{"id":142197,"date":"2022-03-29T16:21:10","date_gmt":"2022-03-29T22:21:10","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=142197"},"modified":"2024-01-29T15:40:02","modified_gmt":"2024-01-29T22:40:02","slug":"expert-or-amateur-real-estate-syndicator","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/expert-or-amateur-real-estate-syndicator","title":{"rendered":"Expert or Amateur? Do You Know Who Your Real Estate Syndicator Is?"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC1183498123&#038;light=false\" width=\"100%\"><\/iframe>  \n\n\n\n\n<p><span style=\"font-weight: 400;\">Have you been to Texas lately? I was there last month, and you should really know what\u2019s happening in the real estate world there.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Texas radio shows and billboards are covered with ads for real estate investments. But it\u2019s not what you might expect.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">These are not ads to find investors. These are ads to find and train syndicators.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The rise of amatuer real estate syndicators<\/h2>\n\n\n\n<p><span style=\"font-weight: 400;\">Multiple competing programs have trained tens of thousands of \u201cregular people\u201d to become real estate syndicators and there\u2019s nothing wrong with that.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">I&#8217;m all for it, in fact! I\u2019m thrilled that these opportunities exist. We all started in a similar place, after all.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">However, I\u2019ll admit that I\u2019m nervous about it.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">I\u2019m nervous because some of these new syndicators are raising hundreds of millions of dollars from investors all over the United States, then reselling their deals to the next trainee for substantial profits within 18-30 months.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">The problem with that? Most of these real estate syndicators haven\u2019t tasted the bitter gall of a downturn. Their inexperience has led them to make broad statements like:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400;\">\u201cIt\u2019s different this time.\u201d<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">\u201cRent prices will always increase.\u201d<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">\u201cEveryone needs a place to live.\u201d<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">\u201cThey\u2019re not making any more land.\u201d<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400;\">That\u2019s the same sort of presumptuous language I heard leading up to 2008. No, I\u2019m not predicting a repeat of 2008\u2019s financial crisis, but I am warning that hubris often leads to disaster.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">A broker told me recently that he routinely markets deals where multiple students from the same program bid against each other. The property winds up selling 20% higher than the original asking price.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Then, they rinse and repeat, selling to the next person for even more.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">It sounds great and all, but did you ever play musical chairs as a kid? At some point, the music stops. What happens then?<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">My message: In a world where amateurs and experts profit equally, it\u2019s hard to know who the experts really are.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">If you passively invest in syndicated deals and trust the operator with your hard-earned money, I\u2019m guessing that you want to partner with operators who are true experts.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Experts who:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400;\">Have been in the real estate business for a long time.<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Know how to spot intrinsic value and extract it on behalf of their investors.<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Acquire off-market deals that brokers and successful amateurs will never see.<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">They\u2019re better operators than promoters\u2014which is why you haven\u2019t heard of most of them.<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">True expertise in action<\/h2>\n\n\n\n<p><span style=\"font-weight: 400;\">My firm and I just invested with a true expert. He\u2019s closing on a self-storage conversion deal in an underserved market near Boston. This is a highly visible property on a main road in a booming area. Its been operating as a shopping center for decades, but as its retail sales have declined, so has its profitability.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">This real estate syndicator has a long and successful history in self-storage. The principals assembled and sold a portfolio of 27 storage assets to an institutional investor for over $100 million several years ago. As a result of their relationships in the market, they had access to this deal before it went public.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Here\u2019s why we love this deal. The conversion and operation of this property as a self-storage facility conservatively project internal rates of return (IRR) well over 20%. But that\u2019s just for the storage business. The property also includes a number of other valuable opportunities that will significantly increase returns.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">For example:&nbsp;<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400;\">The property has several acres of valuable riverfront that can be developed as pricey riverfront condos or multifamily units.<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">The parking area can be sold off as multiple outparcels to restaurant or multifamily developers.<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Some of the existing retail sections can be rehabbed to raise income and value.&nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-weight: 400;\">Below is a map of the property:<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/03\/map-of-property.jpeg\" alt=\"real estate syndicator deal\" class=\"wp-image-142198\" width=\"834\" height=\"587\" title=\"\"><\/figure>\n\n\n\n<p><span style=\"font-weight: 400;\">Remember, all of these opportunities exist on top of the projected 20%+ IRR from storage. And, because these three opportunities have essentially no cost basis, their risk is low and the return potential is relatively high.<\/span><i><span style=\"font-weight: 400;\">&nbsp;<\/span><\/i><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">We didn\u2019t find this amazing deal through a radio ad, a billboard, or a widely promoted website. Of course, it\u2019s possible to find great investment opportunities that way. But we\u2019ve found that many of the best deals are not available to the general public. These deals are found from building meaningful relationships with experienced professionals.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">So, how do we find and vet these \u201cexperienced professionals\u201d, anyway?<\/h2>\n\n\n\n<p><span style=\"font-weight: 400;\">I\u2019m glad you asked. <\/span><a href=\"https:\/\/www.biggerpockets.com\/blog\/contributors\/brianburke\" target=\"_blank\" rel=\"noreferrer noopener\"><span style=\"font-weight: 400;\">Brian Burke<\/span><\/a><span style=\"font-weight: 400;\"> is an experienced pro. He\u2019s been investing in real estate for over 30 years. He\u2019s managed over 750 residential deals and over 3,000 multi-family doors.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Brian, like me, was concerned about the rush to the top in this explosive market. He partnered with BiggerPockets Publishing to release a book for passive investors who want to do their due diligence on syndicated operators and deals. It\u2019s aptly titled <a href=\"https:\/\/store.biggerpockets.com\/products\/the-hands-off-investor?variant=32588986974304\" target=\"_blank\" rel=\"noreferrer noopener\">&#8220;The Hands-Off Investor&#8221;<\/a> and I highly recommend reading it.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Finding experienced pros can be as easy as utilizing BiggerPockets&#8217; massive community. You should also check out real estate syndicator reviews and community forums online. This is a bit more challenging than checking out restaurants on Yelp, but there are plenty of great resources out there to get you started.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">You can use Google, too. Find a company and look up their leadership team on Google followed by words such as \u201cscam, SEC violation, crime,\u201d. You might be surprised by some of the results you find. Whenever I invest, I go as far as purchasing detailed background and criminal checks.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Another example of a true real estate pro is <\/span><a href=\"https:\/\/www.biggerpockets.com\/users\/jimp2\" target=\"_blank\" rel=\"noreferrer noopener\"><span style=\"font-weight: 400;\">Jim Pfeifer<\/span><\/a><span style=\"font-weight: 400;\">, who has been investing in syndications for years. He created a community called <a href=\"https:\/\/leftfieldinvestors.com\/\" target=\"_blank\" rel=\"noreferrer noopener\" data-type=\"URL\" data-id=\"https:\/\/leftfieldinvestors.com\/\">Left Field Investors<\/a> to review and recommend syndicated passive investments. Their goal is to help investors create financial freedom through finding the right syndicators and investments.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Additionally, <\/span><a href=\"https:\/\/www.biggerpockets.com\/users\/ianippolito\" target=\"_blank\" rel=\"noreferrer noopener\"><span style=\"font-weight: 400;\">Ian Ippolito<\/span><\/a><span style=\"font-weight: 400;\"> has a great passive investor forum as well. Ian sold his tech firm and started looking for real estate investments nearly a decade ago. He recognized the lack of democratized platforms dedicated to honest conversations between crowdfunding investors, so he created <a href=\"https:\/\/www.therealestatecrowdfundingreview.com\/\" target=\"_blank\" rel=\"noreferrer noopener\" data-type=\"URL\" data-id=\"https:\/\/www.therealestatecrowdfundingreview.com\/\">The Real Estate Crowdfunding Review<\/a>. While focused on crowdfunding, his forum is not limited to crowdfunded deals. There are plenty of reviews on all types of real estate syndicators and opportunities.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Final thoughts on experts and amateurs<\/h2>\n\n\n\n<p><span style=\"font-weight: 400;\">I want to be clear, there is no shame in being an amateur. BiggerPockets is a powerful gathering place for investors of all types, backgrounds, and experience levels to share ideas and grow together.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">But, I also want to emphasize that the real estate game may be harder than it looks right now. Sure, it might have been relatively easy to make significant returns from our active and passive deals over the past 12 years. The rising tide has truly lifted all boats.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">But if something can\u2019t go on forever, it will eventually end (not my witty line, but I\u2019m happy to use it). Trees don\u2019t grow forever. Musical chairs is fun, but the music will eventually yield to silence. You get the idea.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">If you\u2019re growing in your role as an active real estate investor or commercial syndicator, keep up the great work! Continue learning, building your team, talents, technology, and track record.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">But please don\u2019t mistake the wonderful rising market we\u2019ve all enjoyed as a sign that you can\u2019t make a bad deal. Use this time to learn with the wind at your back, but be constantly aware that the wind could shift on a dime.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Be prepared for that day. Make sure you\u2019ve structured your investments to weather the storm. Don\u2019t overpay for deals and please don\u2019t take investor capital if you do.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">If you\u2019re a passive investor, I\u2019d advise that you look carefully at every syndicator you plan to invest with. Check out their team and track record. Ask them hard questions.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Try to determine if this is the type of person you would want to be in trouble with for a decade if the market goes south. Even if things run smoothly, the character of your business partners is of utmost importance.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">A great real estate syndicator can turn a mediocre deal into a winner. A lousy one can ruin the very best<\/span>.<\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">There will come a day when it\u2019s easy to see the difference between experts and successful amateurs. Until then, I urge you to cut through the noise and partner with expert operators who provide downside protection and upside profits throughout all market conditions.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<div id=\"hero-block_62ee867235a1c\" class=\"first:mt-0 hero-block py-4    has-background has-slate-300-background-color has-text-color has-slate-800-color\">\n    <div\n        class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 lg:w-2\/3 \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-slate-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Learn how to invest in self-storage!<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px\">Investing in\u00a0self-storage\u00a0is an often overlooked real estate strategy that can accelerate your income and compound your wealth with minimal active management.<\/p>\n\n\n\n<div id=button-custom-event-block_64138705d4d27 class='button-custom-event'>\n      <a href=\"https:\/\/store.biggerpockets.com\/products\/storing-up-profits?utm_source=blog&#038;utm_medium=marketing_block\" x-on:click=\"window.analytics.track(&#039;Blog Block | Publishing: Storing up Profits Book&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/expert-or-amateur-real-estate-syndicator&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Get Yours Now<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\"lg:w-1\/3 first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/11\/Storing-Up-Profits-3d.png\" alt=\"\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n\n<p><i><span style=\"font-weight: 400;\">What about you? Have you had a hard time distinguishing experts from successful amateurs? What are you doing to protect yourself from the eventual downturn that impacts every investor at some point?&nbsp;<\/span><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Have you been to Texas lately? I was there last month, and you should really know what\u2019s happening in the real estate world there.&nbsp;&nbsp; Texas radio shows and billboards are [&hellip;]<\/p>\n","protected":false},"author":214608,"featured_media":142207,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7119],"tags":[2569],"class_list":["post-142197","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-biggerpockets-daily","tag-real-estate-syndication"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/142197","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/214608"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=142197"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/142197\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/142207"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=142197"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=142197"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=142197"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}