The real estate syndicate is a pooling of resources of many investors to buy a building or long-term lease-hold.
Every brochure issued pertaining to a real estate syndicate contains estimates or projections of distributions and of income which shall be used to make such distributions. Are those projections fair and realistic, or are they starry eyed hopes of the man trying to sell you a unit?
If you have a building which has been in existence for a number of years and if the projections are stated to be based on past earnings, you are probably on solid ground.
However, many times you will receive brochures about buildings which are not in existence yet – or have not yet been fully rented. You will see beautiful illustrations, called “architect’s rendering.” That means it is the drawing of a building yet to be built and portrayed as beautifully as a skilled artist can draw it. The income is estimated on what the syndicator hopes will be available, when as and if he rents it all and gets the mortgage financing which he needs.
At other times, you may receive a brochure concerning an existing building. When you look at the past rent roll, you may find that it is insufficient to pay the promised distributions. The syndicator tells you of his intention to improve the building by altering or modernizing it and of the additional income which the alteration and modernization will produce, if his hopes come true.