Capital or Deals: Which first for a new syndicator?

Question

Just curious how you started your syndication journey, did you find the perfect deal and sponsor then the capital, or did you go on the hunt for capital and soft commits then find active syndications to put those funds in?

Did you do something completely different?

Thank you in advance for your time and response

Did you do something completely different?

Thank you in advance for your time and response

Brock Mogensen · Answer

Do it all simultaneously.  It is beneficial to have somewhat of an LP list before seriously targeting deals.  But the reality is it's going to take you a while to find a good deal.  Start building out your LP soft commitments and meanwhile start building relationships with brokers in your target market.

Evan Polaski · Answer

@Michael Orndoff, the simple answer is capital first then deal.

The detailed answer is: you are teeing up interest and building your POTENTIAL investor network before finding a deal, but generally most LPs will not sign a sub doc or fund any money until you have the deal identified.

The flip side is no brokers/sellers will award you a deal as a new sponsor, until you have the capital raised.  Or more accurately, they won't award you any great deals.  You will be getting the deals that most other established groups have passed on.

Taylor L. · Answer

Capital first. That doesn't mean you need to have it all raised, but you need to have a specific, direct, and actionable answer to the question "Where am I going to find the money for this deal?"

Todd Dexheimer · Answer

Get the money first, then focus on getting the deal. The deal never brings in the money.

Paul Moore · Answer

Hi @Michael Orndoff! It is critical that you build your resume first. It is important that you do a lot of individual deals or you are involved with them as a key team member before trying to be a syndicator. I am not saying that to be snobby, but the fact is it will be much harder to raise capital if you don't have a track record.

Once you have some experience under your belt, and you may already have that, I would recommend you set up a capital raising structure. @Taylor L. and others have made similar comments. To do that, I recommend you create several e-books and hopefully even write at least a short book. With that you can get guest spot on podcasts, and create your own podcast. You can also do webinars, social media and more. This way you will build up a list of potential investors for the time when you have your first deal.

Whitney Sewell, of The Real Estate Syndication Show did this. He started a daily podcast and created other investor collateral. Then when he had his first investment opportunity, he was able to quickly raise capital from hundreds of accredited investors. I highly recommend you check out his show and follow in his foot steps! Good luck!

Joseph Harris III · Answer

I agree with @Brock Mogensen. Do both. Im just starting my journey too and Im doing both.

Chris Seveney · Answer

@Michael Orndoff

We invest in mortgage notes so our funds are typically blind pool funds. This we get the $ first

We did do one raise where we had the assets first and raised the funds.

You will be opinions on both sides. My only other comment is if you go after the deal first, make sure you have some people on the sidelines you know who will invest with you.

Don’t forget to get your docs done first prior to doing either though.

Terrell Hill · Answer

Money 1st. I would work on building relationships with commercial mortgage brokers. My broker searches every morning, all the loan products that these Commercial Lenders come up with daily. There are hundreds if not thousands of banks out there that change the products they offer daily to compete. (The financial deck is frequently being reshuffled).Coupled with  building Commercial broker relationships.

John Mazzella · Answer

@Michael Orndoff I would say capital first for sure. It helps to network and meet people, you also may run into someone already doing syndication that you can partner with on a deal. I would say looking for deals would be significantly harder. Brokers don’t like working with individuals without experience for large syndication deals, they look for people who have a track record of closing deals. If you want to chat more shoot me a PM, good luck!

David A Lisowski · Answer

Money follows the deal

Capital or Deals: Which first for a new syndicator?

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