You will typically see two types of syndicates: Common types of property syndicate in Western Australia It is important to differentiate the two, as lenders and the Australian Taxation Office view JV’s and Syndicates as different types of activity. In a property syndicate, all participants typically have the same rights and obligations for their class of shareholding and will have a proportionately vested financial interest by way of an equity contribution, and share profits, not output. The development can involve renovation, subdivision and/or the construction of new dwellings, which can then be sold or rented out (profits or income to be disbursed to all participants in the syndicate).Ī syndicate is different to a Joint venture- a joint venture is where a number of parties contribute resources to execute a project and share output (one may provide the property, another may fund the land development, another party may build the dwellings, for example). In residential property development, it is possible to subdivide or develop real estate as a collective of people or trading entities under a “ Property Syndicate”- you don’t have to develop alone.Ī property syndicate is where a number of investors (individuals, partnerships, or other trading entities) will come together by contributing equity (cash) to form a project specific Special Purpose Vehicle (SPV) with the intention of acquiring and developing a piece of real estate for a given time frame. This is thinking outside the box a little, by pooling resources. Because of this it has been a viable strategy to tackle infill development projects through a property syndicate. Perth has been a tough market for developers- good development sites and finance have been hard to come by. In the current financial and lending climate in Western Australia, it has been very topical for people to investigate joining or forming property syndicates. They can seem like a good idea, but before you get involved in or start one you need to understand that there are important legal, taxation and lending ramifications with property syndicates. This article will explore syndicates and the possibilities pitfalls you need to aware of, either as an investor or instigator. It can appeal because it seems to be able to provide them with with an apparently low risk entry point of involvement into a development, the capacity to target projects that they couldn’t afford to tackle by themselves, or allow them to fund their own deals with very little of their own money. Lots of people getting into subdivisions and property development will stumble across the concept of a property syndicate some point, and will usually be intrigues by the idea. What is a property syndicate? is it smart to get involved in one? Should I form one? Is a Residential Property Syndicate a Good Idea? Should I use a property syndicate to fund a project?
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