Multifamily Housing Real Estate Syndicates...

Rainmaker Marketing Corporationoffers multifamily real estate syndicates and development financing opportunities for multifamily developers and investors, alike.  Most multifamily real estate syndicates offer the opportunity for the investors (via a tenants-in-common fractional ownership plan) the opportunity to use the 1031 exchange process to create comparable leverage.

But are the potential returns really comparable or is this just a marketing ploy designed to separate you from your savings?

Let's undertake a simple analysis and see what the truth really is when it comes to multifamily real estate syndicates and syndication investments.

The prototypical transaction structure is to allow real estate investors to make a 1031 tax-free exchange so there is no gain recorded for the transaction and the resulting savings of capital gains (or savings of ordinary income, as the case may be) becomes the investment boost that makes the transaction so attractive.

We'll start with a simple comparison for two (2) fictitious transactions - one done by ABC Development and one done by the Acme Development Company.

The Acme Development Company is developing a rental apartment complex that has a cost of $10,000,000 (not including financing costs and carrying costs - working capital) and ABC Development is developing a rental apartment complex across the street from the Acme Development Company project and it is the same size and has the same cost of $10,000,000.  Both projects require 18 months to develop, construct and stabilize at their maximum sustainable occupancy.  At the end of the 18-month holding period, both of the resulting syndicates will be wound-up, paid off and closed.