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01. This Book
02. Syndicate Boom
03. Get Information
04. Syndicator
05. How much?
06. Depreciation
07. Depreciation Applied
08. Declining Balance
09. Straight Line
10. Paying Taxes
11. Pay Mortgage
12. Income Taxes
13. Paper Loss
14. Tax Shelter
15. Rent?
16. Syndicator Units
17. Wear + Tear
18. Lease-Hold
19. Building
20. Comparison
21. Specialized Properties
22. Growth
23. Leverage
24. Share Growth
25. Why + How
26. Syndicate Agreement
27. Net Lease
28. Long-term Lease
29. No Guarantee
30. Inflation Clauses
31. "Inflation Clause" Works
32. Inflation Clause?
33. Mortgage Due
34. Interest Rates
35. Short Term Mortgage
36. Good Mortgages
37. Refinancing
38. Refinancing Clauses
39. Share of Mortgage
40. Share of Profit
41. Purchase Options
42. How Purchase Options
43. Stunt the Growth
44. "Subordination"
45. Long Term Lease
46. Business Organizations
47. Syndicate Debts?
48. Management
49. Your Consent?
50. Sell Your Unit
51. Investment Trust?
52. Business Syndicate
53. Multiple Properties
54. Dream or Reality?
55. Syndicator's Background
56. Value of Guarantees
57. Look for Yourself
58. Conclusion
Resources
16. Syndicate Participation Units for the Syndicator
Since we are on the subject of the syndicator's profit, we may as well consider additional methods employed by the syndicator to obtain his share of the profits.
In the first place he could buy the property and then sell it to the syndicate at a profit. This is perfectly legal, as long as he discloses all the facts to the investors. In such a case the brochure should even state the amount of the profit realized by the syndicator.
Sometimes the syndicator gets his profit by obtaining participation units from the syndicate. Look at the following clause.
The partnership is capitalized at $1,235,000. Of this amount Messrs. A and B have acquired interests as General Partners to the extent of $50,000 each and as Limited Partners to the extent of $50,000 each by virtue of their contributing to the capital of the partnership property of an agreed value of $200,000. Such property consists of their equal undivided interest in the purchase agreement which they assigned to the partnership.
This clause says that the syndicators have obtained together a $200,000 interest in the syndicate which has a total capitalization of $1,235,000. They have not paid cash for this interest but have contributed property of an agreed value of $200,000. What does this property consist of? When the syndicators signed the purchase contract for real estate, they themselves had the legal right to obtain the deed in their own name, upon payment of the balance. This right to take title they turn over to the partnership. This is the "property" for which they receive interests in the partnership valued at $200,000.
Who fixed the value of this contribution at $200,000? The syndicators and their business associates did. This happened, of course, before you were asked to contribute funds to the venture. So you have no reasons to complain, as long as the facts are disclosed. You look at what is left for you and decide on that basis whether the investment will be a good one or not.
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