Would you like
to print a copy of this book to read offline? Click Here to download the printable PDF version |
 |
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
53. Multiple Properties, Increased Safety or Increased Dangers?
Lately, we have seen offers of participations in syndicates which intend to acquire several properties. There are also the combinations of existing properties and properties under construction, or of leaseholds and properties under construction. The sales argument given to you on these offerings is that diversification offers greater safety. The diversification slogan is taken from the stock market, but is it true when it comes to syndicates? In the stock market, you take your pick. There is no tie-in sale. When it comes to the multiple property syndicate, you buy a package deal. You take the bad property with the good ones.
If you own securities in five different corporations and one starts to lose money, you may lose all or part of the money in that particular corporation, or you may sell the stock in the corporation which loses money. Your investment in the others is not affected. But if one of five buildings owned by the same syndicate begins to lose money, your income from the other buildings may possibly be endangered. The syndicate will probably want to keep up the tax and mortgage payment on the building which loses money, so that the property won't be foreclosed. To do that, they may have to use the money from income of the other buildings. Thus, in the case of the syndicate, if one building begins to lose money, your investment in the other ones may be in danger. There is another possibility or rather another risk. Suppose that one building is suddenly in need of substantial repairs. The income of other buildings may have to be used to save the investment of the one which threatens to turn sour.
Therefore, let us not rely on slogans. If you must have one, let's say that a chain is as strong as its weakest link. All this means that if there are several buildings or leaseholds or a combination of buildings and leaseholds combined in one offering, you must examine each building and each leasehold separately. Do not be satisfied that one property has a good tenant and a long term lease. Be sure that along with desirable property, they do not palm off something which you would not buy if it were offered alone.
Look for the weakest link. Only if all properties satisfy you, can you be satisfied with the syndicate.
Are You Ready To Move Onto The Next Lesson? Click Here...