Passive investing into real estate syndication when unaccredited

Homeowner · Columbus, OH · Member since 2022 · 5 posts · 7 votes

I'm just starting out and the strategy that is most appealing to me is passive investing into real estate syndications. I'm not accredited and it's hard to access good deals. Anyone have any tips or thoughts on how to get into my first deal with this strategy?

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Andy WebbPro Member

Rental Property Investor · Carrollton, TX · Member since 2013 · 750 posts · 538 votes

There are ways for syndicators to file/structure their deals that allow non-accredited, but "sophisticated" investors to participate; up to 35 sophisticated investors. This is done via private-placement memorandum, not openly marketed, so you have to have a relationship with those syndicators. Are you in any clubs or REI groups that have that type of syndicator that you can meet and get to know?

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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
3y
@Brittany Barchalk
there are various platforms that are syndication-like and I believe don't require accreditation. Fundrise, Arrived Homes, or even just publicly traded REITs.
disclaimer: i have a non-trivial amount in Starwood and a couple other REITs. they pay high dividends. i haven't invested in anything like Fundrise that isn't publicly traded.
but just curious - as someone starting out, what about this appeals to you? to me syndication makes the most sense as a diversification strategy.
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Elisa Zhang
Investor · Seattle, WA · Member since 2015 · 43 posts · 19 votes
3y
Hi Brittany, I just PM'd you. Would love to learn more about your story. My team and I offer complementary trainings and 1:1's to help newer investors learn about passive investments and syndications.
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Andy WebbPro Member
Rental Property Investor · Carrollton, TX · Member since 2013 · 750 posts · 538 votes
3y
There are ways for syndicators to file/structure their deals that allow non-accredited, but "sophisticated" investors to participate; up to 35 sophisticated investors. This is done via private-placement memorandum, not openly marketed, so you have to have a relationship with those syndicators. Are you in any clubs or REI groups that have that type of syndicator that you can meet and get to know?
2 Reply
Omar Ruiz
Investor · Anaheim, CA · Member since 2014 · 242 posts · 81 votes
3y
@Brittany Barchalk
If you're not accredited, then you need to work with syndicators that work with sophisticated investors. Even that needs to be vetted and documented along with a pre-existing relationship (documented conversations, phone call, meetings, etc.). That may be you or may not, but there is a way to level up to that. Feel free to reach out and I can explain.
1 Reply
Foti Karastamatis
Member since 2020 · 45 posts · 46 votes
3y
Quote from @Nicholas L.:

@Brittany Barchalk
there are various platforms that are syndication-like and I believe don't require accreditation. Fundrise, Arrived Homes, or even just publicly traded REITs.
disclaimer: i have a non-trivial amount in Starwood and a couple other REITs. they pay high dividends. i haven't invested in anything like Fundrise that isn't publicly traded.
but just curious - as someone starting out, what about this appeals to you? to me syndication makes the most sense as a diversification strategy.

Have you seen what is happening to Starwood and Blackrock?
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Foti Karastamatis
Member since 2020 · 45 posts · 46 votes
3y
Quote from @Brittany Barchalk:

I'm just starting out and the strategy that is most appealing to me is passive investing into real estate syndications. I'm not accredited and it's hard to access good deals. Anyone have any tips or thoughts on how to get into my first deal with this strategy?

Hello Brittany,
There are a few funds out there for non accredited Investors. One that comes to mind is Cardone Capital. Their min is $5000 but you have to be in it for the long haul. I believe those are 10-yr syndications. I think Infinity may also have one or more but I don't know for sure. Most syndicators don't do non accredited because it is VERY expensive and time consuming to operate.
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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
3y
@Foti Karastamatis
I sure have.
I've had the money in there for a while and am not recommending them.
Was just including it as a relevant piece of background info.
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Owen DashnerPro Member
Lender · Omaha, NE · Member since 2008 · 1k+ posts · 1k+ votes
3y
I'd suggest attending your local meetup groups or REIA's and asking around there on who does syndications. As others have mentioned above, you can participate in a 506B offering as a sophisticated investor, but you would need to know the sponsor group. I would also make this same post in the Facebook investing groups in your area.

Best of luck to you! I am a sponsor in a deal right now (we are fully funded though), and I'd be happy to answer more questions if you shoot me a DM.
Good luck!
1 Reply
Joe Archbold
Investor · Batavia, IL · Member since 2014 · 102 posts · 81 votes
3y
Brittany,
There are 506B projects out there. you just need to remember per the SEC, 506B offerings allow for only 35 non-accredited spots, so these are limited. Our group has had several multifamily projects open for non-accredited investors in 2022. You just need to be ready to act as there are fewer open spots.
The operator has the choice to bring their project forward as 506B or 506C. 506C allows them to advertise but to accredited investors only. 506B allows the operator to add friends and family (non-acc), but they cannot advertise.
Glad to chat and share some past projects to give you some guidance.
Regards,
Joe
2 Reply
Scott Holland
Member since 2022 · 24 posts · 4 votes
3y
Quote from @Andy Webb:

Are you in any clubs or REI groups that have that type of syndicator that you can meet and get to know?

Can you give a couple examples of "clubs"?
0 Reply
Mark F.Pro Member
Rental Property Investor · Northern NJ · Member since 2019 · 673 posts · 678 votes
3y
Quote from @Brittany Barchalk:

Theres some good info in this recent thread on the exact same topic.
In short, I invest in AHP funds (old threads on here) and 7E Investments fund. Semi happy with AHP, very happy with 7E Investments fund.
https://www.biggerpockets.com/...

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Doug Spence
Investor · San Diego, CA · Member since 2016 · 1k+ posts · 975 votes
3y
@Brittany Barchalk Welcome to bigger pockets! Have you read "the hands off investor" by brian burke yet? That's a great one to learn more about investing passively in syndications. Even though you're not accredited, you can invest in 506(b) syndications as a 'sophisticated' investor.
Another option is investing in real estate via joint venture deals. You can't technically be completely passive in those, but you can have role that suits your strengths and keep the regulators happy. Just make sure you're chatting with any attorney about it so you don't get in any trouble!
Another way you could invest passively is to do private lending to people doing active real estate deals, like brrrr's and flips. These operators always need capital and are willing to pay a pretty solid interest rate for the capital!
Good luck and keep us all updated on your journey!
0 Reply
Brittany Barchalk
OP
Homeowner · Columbus, OH · Member since 2022 · 5 posts · 7 votes
3y
Quote from @Nicholas L.:

@Brittany Barchalk
there are various platforms that are syndication-like and I believe don't require accreditation. Fundrise, Arrived Homes, or even just publicly traded REITs.
disclaimer: i have a non-trivial amount in Starwood and a couple other REITs. they pay high dividends. i haven't invested in anything like Fundrise that isn't publicly traded.
but just curious - as someone starting out, what about this appeals to you? to me syndication makes the most sense as a diversification strategy.

@Nicholas L. I work a W-2 and don't have a lot of free time to be on the active side so passive is appealing to me. Syndications seem to be a great strategy to become an owner and let the sponsor do the work with me being well informed.
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Brittany Barchalk
OP
Homeowner · Columbus, OH · Member since 2022 · 5 posts · 7 votes
3y
Quote from @Andy Webb:

There are ways for syndicators to file/structure their deals that allow non-accredited, but "sophisticated" investors to participate; up to 35 sophisticated investors. This is done via private-placement memorandum, not openly marketed, so you have to have a relationship with those syndicators. Are you in any clubs or REI groups that have that type of syndicator that you can meet and get to know?

@Andy Webb yeah I know a community for passive real estate investors called Left Field Investors that has a bunch of sponsors they have already vetted - I'm actually attending a meeting there next Wednesday.
0 Reply
Brittany Barchalk
OP
Homeowner · Columbus, OH · Member since 2022 · 5 posts · 7 votes
3y
Quote from @Joe Archbold:

Brittany,
There are 506B projects out there. you just need to remember per the SEC, 506B offerings allow for only 35 non-accredited spots, so these are limited. Our group has had several multifamily projects open for non-accredited investors in 2022. You just need to be ready to act as there are fewer open spots.
The operator has the choice to bring their project forward as 506B or 506C. 506C allows them to advertise but to accredited investors only. 506B allows the operator to add friends and family (non-acc), but they cannot advertise.
Glad to chat and share some past projects to give you some guidance.
Regards,
Joe

@Joe Archbold this is helpful! I didn't know that. How would I know about the availability if they can't advertise so I'm ready to act? I'll DM you about past projects, I'd like to learn more.
0 Reply
Brittany Barchalk
OP
Homeowner · Columbus, OH · Member since 2022 · 5 posts · 7 votes
3y
Quote from @Doug Spence:

@Brittany Barchalk Welcome to bigger pockets! Have you read "the hands off investor" by brian burke yet? That's a great one to learn more about investing passively in syndications. Even though you're not accredited, you can invest in 506(b) syndications as a 'sophisticated' investor.
Another option is investing in real estate via joint venture deals. You can't technically be completely passive in those, but you can have role that suits your strengths and keep the regulators happy. Just make sure you're chatting with any attorney about it so you don't get in any trouble!
Another way you could invest passively is to do private lending to people doing active real estate deals, like brrrr's and flips. These operators always need capital and are willing to pay a pretty solid interest rate for the capital!
Good luck and keep us all updated on your journey!

@Doug Spence Thanks for the welcome! I had not heard of that book, I just ordered it! Thanks for the recommendation. Excited to start my journey.
1 Reply
Joe Archbold
Investor · Batavia, IL · Member since 2014 · 102 posts · 81 votes
3y
Great question Brittany.
To see Syndication opportunities or "offerings", you need to sign up with and connect to individual operators, or with groups that connect to operators, and that is what we do.
To protect the individual investor the SEC has made a pre-existing relationship a must for operators to share an "offering " to investors.
These opportunities have become almost word of mouth through connection or relationship.
Again, glad to help.
Joe
0 Reply
Jay ThomasPro Member
Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
3y
For investors who don't meet the accredited investor qualifications, private placements are a great way to access attractive real estate investments. However, it's important to be aware that these opportunities are not openly marketed - meaning you need to have a relationship with the right syndicators in order to get access. This is why it's so important for non-accredited investors to build relationships and familiarize themselves with reputable syndicators. Doing so can open up interesting and lucrative real estate deals that might otherwise remain out of reach!

Additionally, something worth noting is that there are rules limiting the number of sophisticated investors that can participate in private placement deals - this limit is currently set at 35 individuals per deal. So make sure you're informed on the specifics if you're considering taking part in one of these deals.

Overall, private placements offer a great way for sophisticated investors to access attractive real estate investments - as long as they take the time to build relationships with syndicators and understand the limits that come with these deals. By doing so, they can broaden their investment opportunities and get the most out of their real estate portfolio!
Happy investing!

[email protected]832-889-5607
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Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
3y
I am an accredited investor but most of the syndications I associate with do not require that I am accredited. What they require is an existing relationship. They cannot advertise so to find out about them you must have a relationship. This implies network with various syndicators is the best way to learn about the various syndication options.
I suggest you search social media for well established, successful syndications and connect with them (subscribe to their channel, etc).
Good luck
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Chris Levarek
Real Estate Syndicator · Phoenix, AZ · Member since 2018 · 903 posts · 1k+ votes
3y
@Brittany Barchalk Relationships are what matter most if not accredited yet. I speak with many non-accredited investors weekly.
There are always opportunities, but a relationship is needed. It's an SEC requirement. Which is a good thing for both sides!
Happy to provide some guidance and connect with you.
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Andy WebbPro Member
Rental Property Investor · Carrollton, TX · Member since 2013 · 750 posts · 538 votes
3y
Quote from @Scott Holland:

Quote from @Andy Webb:

Are you in any clubs or REI groups that have that type of syndicator that you can meet and get to know?

Can you give a couple examples of "clubs"?

Hi Scott - club or association or group - something in that vein. Here in DFW there are several groups that meet. There is a DFW REI Club that meets in Ft Worth for example. Personally I am a member of a sizable group called Lifestyles Unlimited that has a lot of education and mentoring around residential real estate investing. I have gotten into quite a few passive apartment investments with syndicators I have gotten to know there, both in Texas and beyond.

Andy
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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y
@Brittany Barchalk
We have a regulation a+ offering (as do others) that accepts non accredited investors.
7e investments53 Reviews
Website View Page
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Larry Fried
Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
3y
Quote from @Brittany Barchalk:

I'm just starting out and the strategy that is most appealing to me is passive investing into real estate syndications. I'm not accredited and it's hard to access good deals. Anyone have any tips or thoughts on how to get into my first deal with this strategy?

I started out as non-accredited investor in syndications some 7+ years ago with a particular crowdfunding company. The company has morphed into offering very different deals over time, and I still invest with them. Nearly all their deals are open to non-accredited investors, and I have maintained a 4 part BP blog series about my investments with them & how they perform. You can see how the deals have changed, how the exits have worked and much more via my quarterly updated blog. It all starts with:
Have I Found the Holy Grail of Passive Real Estate Investing?
The updates are in (Part 4).
All best in your REI.

1 Reply
Brock Mogensen
Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes
3y
There are many syndicators out there that allow for non-accredited investors. You will need to build a "relationship" with the syndicator prior to investing though, per SEC regulations. I suggest connecting with a few syndicators, get on their deal list, stay in touch with them. Then invest with the one you like the best and has the best deal.
0 Reply
Jay Ben
Member since 2019 · 72 posts · 21 votes
3y
Quote from @Elisa Zhang:

Hi Brittany, I just PM'd you. Would love to learn more about your story. My team and I offer complementary trainings and 1:1's to help newer investors learn about passive investments and syndications.
Do you have an offering or do you just give complementary trainings? Id like to learn more.
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