoellner breaks down real estate syndications and explains the two main sides of a syndicated deal: the party who puts the deal together, and the passive investors who invest in the deal.

Updated October 13, 2020

Real estate syndication investments have become more common recently. I actually like these types of investments and think they make good sense, so I can understand why they’ve gained traction with investors.

There are two main parties to a real estate syndication: the person or entity who actually sets up the syndication deal, and the passive investors who fund it. These are two very different routes.

Being a passive investor in a syndication simply means putting money into the deal with the understanding that you’ll see a return on that investment with some sort of cash flow and a pay-out at the end when the property is sold. This is the most common way being a passive investor in a real estate syndication looks, from my personal experience investing in syndications as well as my clients’ experiences.

Less common is going the route of actually finding the deals and setting up the syndication. There are several companies out there that teach this type of real estate investing. Most often, you’ll see real estate syndications happening in the multifamily realm.

There are benefits to being the one to actually source real estate syndication deals. Between acquisition fees for finding the deal plus part of the investment, it can be quite lucrative to set these deals up. That being said, syndication deals do require significant legwork.

If you’re interested in setting up a syndication deal, I strongly advise you to work with a professional or experienced mentor because the pitfalls with these types of deals can be significantly larger since the investment is exponentially larger. Specifically, you’ll want an attorney who focuses on SEC compliance to make sure what you’re offering is compliant with the SEC’s regulations on marketing securities. Per the SEC, violating their regulations will result in “a complete disgorgement of all profits” — strong words. Expert guidance is essential here.

If you’re a passive investor in a real estate syndication, it’s not quite the same. As a passive investor, the appealing part to me is that it’s money in, money out. If you’re working with experienced syndicators, it’s usually a fairly consistent and predictable formula. However, there are still risks involved with this type of deal.

Being a passive investor in syndications works for me because I don’t have to worry about setting up the entities; the cash flow just comes back to me. It’s a more conservative investment with a consistent percentage of return. On the other hand, I’m not going to see nearly the same return as if I were the one to actually set up these deals.

Overall, there are lots of different ways to set up and invest in real estate syndications, and lots of different projects that could be syndications. It’s crucial that you work with a reputable mentor company if you want to get into this arena of investing to protect your investment. Furthermore, be prepared to put down significantly more money in upfront costs regarding set up and compliance. It’s an expense to the business, sure, but still something to be prepared for.

If you’d like to talk to an experienced asset protection and real estate investing Advisor about your investing, schedule a complimentary Strategy Session now. On the call, you and an Advisor will discuss your current investing and goals, then create a diagram of the best asset protection entity structure for you. You can schedule online or by calling 888.871.8535.


Watch as Carl covers the basics of real estate syndication deals and explains some overarching concerns to keep in mind when investing in this arena or setting up these types of deals.


Resources mentioned in this video

Claim your complimentary consultation & customized asset protection plan

Empower your business with Platinum membership to ask unlimited questions of attorneys & CPAs with no hourly rates


Got an idea for a future Coffee with Carl? Send it to Carl at