The writer of "The Small Investor" is right in the headline, "Be Wary of Real Estate Syndications" (Aug. 5), but way off base in saying, "The days of real estate limited partnerships were killed by the 1986 Tax Reform Act. . . ."
This implies that all syndications are (or were) tax shelters; moreover, it suggests that all realty investments, syndicated or not, were killed by tax reform and all were unsound investments. Neither is true.
The truth of the matter is that before and after tax reform, some (but not all) syndicators, institutions and private investors, in a frenzy to outbid the next buyer, overpaid for apartments and commercial properties and mortgaged them to the hilt.
These buyers who ignored cash flow, the ability of properties to service their debt, and the viability of the product and its geographic location were shot down not by tax reform, but by the foolish theory that all real estate is good and what goes up never comes down.