Getting the keys to a property syndicate

Property syndicates are an increasingly affordable way people can buy an investment property for sale and then develop their property portfolio across all forms of investments, especially property investments. Rather than find an investment property for sale and accept the compromises that come with your budget, a property syndicate allows you to pool your resources with either friends or financial partners to expand your property investment options.

Why start property syndicates rather than invest in property alone?

Property syndicates suit those who may have a limited budget and want to see long-term growth rather than flip properties. Getting into the market sooner, however, allows you to see returns sooner than you would if you had to save for an extra 2-3 years for a deposit on your own.

Your reduced financial commitment that results from segmenting a property investment means that you are forced to save, while gaining access to compounding growth through multiple property and stock investments.

Things to consider when starting out in property syndicates

1. What size? Decide on the structure of your property syndicate and think in the long-term. You may want to restrict the size of your property syndicate to a joint venture to reduce complications. If you wish to start a large property fund than you will probably need to acquire an Australian Financial Services licence, which can be hard to acquire. Seek help from a financial advisor in these cases.
2. Seek similar minds. Be sure that the people with which you invest share with you a similar approach to their own money. Friends who have never been very good at saving but have come into an inheritance and want to put it towards an investment may seem at first like a good investment partner (because they have the money and you have a good relationship with them) but their lack of financial literacy will prove a headache for you in the future.
3. Monopolise on different locations. Having a property syndicate spread across different states, with members living in different areas, can allow you to more easily diversify your investment portfolio.
4. Create strong lines of communications. Regularity is the key to a successful property syndicate. You want to have regular meetings that are in person, rather than solely by email. When not in meetings, use communications and project management tools to help organise people and plans.
5. Tailor your finances. A property syndicate is a financial syndicate first and foremost. This means that rather than spend the initial stages deciding what properties interest you, decide how you will structure the finances of the group. Will your ownership of a property be a partnership, a private company, unit trust, joint tenancy, tenancy in common or discretionary trust? These options will dictate how you use your money within the group.
6. Establish objectives and timelines. Whether you want to invest in a single holiday home, a series of properties or to diversify your portfolio into different asset types (e.g. shares, commercial property, businesses) you need to agree on these objectives and the timeframe within which you expect to achieve goals. A financial advisor will help you visualise such a plan.
7. Work out the legal stuff. A solicitor with experience in syndicates will help guide you in establishing what will happen in a variety of scenarios. For instance, what will happen if someone wants to leave the syndicate or if further partners want to be included, who does what within the group, will there be a hierarchy for decisions?

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