Hello, I am studying how to invest in apartment complexes. It is my understanding that some REI groups/meet-ups offer group buying (a syndicate?), in which one investor becomes the lead and others simply contribute funds. Return can reach double digits. Where can I learn more about this type of investing?
Some other questions are:
- Where can one find such offers? Especially if one cannot visit those meetups.
- How do you check the validity of such deals? Is there a way to insure the funds?
- What are some main principles of such investing?
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
10y
These quasi seminar companies are doing things the "old way" and investing like what you mention is much simpler today by visiting crowdfunding sites. We and other platforms like ours have funds and syndicated offerings on our site for investing in syndicates.
Care must be taken to invest in projects from people that know what they're doing. This is harder to do online because you can't interact with the promoter as much. So a lot depends on how you intend to do diligence and how advanced you are in your investing career. It seems like you're just getting started so reading some books and material from people on either BiggerPockets or other places online should give you a good sense for who knows what they're talking about.
I could literally write a whole book in this post about what to look for, but some of the bullet points given my limited time are:
-Track Record - Does the syndicator/operator/issuer understand the deal type and the market that they're raising funds for? How have their investments performed historically? What experience do they have in this market for this specific type of project?
-Risk - Does what you're being offered make sense given the risk of the project and where you are in the waterfall? This is a much harder question for a newbie to answer. What other risks are there? What things have to go right for the promoter to achieve the projected returns and how likely are they to transpire?
-Compliance - Are the documents organized correctly and is the promoter using the right exemptions?
-Interaction / Follow-up Post Investment - What systems and processes does the promoter have set up to communicate investment performance post investment with the investor?
Hope this helps some. Feel free to reach out to me if you have any questions.
@Dawn Oishi, I got ~30% return last year. Invested $50K in a syndication in Nov 2014. Received $25K in Dec of 2015 upon refinance. Still have ~$40K equity in the project of which $25K is my original capital.
Nice! How did you leverage the risks?
The property was bought for $5.8M with additional $2M of rehab budget, closing costs, etc. All-in was $7.8M. $3M came from investors like myself (avg. $100K per person - some more, some less), $4.8M was a hard money loan at 10% interest. In December the property was refinanced with Fannie Mae based on $9.1M value, so got a little over a half of the original $3M back net of fees, escrows, and other charges.
Rental Property Investor · Dallas, TX · Member since 2015 · 503 posts · 504 votes
10y
For those suggesting that many of the gurus are scams, it is true that they often charge thousands of dollars to become a personal student, and many who forked over that kind of money are unhappy with the results. Some probably are not worth the money, and others may be worthwhile but the student failed due to their own shortcomings. Just because it may not be worth giving someone thousands of dollars, it doesn't necessarily mean that the guru doesn't know their stuff. Most of the names mentioned on this thread offer some basic information for free, either via YouTube videos, websites, webinars, or live seminars (where they pitch their more expensive program). Sometimes they have a book which would not cost much. My point is that you can still learn a lot from an expert without paying for their high-priced services. For the cost of your time, and/or maybe $10-$20, you can get a lot of knowledge.