Multi-family Syndications vs. Doing It On Your Own

[Chavi Fettman]

There are contradicting opinions regarding going the syndication route vs doing it on your own so I figured I’d jump in and give my 2 cents. 

Before I do, I wanted to give a huge thank you to BiggerPockets and all its incredible members. This truly is an exceptional community.

When I started out in real estate a couple years back, I ‘moved into’ BiggerPockets. I spent hours and hours on here, devouring content, podcasts, and webinars. I learnt everything I could. And then I built some of my team on here. I found 2 incredible agents and an amazing PM here, and got started with the information I leant here. 

I want to thank this incredible community. I was a quiet observer in the background but you all changed my life. 

I started out doing it all alone. I’m a bit of a control freak so I wanted to be in charge of how my money was spent. And I did well. 

Fast forward to today. I now work at a syndication company doing asset management and some of the acquisition.

This is what I realized.

Real Estate Syndicators are like therapists. Why? Because there are some -not such good ones out there -who ruin the reputation for the good ones.  

For everyone who says ‘do not put your money into a syndication’ there is a story behind it to prove their point. But that does not mean that you should not join a syndication. 

It just means you need to choose them carefully. 

If you are lucky to find an incredible syndicator, you could make the same kind of returns you would while doing it on your own. Without the brain damage. Sometimes, companies who have generations of experience can do things that we can not do. And make the kind of returns that we cannot make on our own. While we do nothing. We humans love to complicate things. We love to make things hard for ourselves. Lots of times there’s an easier way when we leave it to the ones who do it best. 

Yes, there are some great companies who care deeply about their investors’ money and are incredibly trustworthy and reliable. 

The company I work for signed on a deal about 6 months ago with the agreement to close in May. At the time of the signing, they were taking a risk not knowing which direction the market would go. This deal is in Florida and the market went up considerably. They had a couple of offers from buyers to buy it from them, even before they closed, and they would have made a  couple million dollars from the flip. This could have been a huge win for the company and they would not have to split any of this with their investors because there were no investors involved yet. 

However, the company chose not to flip the deal, but instead to bring it to their investors. Why? Because their core value is servicing their investors. They felt greedy taking the good stuff only for themselves. They feel a loyalty toward their investors and want to share all the good stuff with them. 

I was blown away. I did not know that businesses like this exist. There would have been nothing wrong with making a win for themselves and no one would even have known. 

My point to you is this: You don’t necessarily make the biggest returns when you work the hardest. 

You make the biggest returns when you surround yourself with really smart people. And sometimes, that includes a syndicator. This company has been giving their investors incredible returns.

I am not writing this to raise money. They have a pool of investors and this deal will sell out really quickly. 

I am writing this to show you the positive side to entering a syndication. 

IF you do the proper research and find the right ones. 

For all the others who choose to do it the hard way, there’s definitely benefit to that model as well. As long as you understand all the options and make an educated choice. 

Wishing you the best of luck in whichever path you choose to go!

[Christine Bellish]

Quote from @Chavi Fettman:

There are contradicting opinions regarding going the syndication route vs doing it on your own so I figured I’d jump in and give my 2 cents. 

Before I do, I wanted to give a huge thank you to BiggerPockets and all its incredible members. This truly is an exceptional community.

When I started out in real estate a couple years back, I ‘moved into’ BiggerPockets. I spent hours and hours on here, devouring content, podcasts, and webinars. I learnt everything I could. And then I built some of my team on here. I found 2 incredible agents and an amazing PM here, and got started with the information I leant here. 

I want to thank this incredible community. I was a quiet observer in the background but you all changed my life. 

I started out doing it all alone. I’m a bit of a control freak so I wanted to be in charge of how my money was spent. And I did well. 

Fast forward to today. I now work at a syndication company doing asset management and some of the acquisition.

This is what I realized.

Real Estate Syndicators are like therapists. Why? Because there are some -not such good ones out there -who ruin the reputation for the good ones.  

For everyone who says ‘do not put your money into a syndication’ there is a story behind it to prove their point. But that does not mean that you should not join a syndication. 

It just means you need to choose them carefully. 

If you are lucky to find an incredible syndicator, you could make the same kind of returns you would while doing it on your own. Without the brain damage. Sometimes, companies who have generations of experience can do things that we can not do. And make the kind of returns that we cannot make on our own. While we do nothing. We humans love to complicate things. We love to make things hard for ourselves. Lots of times there’s an easier way when we leave it to the ones who do it best. 

Yes, there are some great companies who care deeply about their investors’ money and are incredibly trustworthy and reliable. 

The company I work for signed on a deal about 6 months ago with the agreement to close in May. At the time of the signing, they were taking a risk not knowing which direction the market would go. This deal is in Florida and the market went up considerably. They had a couple of offers from buyers to buy it from them, even before they closed, and they would have made a  couple million dollars from the flip. This could have been a huge win for the company and they would not have to split any of this with their investors because there were no investors involved yet. 

However, the company chose not to flip the deal, but instead to bring it to their investors. Why? Because their core value is servicing their investors. They felt greedy taking the good stuff only for themselves. They feel a loyalty toward their investors and want to share all the good stuff with them. 

I was blown away. I did not know that businesses like this exist. There would have been nothing wrong with making a win for themselves and no one would even have known. 

My point to you is this: You don’t necessarily make the biggest returns when you work the hardest. 

You make the biggest returns when you surround yourself with really smart people. And sometimes, that includes a syndicator. This company has been giving their investors incredible returns.

I am not writing this to raise money. They have a pool of investors and this deal will sell out really quickly. 

I am writing this to show you the positive side to entering a syndication. 

IF you do the proper research and find the right ones. 

For all the others who choose to do it the hard way, there’s definitely benefit to that model as well. As long as you understand all the options and make an educated choice. 

Wishing you the best of luck in whichever path you choose to go!

 Thank you for sharing this story!!!!! Love to hear it. Definitely think there is a place for both do-it-yourself investors, and hands-off passive syndication investors. Personally, I think I will probably always do a little bit of both, but I am grateful for syndication because it's giving me an opportunity to scale much faster than I could have by myself. The reality is there are only so many hours in the day to get things done, so being involved in truly passive projects is life changing. Even if you hire everything out, put the systems in place and rely on other people as you purchase your own properties - there is a level of ongoing work involved to run that business. For people looking for more time freedom and flexibility, passive syndication investments can provide that in a way that purchasing properties yourself just can't.

My husband and I did a nightmare gut reno project on a 2 family 100 year old house that went over budget and over time (horrible contractor) - it ended up working out well as a BRRRR and we have it rented to two awesome long term tenants now - we are happy with the cash flow, more than doubled our equity and got most of our cash back after the refi, but we have PTSD from that project, so syndication was a life saver - to be able to make similar returns for doing no work, just seemed like a no brainer for us, especially after that kind of experience.

For that project put our own life's savings on the line, believing in ourselves that we would be successful in taking on that project with no experience (which we were, but it was horrible lol), which is why trusting someone who is a professional, who has a track record of experience, to do what they are good at just makes sense. We think of it like this: you trust a dentist to do your dental work, you trust your electrician to do your electrical work, you trust your attorney to handle your legal issues, so why not trust your syndicator in real estate projects when that's what they do!