| Real Estate Syndicates Private syndicate or holding companies are formed by like minded people for a specific purpose; in this case property investment. The total number of people involved should not exceed twenty in both cases as it would than be subject to legislative requirements; a prospectus like in a stock listing will have to be prepared. The idea of a private syndicate or holding company was mooted as people realised that by amalgamating their resources they are better able to take on opportunities that come their way. With a greater amount of funds available, they are able to purchase choice units in good location that normally cost more and gives better returns in the long run. Holding a wider spread of properties helps further diversify the risk to every individual as it is shared among them. The economies of scale they derive in administration and reporting helps reduce holding cost and hence increase returns. As a large group they are able to negotiate better prices or they can combine with other syndicates for joint investments in bigger projects. All these arguers well for the formation of private syndicates as it makes owning properties simple and cost effective for the individual. There are numerous ways in which such collaborative efforts are brought about. Managing agents of properties will sometimes gather investors to form a trust or individuals subscribe to an informal investment club that register their interest and put these people in touch with one another. Private syndicates are legal trust formed to look after the interest of the beneficiaries, i.e.the members. The proceeds are invested into properties on behalf of the members by the trust and management of the trust is vested in the board; made up by fellow members. The board appoints the managing agent and accountant to manage the properties and to report to members on a quarterly or half yearly basis. They call meetings to decide on major decision such as the acquisition or disposal of properties and are created for a fixed number of years, as specified, unless renewed by all members. |
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