How to get your foot in the door? (Syndication)
Rental Property Investor · San Diego, CA · Member since 2018 · 26 posts · 8 votes
How to get your foot in the door? (Syndication)
Most Popular Reply
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
4y@Vincent E peters
I wouldn’t try and force anything as one bad deal will set you back a decade.
Speaking truthfully I would not recommend doing a syndication after having one deal under your belt. A syndication is also running a company where you are paying investors returns and managing cash flow. You can’t hold too much cash but need to have enough. That balance along with dealing with investors, auditors etc. Is not simple task.
Also, when raising money people will ask how much have you made in real estate and how much do you have in the deal. If your response is I bought three rentals and have not made any money yet why would they invest in your offering. What is your differentiator from others
This is not meant to be a dig, but I hope people read this and understand real estate is a long game and you should tread lightly. It’s like someone getting a pilots license then wanting to go fly a commercial 757 after flying a single engine only.
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19 Replies
- Real Estate Consultant · USA · Member since 2014 · 1k+ posts · 751 votes4y
Start raising capital.
- 4yMarcus LongPro MemberRental Property Investor · Leawood, KS · Member since 2016 · 102 posts · 104 votes
@Account Closed mentioned, having the ability to raise capital can be a game changer. Whether you source your own deal or partner with another syndicator that requires capital for their deal, capital is one of the key requirements and can provide you a better opportunity to get into a partnership. Talk about what you are doing with your friends, family, other firefighters, your old military buddies, and everyone else.
One pieces of advice is that I wouldn't "force" things to happen. I would set the conditions such that you are prepared and can take action when the right opportunity comes along. When we force things we end up with the wrong deal or the wrong partnership, etc.
Cheers,
Marcus - Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes4y
@Vincent E peters
I wouldn’t try and force anything as one bad deal will set you back a decade.
Speaking truthfully I would not recommend doing a syndication after having one deal under your belt. A syndication is also running a company where you are paying investors returns and managing cash flow. You can’t hold too much cash but need to have enough. That balance along with dealing with investors, auditors etc. Is not simple task.
Also, when raising money people will ask how much have you made in real estate and how much do you have in the deal. If your response is I bought three rentals and have not made any money yet why would they invest in your offering. What is your differentiator from others
This is not meant to be a dig, but I hope people read this and understand real estate is a long game and you should tread lightly. It’s like someone getting a pilots license then wanting to go fly a commercial 757 after flying a single engine only.
7e investments53 Reviews - 4yArn CenedellaPro MemberRental Property Investor · Greenville, SC · Member since 2008 · 786 posts · 1k+ votes
@Account Closed
If I may offer a few suggestions……….
In my experience, it is difficult to “force” things to happen - rather one needs to network and create an environment where you bring value to others already in this space.
Even with syndications, syndicators need working capital for earnest money deposit, due diligence, and legal fees etc. With little or no track record in MF, it will take time for brokers to start taking you seriously.
Bottom line, you will need to find partners - which brings us back to the question of how do you provide value to other presumably more experienced investors?
I would suggest being a good underwriter is NOT the first step - plenty of people can underwrite deals and good underwriters can be found and work on a affordable hourly basis. I’m not saying that underwriting is not important. I’m saying underwriting will NOT be the key to break into MF investment.People break into MF space generally in one or two ways:
1. Find deals
Pick a market and start studying that market. Take a look at every deal that comes up in that market. Understand typical price per door, cap rates, expense ratios etc. Tour properties as they come on market. Figure out who the top brokers are in that market and build a relationship with them. LEARN your market so you KNOW what is a good deal. Underwriting is only as good as the data you input - without solid local market knowledge, underwriting is of little value. Stay top of mind with brokers.
2. Raise capital
Start talking to friends family and professional colleagues about investing especially multifamily.
By all means, spend time learning out to underwrite - but I would spend most of my energy out in the market learning that market and talking to investors.
Hope this helps.
The magic the answer to MF investing is NOT found in a spreadsheet.
The magic the answer to MF investing is local market knowledge and networking.
Assess your skills and your existing network. Determine where your strengths lie and where your time would be best spent. Focus on 2 or 3 markets at most and physically get to those markets OR start educating your existing network about the benefits of passive investing.
Hope this helps!
- Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes4y
Go to syndication meet ups and go consistently. Make sure people recognize your face and know how serious you are
- Rental Property Investor · San Diego, CA · Member since 2018 · 26 posts · 8 votes4y
Quote from @Jim Pellerin:
Start raising capital.
Thank you for your response. There's plenty of fireman that want to invest out of state but don't know how. So I can this being an opportunity in that aspect.
- Rental Property Investor · San Diego, CA · Member since 2018 · 26 posts · 8 votes4y
Quote from @Eliott Elias:
Go to syndication meet ups and go consistently. Make sure people recognize your face and know how serious you are
I agree, I'm currently trying to find some local groups in the area. Thank you.
- Rental Property Investor · San Diego, CA · Member since 2018 · 26 posts · 8 votes4y
Quote from @Marcus Long:
@Account Closed As @Jim Pellerin mentioned, having the ability to raise capital can be a game changer. Whether you source your own deal or partner with another syndicator that requires capital for their deal, capital is one of the key requirements and can provide you a better opportunity to get into a partnership. Talk about what you are doing with your friends, family, other firefighters, your old military buddies, and everyone else.
One pieces of advice is that I wouldn't "force" things to happen. I would set the conditions such that you are prepared and can take action when the right opportunity comes along. When we force things we end up with the wrong deal or the wrong partnership, etc.
Cheers,
MarcusThank you Marcus, capital raising is doable at my current job with the high-income earners in our department. I just need to build up a reputation for being the out-of-state multifamily guy on the job. If I have to wait and do a few of my own deals to get tract record started that's what I'll do. I'm going to keep working on my network and see what opportunities present. I'll also tread lightly on forcing things to happen.
- Rental Property Investor · San Diego, CA · Member since 2018 · 26 posts · 8 votes4yArn, thank you for your response. Your input was very helpful to me. I needed to get a baseline on the underwriting to get a foundational understanding of how the syndication works. I understand the underwriting is only as good as the data inputted. Currently the team I'm getting coached by recommended me to work on underwriting and then reach out to brokers with their buying criteria and help them find deals. They also pitched to me that I could potentially become a project manager/asset manager for an area they are looking to expand in. This was based on the first conversation we had so I'm going to feel things out and keep building a relationship with them while also getting coached to improve my skillsets. As far as raising capital once I get in with a group I can definitely see other firemen reaching out to me like they already are about my AirBnb, word spreads fast in our community, but I definitely want the experience and backing of more experienced individuals than myself before I do that.
Quote from @Arn Cenedella:
@Account Closed
If I may offer a few suggestions……….
In my experience, it is difficult to “force” things to happen - rather one needs to network and create an environment where you bring value to others already in this space.
Even with syndications, syndicators need working capital for earnest money deposit, due diligence, and legal fees etc. With little or no track record in MF, it will take time for brokers to start taking you seriously.
Bottom line, you will need to find partners - which brings us back to the question of how do you provide value to other presumably more experienced investors?
I would suggest being a good underwriter is NOT the first step - plenty of people can underwrite deals and good underwriters can be found and work on a affordable hourly basis. I’m not saying that underwriting is not important. I’m saying underwriting will NOT be the key to break into MF investment.People break into MF space generally in one or two ways:
1. Find deals
Pick a market and start studying that market. Take a look at every deal that comes up in that market. Understand typical price per door, cap rates, expense ratios etc. Tour properties as they come on market. Figure out who the top brokers are in that market and build a relationship with them. LEARN your market so you KNOW what is a good deal. Underwriting is only as good as the data you input - without solid local market knowledge, underwriting is of little value. Stay top of mind with brokers.
2. Raise capital
Start talking to friends family and professional colleagues about investing especially multifamily.
By all means, spend time learning out to underwrite - but I would spend most of my energy out in the market learning that market and talking to investors.
Hope this helps.
The magic the answer to MF investing is NOT found in a spreadsheet.
The magic the answer to MF investing is local market knowledge and networking.
Assess your skills and your existing network. Determine where your strengths lie and where your time would be best spent. Focus on 2 or 3 markets at most and physically get to those markets OR start educating your existing network about the benefits of passive investing.
Hope this helps!
- Rental Property Investor · San Diego, CA · Member since 2018 · 26 posts · 8 votes4y
Quote from @Chris Seveney:
@Vincent E peters
I wouldn’t try and force anything as one bad deal will set you back a decade.
Speaking truthfully I would not recommend doing a syndication after having one deal under your belt. A syndication is also running a company where you are paying investors returns and managing cash flow. You can’t hold too much cash but need to have enough. That balance along with dealing with investors, auditors etc. Is not simple task.
Also, when raising money people will ask how much have you made in real estate and how much do you have in the deal. If your response is I bought three rentals and have not made any money yet why would they invest in your offering. What is your differentiator from others
This is not meant to be a dig, but I hope people read this and understand real estate is a long game and you should tread lightly. It’s like someone getting a pilots license then wanting to go fly a commercial 757 after flying a single engine only.
I agree with you 100%. I have no intention of just going out there and doing this by myself, zero. I want to join an already established syndicator, that is the goal. I can study all day/night but at the end of the day I need to put rubber to road and get the experience somehow which in my mind is by working with a team that's established. Thank you for your response.
- 4yJoshua MessingerBusiness MemberProperty Manager · Poconos, PA · Member since 2020 · 443 posts · 264 votes
Hey @Account Closed!
The main thing I have noticed that is the biggest part about doing a syndication deal is being able to raise the capital for any type of deal that approaches you very quickly. This of course comes hand in hand with networking but also networking with the right type of people that trust you and are willing to invest with you.
I hope this helps and if you ever need any help with anything or would like to partner in the future don't hesitate to reach out!
-
Josh
- Investor · Castle Rock, CO · Member since 2018 · 297 posts · 159 votes4y
@Vincent E peters 1. Raising Capital and 2. Deal sourcing are probably the two most valuable things you can bring to a team. If I were you, I would pick one of those and focus on that while continuing to network and work on your UW skills.
Try to find a syndicator or team that you click with and once you have your value proposition set and ready to go, bring it to them and make it happen!
Best of luck to you!
- Rental Property Investor · San Diego, CA · Member since 2018 · 26 posts · 8 votes4yThank you Adam for the great advice that I can take action on.
Quote from @Adam Lacey:
@Vincent E peters 1. Raising Capital and 2. Deal sourcing are probably the two most valuable things you can bring to a team. If I were you, I would pick one of those and focus on that while continuing to network and work on your UW skills.
Try to find a syndicator or team that you click with and once you have your value proposition set and ready to go, bring it to them and make it happen!
Best of luck to you!
- Investor · Chicago · Member since 2022 · 128 posts · 85 votes4y
I started in real estate with the goal of getting into syndication. On the way I have picked up 2 SFH that were great deals and will eventually be a source of seed money to get into bigger multi family units.
I bought these units with a passive money partner, and I am looking for more. (Deals and partners)
my feeling is that, although I want to get into big multifamily, I should still be looking out for smaller deals as stepping stones to help me scale while I learn the ropes.
So I would say, don't ignore smaller deals that come up on your path to big syndications. Not only will they help you financially, but you will learn a ton along the way.
- Multifamily Syndicator · New York, NY · Member since 2020 · 68 posts · 37 votes4y
@Account Closed I would say to get your foot in the door you should raise capital. As I saw someone mention above it is helpful to know your target audience. In your case starting with firemen is a good idea. You are on the right track by networking with Syndicators. While building a relationship it is a good call to see if you can join in a deal as a capital raiser (along with other tasks per SEC rules). This will get you into deals to see the inner workings and you can start to gain experience and reference that experience in the future when speaking with brokers and lenders. I would suggest not working on findings deals unless you have a broker willing to work with you because they generally like to work with individuals they know can close deals. There is plenty to work on but capital raise is the best starting point. If you want to hop on a call I am always happy to talk about real estate. Good luck!
- Rental Property Investor · San Diego, CA · Member since 2018 · 26 posts · 8 votes4y
Quote from @Mordy Chaimovitz:
I started in real estate with the goal of getting into syndication. On the way I have picked up 2 SFH that were great deals and will eventually be a source of seed money to get into bigger multi family units.
I bought these units with a passive money partner, and I am looking for more. (Deals and partners)
my feeling is that, although I want to get into big multifamily, I should still be looking out for smaller deals as stepping stones to help me scale while I learn the ropes.
So I would say, don't ignore smaller deals that come up on your path to big syndications. Not only will they help you financially, but you will learn a ton along the way.
Thank for your reply @Mordy Chaimovitz. I'm definitely trying to take both approaches. Luckily for me, I have the VA loan to use at my disposal which can help me get into the California market but right now I'm not really seeing a way to cash flow at all in multifamily. However, I have been looking at other strategies that could cash flow in Cali, such as assisted living. Also, I could probably go in with some other guys on something out of state I'm just currently tied up on the first property that I put some money into that I need to recoup first. Definitely want and need the reps like you are implying though.
- Rental Property Investor · San Diego, CA · Member since 2018 · 26 posts · 8 votes4y
Quote from @John Mazzella:
@Account Closed I would say to get your foot in the door you should raise capital. As I saw someone mention above it is helpful to know your target audience. In your case starting with firemen is a good idea. You are on the right track by networking with Syndicators. While building a relationship it is a good call to see if you can join in a deal as a capital raiser (along with other tasks per SEC rules). This will get you into deals to see the inner workings and you can start to gain experience and reference that experience in the future when speaking with brokers and lenders. I would suggest not working on findings deals unless you have a broker willing to work with you because they generally like to work with individuals they know can close deals. There is plenty to work on but capital raise is the best starting point. If you want to hop on a call I am always happy to talk about real estate. Good luck!
@John Mazzella I like those ideas. Just need to figure out how to pitch that to guys on the job when I haven't been doing it. This is why I figured I can maybe deal sourcing would be better to start with. The syndicators I'm getting coached by already said they would pull the trigger on a deal if I bring them what fits their criteria. Then once guys start to see I'm active with a team the raising capital part will be way more fluid. There are plenty of guys on the job that want to invest but don't see the way to do it with California markets. The potential is definitely there. I'd love to hop on a call with you, I need all the strategy I can get. Thank you for replying!
- Multifamily Syndicator · New York, NY · Member since 2020 · 68 posts · 37 votes4y
@Account Closed that is great that you have found syndicators who are willing to partner with you on a deal. Since you are looking for deals it would probably be helpful if you could leverage those sponsors track record. It is worth asking the sponsors if you can use their name and mention you are partnering with them when speaking to brokers in their markets. Good luck and keep me updated!
- Rental Property Investor · San Diego, CA · Member since 2018 · 26 posts · 8 votes4yThank you, I’ve been trying extremely hard to make things happen. I already have the green light on using them as well as sending their buying criteria over to the brokers. Just need to start making those relationships happen.
Quote from @John Mazzella:
@Account Closed that is great that you have found syndicators who are willing to partner with you on a deal. Since you are looking for deals it would probably be helpful if you could leverage those sponsors track record. It is worth asking the sponsors if you can use their name and mention you are partnering with them when speaking to brokers in their markets. Good luck and keep me updated!
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