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How Much Is That Doggie In The Window.

Every major city has one. Yes, yours does too. And I’m willing to bet that you are more familiar with it than you realize. I know you’ve seen it but did you realize that you could own it?


I’m referring to the most popular and iconic feature of your city. Its majestic skyline. Populated by tall, skyscraping buildings each serving as distinctive landmarks. These architectural marvels are a testament to human ingenuity and creativity. Each building narrating a story of the city's past, present, and future aspirations.

But amidst the grandeur of these buildings, hides a revelation: about 90% of these impressive commercial buildings are not owned by a corporation. They are owned by ordinary individuals – people like you and me.


The vast majority of large commercial real estate is owned by groups of investors, in what is commonly known as real estate syndications. These syndications attract like-minded people who pool their resources to purchase properties that would be challenging for a single person to acquire. These individuals share in the ownership and profits from the property while the lead sponsor, or syndicator (i.e., Aionia Capital) manages the day-to-day operations. This collective approach allows everyday people, career focused professionals to participate in these lucrative real estate ventures and create ongoing passive cash flow.


So how does syndication work. In a few words, syndication is a pool of resources used to accomplish a goal. In a real estate syndication, the lead sponsor identifies real estate – let's say an apartment complex - to purchase. The lead sponsor forms an entity, usually an LLC and then invites people to join that LLC as members. Those members contribute their capital, and the LLC acquires the real estate. The lead sponsor oversees the property management, sends the members monthly reports and pays quarterly distributions as the property generates revenue.

That is a simplified summary of how a syndication works. There are of course documents to be reviewed, due diligence, contracts, lenders, inspections, and financials involved but I hope you get the picture.


It's important to understand that real estate syndications are a long-term illiquid investment. Typically, each syndication spans three to seven years. You should expect that your initial investment may only be retrieved when the property is sold. With these thoughts in mind, you should only invest money that you will not need in the near future.


How Much Can You Earn From A Syndication

The returns from real estate syndications vary based on the property and how the deal is structured. You’ll learn more about this once you’ve joined our investors club and prior to funding your account. For example, an apartment syndication with a projected annual cash flow of 8% might result in your original investment doubling because of cash flow during the holding period (or length of ownership) and the profits from the sale of the property.


Again, it's important to understand that real estate syndications are a long-term illiquid investment. Typically, each syndication spans three to seven years. You should expect that your initial investment may only be retrieved when the property is sold. With these thoughts in mind, you should only invest money that you will not need in the near future. However, the returns can be substantial.


Let’s elaborate on the example above. Investing $100,000 in a syndication with 8% annual cash flow could result in $40,000 of passive income over five years, and the potential to receive another significant disbursement upon the sale of the property.

Imagine the lead sponsor, also known as the syndicator, finds an apartment complex priced at $10 million. The down payment would be about $2.5 million. Then let’s assume that renovations, upgrades or enhancements to the property would total about $1.5 million. That’s a total of $4 million. Given the level of difficulty for one individual to outlay such a significant sum, the sponsor team decides to syndicate the deal, inviting passive investors to participate.


So, let’s say I contribute $50,000, you invest $100,000, a friend of yours invests $75,000, and so on. We become members of the LLC or limited partners as it's called in the syndication. The lead sponsor is the active partner because they are responsible for the daily operations and managing the property.


Now imagine this syndication is a planned five-year hold with a projected 8% annual cash flow return.

If you invest $100,000 in this syndication, with a projected annual cash flow of 8%, your annual passive cash flow could be $8,000 per year. Over the five-year holding period, this would translate to $40,000 in total cash flow, paid in quarterly distributions.

In addition to that cash flow, there's the profit from the eventual sale of the property. So, combining the cash flow and the profit from the sale, your original $100,000 investment could have grown to $200,000 after five years. That’s a 2x equity multiple, meaning your initial investment doubled during the five-year holding period. I think that’s a pretty nice return.


Another great thing about syndication is that You can invest using funds from a retirement account by rolling them into a self-directed IRA. When you’re ready to learn more about that click here, we have IRA specialists ready to assist and help you navigate the process. For those watching the video there’s also a link in the description.

This guide was intended only to provide a high-level overview of a syndication. It may have answered some general questions, but you likely have a few more. I encourage you to review the monthly articles posted on our site and schedule a time for us to speak. We look forward to meeting you and are happy to answer the questions you have.

One last thing. The next time you admire the city skyline, remember it as proof of what we can accomplish together. Somebody owns those buildings. Why isn’t it you.


To Your Success.

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