Any experience with 506(b) syndicators?

16 Replies

Looking to deploy a significant amount of money as a sophisticated investor from a cash out refinance on my house. My goal is to have my money work for me for 3-5 years then syndicate my own deals to eventually leave my 9-5. Does anyone have experience with syndicators who run under 506(b). I have spoken to one syndicator, Tim Bratz. Most of the syndicators I have found are 506(c). Looking for at least three plus who to stay away from. Thanks. Derek 

@Derek Berns  

My 506(b) offerings are only available to accredited investors.

Good luck on your search!!

@Derek Berns

Welcome to BP! 

Rule 506 (b) entails that you must have pre-existing relationships with a deal sponsor. So this takes some time. I suggest you search through BP and find old threads that cover similar topics and then just reach to investors for recommendations.

Here's one thread example: 

https://www.biggerpockets.com/forums/432/topics/57...

Most syndicators won't take non-accredited investors money because there is a lot more red tape and potential liability. Those that are not accredited are seen more as unsophisticated and easier to manipulate, not know the risks of an investment, etc.

Basically the real estate uneducated, innocent investor defense.

Some syndicators also will not take 1031 exchange money as that also requires more layers of compliance and certain entity structures for a syndicator.

@Derek Berns you could always start doing your own deals. Sometimes all it takes is one to get you out of the rat race.

Hi @Derek Berns . As @Alina Trigub said in her post, there are many BP threads that list out apartment syndicators. Just search "list of apartment syndicators", read through the threads, and reach out to the syndicators mentioned.

Keep in mind that some syndicators do 506(b) but still only take on accredited investors, so let it be known that you are not accredited. Also, don't hesitate to reach out to 506(c) syndicators and ask for a referral.

@Derek Berns you're unlikely to get folks to post names of "who to stay away from." You'll get more direct responses if you go talk to people and directly ask them about their experiences privately - including those they've had bad experiences with. However, take all experiences with grains of salt, both good and bad.

If you're in Denver, go to a few events hosted by Adam Triple A Adams. You'll meet both syndicators and passive investors there.

Facebook groups are also great for networking, believe it or not. If you want to PM me I can point you to a few. 

@Derek Berns  I am a syndicator and passive investor as well. I know a lot of syndicators and a few to stay away from. Like @Taylor L. said... I won’t mention them on a public forum but maybe we can do lunch and we can chat. 

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@Dino Pierce yes that is correct, although I don't accept.

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PM me. Happy to share my thoughts with you.

@Derek Berns you will find a few challenges with locating quality 506(b) investment opportunities.  The primary challenge is that we as 506(b) syndicators are not allowed to publicly solicit for investors.  Educating people is appropriate, so you will find some of the best syndicators sharing advice, perspective, and real estate knowledge on forums like this one.  If you take the time to read through threads, it is pretty easy to weed through the sales pitches and find those who are truly sharing advice.  Most of those would be appropriate for you to connect with, OR would likely know a quality syndicator for you to connect with.  Remember, a good experience investing in a syndication starts with a quality syndicator.  

My advice to you is to connect with the ones that resonate with you and take the time to develop a relationship with them.  Be patient.  Prior relationship is a requirement of 506(b) as well, so you should not jump into a deal with a syndicator right away.  Do your due diligence on them.  Take the time to understand their business philosophy, their track record, and don't hesitate to ask for referrals to prior investors of theirs.  

All the best,

Jack

I am always looking to find new operators myself. 

I am a physician syndicator and multifamily investor pm me and I can share some info related to it. I do have some Denver contacts who may be able to help you. Thank you Chander

@Derek Berns - Happy to put you in touch with several syndicators that raise capital under 506(b). PM and would be happy to see how I can help/connect you. 

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