{"id":2,"date":"2023-05-18T04:42:10","date_gmt":"2023-05-18T03:42:10","guid":{"rendered":"http:\/\/formosaequity.com\/?page_id=2"},"modified":"2025-02-06T13:20:17","modified_gmt":"2025-02-06T13:20:17","slug":"faq","status":"publish","type":"page","link":"https:\/\/formosaequity.com\/index.php\/faq\/","title":{"rendered":"FAQ"},"content":{"rendered":"\n
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Frequently Asked Questions<\/h2>\n<\/div><\/div>\n\n\n\n
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What's Syndication and Who Are Involved?<\/p><\/div>

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A syndication is a partnership. It involves multiple parties pooling their capital together to acquire an investment property. General Partners (GPs) are responsible for the execution of the business plan while Limited Partners (LPs) assume a passive role. By investing their capital, Limited Partners collect the greater part of the profits and can often times find more success by partnering with experienced operators rather than using their own time and energy to find, manage, and dispose of the investment alone.  <\/p>\n<\/div><\/div>\n\n\n\n

Are You a REIT?<\/p><\/div>

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Our investment is not a REIT (Real Estate Investment Trust). When you invest with Formosa Equity in an asset, you are a partner in the actual, physical property. You get the advantages of the ownership of that building, the tax advantages, the cash flow, and the upside.

Disclaimer: Please check with your tax and legal professional as Formosa Equity and\/or its Affiliates does not provide tax or legal advice and the above is not intended to or should be construed as such advice. Your specific circumstances may, and likely will, vary.<\/p>\n<\/div><\/div>\n\n\n\n

What's a Preferred Return?<\/p><\/div>

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A preferred return (or \u201cpref\u201d) is a guaranteed rate of return that the limited partners in a real estate syndication receive before any other distributions are made to the general partners. The preferred return is typically expressed as a percentage of the investors\u2019 capital contribution. For example, if an investor has a preferred return of 8% and invests $100,000, they will receive $8,000 in distributions before any other investors receive any distributions.<\/p>\n<\/div><\/div>\n\n\n\n

What Is a Promote In Syndication? <\/p><\/div>

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The promote, or split, is a way for the General Partner (GP) to share in the upside of the investment. The GP is responsible for finding and managing the property, and they take on more risk than the Limited Partners. The promote is a way to compensate the GP for their efforts and to incentivize them to make decisions that will maximize the profits of the investment. The promote is typically a percentage of the profits, and it can be as high as 30%.<\/p>\n<\/div><\/div>\n\n\n\n

What Are the Tax Advantages for a Limited Partner? <\/p><\/div>

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There are a number of tax advantages that limited partners in real estate syndications can enjoy. Some of the most common tax benefits include:<\/p>\n\n\n\n