The High Risks of Single Asset Syndications vs. the Stability of Diversified Funds

‍What is a Single Asset Syndication?

A single asset syndication is a term used for when a sponsor(investor) raises money by soliciting partial ownership shares to accredited investors in order to purchase or develop an institutional grade real estate asset.  Investors take on all the risk in this situation and the upside! However, if the property goes bad, the equity positon can get wiped out after debts are paid off. 

In a single asset syndication, it is often the case where single assets under perform or the performance is delayed due to market conditions and do not produce enough cashflow to justify a distribution to investors. This is especially true in a hyper inflationary market where rates sky rocket over 12 months. Therefore the preferred return gets delayed, often until the sale of the asset where a true up of the preferred return happens, if cash is available. An investor can eventually get paid a larger return, however, if you are looking for consistent monthly cashflow, a single asset syndication might not be for you.

Additionally, Single asset syndications offer equity positions instead of debt positions. Debt always gets paid before equity does. If you are in a syndication, your cash is much more at risk of being eliminated if the deal goes south. The debt will get paid and the shareholders will have to take the crumbs that are left.

What is a Real Estate Income Fund?

An income fund, like Balcomie Index Fund allows you to get monthly returns sent on the 15th of every month of a set return regardless of asset performance. The Balcomie Income Fund diversifies over several assets, mostly through loans on those assets, that are managed by Balcomie Capital. The Fund will have 1st lien debt positions or equity positions with no loans attached to those assets. Therefore, allowing the Fund to be the first one paid back or the only lien holder. In the chance that The Fund takes a second lien position, the asset must be managed by Balcomie Capital or its affiliates.

The main benefit of investing in the Balcomie Income Fund is consistent cashflow backed by real estate. If you are an investor looking for consistent cashflow to help your monthly budgetary needs, or if you are tired of the volatility that comes from investing in the stock market or sporadic cashflows in real estate, reach out to us and learn more about investing in the Balcomie Income Fund.

Click here to learn more about the Balcomie Income Fund.

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