# 14 – Syndication
# 15 – EquitySharing
SO MANY WAYS TO BUY ( PART 2 ) BRUCE KELLOGG
# 14 – Syndication
When investors get together to buy a property , it is commonly called a “ group investment ”, which is legally termed a “ syndication ”. This is usually done to allow the purchase of a larger property and provide “ passive ” ownership benefits for the investors . The common types of syndications are : 1 ) Limited Partnership 2 ) LimitedLiability Corporation ( LLC ), and 3 ) TenancyinCommon ( TIC ). Each one has an organizer who usually becomes the manager of the project . An “ offering circular ” is prepared describing the project , including financial projections , organizations , management , and risks . Investors sign a “ subscription agreement ” and contribute their “ share ” of the project . Syndicatiions are a “ security ” under federal and state laws , so there are regulations to be followed concerning marketing , disclosure , handling of investor funds , management , and reporting . Larger projects typically require the investors to be “ accredited ”, which necessitates a substantial income and net worth . Syndications are easy investments , but investigation of the project and the organizer is essential due to the potential for the promoter to take advantage of the investors through
slick marketing . Additionally , if the organizer is honest yet inexperienced , the project could fail . Don ' t be afraid , but be careful with syndications .
# 15 – EquitySharing
Another method of investing with lots of potential is “ Equity Sharing ”. This is when an investor and a potential homeowner buy a singlefamily residence together , and the aspiring homeowner occupies it . They are called the “ resident coowner ” ( RCO ), and the investor is called the “ investor coowner ” ( ICO ). Percentage shares are negotiable with the RCO paying the property taxes , insurance , loan payment , and routine repairs , while the ICO puts up the down payment . There is a “ Shared Equity Agreement ” or “ Joint Ownership Agreement ”, which sets the term , allocates the incometax benefits , and specifies how the arrangement is to be woundup . One party could buy out the other , or the property could be sold and the net proceeds divided .
EquitySharing works well between relatives . One Lockheed engineer has seven of these going to help his children , nieces , and nephews become homeowners . College housing is another application where the son or daughter owns part of the house with the parents then rents bedrooms to other students .