Identify type of RE investment

2 Replies

I am a new member so hello to all. I am excited to join the community.

I am getting started on RE investing and have come across some offers that I would like to research more about but I don't know what this is called - deals such as:

RE investment company buys a large Multi-Family property and allows investors to buy shares. The specific deals I have seen are usually with a preferred return (7-8%) and a split on profits (60/40 or 70/30 in favor of investor). The management company is taking a fee (usually 4-6%) and there are some closing costs etc.

I have heard from friends that these deals have been working out well for them and that it's a good way to get started. Strategy is to go with well recommended and trusted groups and start having a piece of CRE action.

Questions:

1) How do I find more information and advice on this type of investments?

2) What's this called? (buying shares in a CRE deal? buying a syndication?) i.e. How do I Google this?

3) Any good BP threads to get me started?

Thanks in advance!

@Jay West What you're referring to can be easily searched either via BP or Google as "syndication" or "real estate syndication". There're actually a ton of other key words, but these will get you started in the right direction.

Here's also some reading material to educate you a bit more on the topic:

https://www.biggerpockets.com/blogs/10850/77215-th...

https://www.biggerpockets.com/blogs/10850/74883-wh...

If you have any other questions feel free to PM me.

Best!

@Jay West the structure you are describing is commonly referred to as “Syndication”.  You can google it but probably most of the google results will loop back to posts here on BP.  So you can also use the BP search tool to find forum threads and blog posts with tons of information.

One of the most important aspects of investing in these types of deals is selecting the right investment company to invest with.  There is a good forum thread with some good answers and dialogue on the topic here:  https://www.biggerpockets.com/forums/432/topics/503289-how-to-vet-syndicators?page=1

Finding sponsors and information about these types of investments is a bit tricky. This is because sponsors aren’t allowed to advertise their deals—which is why the investments are also referred to as “private offerings” or “Real Estate private equity” (google those, too!).  The securities laws require any publicly-sold securities to be registered, which is an expensive process.  But the legal framework allows for the sale of securities under an exemption to the registration requirement so long as the securities aren’t sold publicly, which by-and-large means “aren’t advertised”.  

This means that most investors learn of them through word-of-mouth (such as your friends that told you they are doing it) or by seeing a blog post, reading a book authored by an investment sponsor, hearing someone on a podcast, or whatever. 

What you’ll probably find is that now that you are aware of it and looking for it you’ll find it—where as before you wouldn’t have even noticed. :)