4. The Syndicator and You

You will receive a booklet (the brochure or prospec-pectus) crammed full with information concerning the propery, its tenants, location, the projected distributions, leases, mortgages, refinancing, distribution of proceeds of sale, repurchase agreement, tax treatment, opinion from attorneys and accountants, lease-backs and summary of purchase contact. Before you get this, someone must have done some work to get the project so far under way. Someone did.

The promoter of the syndicate—we shall refer to him as the syndicator—has probably put a great deal of time and effort and also money into the syndicate. In today's market, he had to look at many properties to find one that promises to yield a sufficient return with a reason­able degree of safety to make it suitable for syndication. Then he had to deposit money when he signed the pur­chase contract. Next he conferred with attorneys, ac­countants, probably obtained rulings from the director of Internal Revenue. Then he had to lay out more money for printing and other promotion expenses. All this is a full time job. But he still does not know whether the syndicate comes off the ground. Perhaps you, the in­vestor, and others like you don't like this deal. If that is the case, the deal falls through and the syndicator has wasted a great deal of time, lost his deposit and also his other expenses.

As you can see, the syndicator has a man-size job. Very often he incurs substantial risks. For his work, his imag­ination, the risk which he takes, the syndicator is entitled to make a profit on the deal. You may be sure he has counted himself in, even if it is not obvious on first read­ing of the brochure.

If you begrudge the syndicator a reasonable profit, you better stay out of the syndicate. But even if you agree that the syndicator is entitled to a reasonable profit, you should know what he makes and how he makes it. You determine for yourself whether it is reasonable (by com­paring it with other deals) and—even more important— whether there is enough left for you.

You will find in this book many references to the syn-dictor's share and how he gets it. There will be so many different references because there are so many ways to skin a cat. Again, we do not quarrel with the syndicator's getting his share. We are just showing you how to find out what he is getting. Remember, what he gets, you don't get.

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