How to fundraise for syndication

Question

Hello! I’m a new investor trying to syndicate my first deal with a few partners. Does anyone have any advice for how best to attract investors for a GP/LP structure? For context we are doing net leased, commercial drive thru properties.

Chris Seveney · Answer

@Bradford Ortlund

Have you done real estate deals in the past? Notes you are a new investor - you new to real estate or new to syndications?

Big difference

Tim Ryan · Answer

Hey Bradford, congrats on getting a deal going.  I've both learned and lived that when you have a good deal, the investments always come. I've never had a problem raising funds in syndications. Be sure the deal is solid and has upside potential for the LP's. Where to find them? If a 506 (b) then everywhere you have direct contact with people. You'll be surprised how many people want to get into these types of deals and usually in our area meeting the accredited investor requirements is not a big hurdle.

Brock Mogensen · Answer

Raising capital is definitely tough in the current economic environment.

Of course the deal needs to make sense from return perspective. But the most important factor is having a great story around the deal. How are you going to add value? Getting the potential investor excited about the deal.

Starting with family and friends is the best place to start for a capital raise.

G. Brian Davis · Answer

You might think about partnering with an experienced sponsor for your first deal or two. It lends credibility to help you raise funds, and they can connect you with the right attorney and other professionals you'll need. And, of course, they'll help you avoid expensive mistakes.

In our Co-Investing Club, we don't invest with novice sponsors. But with an experienced sponsor on the deal, people like me would suddenly start considering it.

Plus, they'll probably be able to help you raise funds with their own existing network.

Just an idea!

Greg Scott · Answer

If your SEC attorney is using the Reg D 506(c) exemption, you can advertise.  If they are using Reg D 506(b) you can only work within your existing network of acquaintances, so the best way would be to pick up the phone.