Apartment Investing/Syndication- Is it wise to be an LP first?

Developer · Philadelphia, PA · Member since 2015 · 2k+ posts · 905 votes

@Kyle Curtin not sure of your market, but it would be very hard to find a decent property (even leverage on a 6-25 unit) with $80K in the markets we operate in.

My suggestion would be to get a little more insight into the syndication model by being an LP if you can find someone who is willing to help with the educational aspect as well.

Are you accredited? If not, you will also have to find a sponsor who is accepting non-accredited investors.

I would not recommend raising funds for someone else if you are not licensed to do so.

2 Reply

Brock Mogensen

Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes

4y

Investing as an LP will show you some of the back end operations. But definitely not a requirement. If your goal is to syndicate deals on your own right away, you likely want to use some of that capital to fund your own deals. Another approach would be to invest $25-$50K as an LP and use the rest for your GP deal.

1 Reply

Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

4y

@Kyle Curtin

I do not believe you need to invest in a syndication to see the back ops. You could probably contact a few and ask them some questions about who they use etc and get most of what you need from there

7e investments53 Reviews

Website View Page

1 Reply

John Mazzella

Multifamily Syndicator · New York, NY · Member since 2020 · 68 posts · 37 votes

4y

@Kyle Curtin I agree that you don't need to invest as an LP to learn the operations, the reality is the GP's will answer some questions but they aren't going to walk you through every aspect of what they do. If you are looking to jump into syndication my advise is to partner with others who have brought a deal full cycle before. By partnering you will be able to leverage their experience when speaking with brokers and lenders, often times they are barriers that are not easily overcome without experience. Good luck!

1 Reply

Kyle Curtin

OP

Real Estate Agent · Tewksbury, MA · Member since 2020 · 494 posts · 284 votes

4y

Quote from @John Mazzella:

@Kyle Curtin I agree that you don't need to invest as an LP to learn the operations, the reality is the GP's will answer some questions but they aren't going to walk you through every aspect of what they do. If you are looking to jump into syndication my advise is to partner with others who have brought a deal full cycle before. By partnering you will be able to leverage their experience when speaking with brokers and lenders, often times they are barriers that are not easily overcome without experience. Good luck!

Hi John! Thank you so much! Awesome advice!

0 Reply

Kyle Curtin

OP

Real Estate Agent · Tewksbury, MA · Member since 2020 · 494 posts · 284 votes

4y

Quote from @Chris Seveney:

@Kyle Curtin

I do not believe you need to invest in a syndication to see the back ops. You could probably contact a few and ask them some questions about who they use etc and get most of what you need from there

Hi Chris! Thank you so much, that is a great idea!

0 Reply

Kyle Curtin

OP

Real Estate Agent · Tewksbury, MA · Member since 2020 · 494 posts · 284 votes

4y

Quote from @Brock Mogensen:

Investing as an LP will show you some of the back end operations. But definitely not a requirement. If your goal is to syndicate deals on your own right away, you likely want to use some of that capital to fund your own deals. Another approach would be to invest $25-$50K as an LP and use the rest for your GP deal.

Hi Brock, thank you for the response! I love that, I definitely want to leverage my own capital into a deal to show that I have skin in the game and I am in it personally with everyone else :)

0 Reply

Kyle Curtin

OP

Real Estate Agent · Tewksbury, MA · Member since 2020 · 494 posts · 284 votes

4y

Quote from @Percy N.:

@Kyle Curtin not sure of your market, but it would be very hard to find a decent property (even leverage on a 6-25 unit) with $80K in the markets we operate in.

My suggestion would be to get a little more insight into the syndication model by being an LP if you can find someone who is willing to help with the educational aspect as well.

Are you accredited? If not, you will also have to find a sponsor who is accepting non-accredited investors.

I would not recommend raising funds for someone else if you are not licensed to do so.

Hi Percy, that amount is how much personal capital I can leverage myself, I definitely will be capital raising in the short term future and have a business partner that I am working with as well. :) I am not accredited at this moment in time. Thank you!

0 Reply

Evan Polaski

Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes

4y

@Kyle Curtin, how much do you know about private placements, waterfall structures, fee structures, etc. There are plenty of people who have put together a syndication without ever investing in others. There are also plenty that do invest as LPs first to get a better understanding.

If you are somewhat well versed, I don't see the value in investing as an LP. If you are a true novice, there could be some value. But, I feel like sometimes people say "invest as an LP" like that will get you the right to shadow an asset manager or acquisitions officer for a week, allowing you to be on phone calls and seeing internal reports.

But if you need surface level understanding of how these types of deals are structured and high level operational understanding, LP investing can help, but as you note: it will tie up your limited capital for likely a couple years or more.

2 Reply

Kyle Curtin

OP

Real Estate Agent · Tewksbury, MA · Member since 2020 · 494 posts · 284 votes

4y

Quote from @Evan Polaski:

@Kyle Curtin, how much do you know about private placements, waterfall structures, fee structures, etc. There are plenty of people who have put together a syndication without ever investing in others. There are also plenty that do invest as LPs first to get a better understanding.

If you are somewhat well versed, I don't see the value in investing as an LP. If you are a true novice, there could be some value. But, I feel like sometimes people say "invest as an LP" like that will get you the right to shadow an asset manager or acquisitions officer for a week, allowing you to be on phone calls and seeing internal reports.

But if you need surface level understanding of how these types of deals are structured and high level operational understanding, LP investing can help, but as you note: it will tie up your limited capital for likely a couple years or more.

Hi Evan! Thank you so much for the advice! I definitely have more learning to do regarding the different ways to structure returns. That part is a bit hazy for me right now, I am almost halfway through the multifamily millionaire volume 2 BP book and it has provided a ton of insight so far!

0 Reply

Percy N.

Developer · Philadelphia, PA · Member since 2015 · 2k+ posts · 905 votes

4y

@Kyle Curtin you probably already know this but if you are planning to raise capital, make sure you follow the SEC rules.

2 Reply

E. C. "Stony" Stonebraker

Rental Property Investor · Coral Gables, FL · Member since 2016 · 199 posts · 266 votes

4y

Quote from @Kyle Curtin:

Goooooood morning BP!

For my next property, I have had the vision to break into the small commercial multi family space (6-25 units) on a local level, and have taken action and started the journey down that path. I have pivoted everything I am absorbing (podcasts, books, folks I reach out to to connect) towards this sector of REI and have a written road map with my business partner on how we are going to get there and the forecasted steps that need to be taken. My main question is, I have about 70-80k in equity that I am hoping to leverage via a HELOC on my househack in the coming months on an 100% LTV. It was my intention to leverage this capital as skin in the deal when a worthwhile opportunity arose and still do, but do you think it could be worth it to invest as an LP on another group's deal FIRST (I have one in mind) to be able to have a hands on approach of the aspects of investor relations, structure, analytics, presentation, and how to handle that effectively, etc.? I really like the idea for the education in the macro but also am keeping in mind if my heloc capital is tied up for a year-2 years in the micro, it could really delay things. But also, that is just MY personal capital. We will begin starting to raise capital and learning the intricacies of it soon, and I have heard many stories of people putting together big deals for the first time with none of their own cash.

What do you think?

Have a great day!

Kyle

Kyle, I started by investing as an LP and it was helpful, but I wasn't thinking about becoming active until later. It did give me an appreciation for the seriousness of the syndication documents, a PPM, OA and SA, which are needed for a syndication. For those you need an experienced SEC attorney. As an LP, however, you are really on the outside looking in.

But if you know you want to learn the business, try to find a sponsor/syndicator who will let you volunteer to help the team out on a deal. If they will let you follow them around and listen in on meetings, site inspections, etc., I think that would be more helpful. You don't have to be part of the deal itself, if you can find someone. Good luck.

2 Reply

Dan Rowley

Investor · Cary, NC · Member since 2012 · 218 posts · 196 votes

4y

@Kyle Curtin Absolutely it's wise and very valuable to be LP investor first!

2 Reply

Kyle Curtin

OP

Real Estate Agent · Tewksbury, MA · Member since 2020 · 494 posts · 284 votes

4y

Quote from @Percy N.:

@Kyle Curtin you probably already know this but if you are planning to raise capital, make sure you follow the SEC rules.

Hi Percy! Thank you for the tip! I’ll definitely do some research and make sure I am within compliance!

0 Reply

Kyle Curtin

OP

Real Estate Agent · Tewksbury, MA · Member since 2020 · 494 posts · 284 votes

4y

Quote from @E. C. "Stony" Stonebraker:

Quote from @Kyle Curtin:

Goooooood morning BP!

For my next property, I have had the vision to break into the small commercial multi family space (6-25 units) on a local level, and have taken action and started the journey down that path. I have pivoted everything I am absorbing (podcasts, books, folks I reach out to to connect) towards this sector of REI and have a written road map with my business partner on how we are going to get there and the forecasted steps that need to be taken. My main question is, I have about 70-80k in equity that I am hoping to leverage via a HELOC on my househack in the coming months on an 100% LTV. It was my intention to leverage this capital as skin in the deal when a worthwhile opportunity arose and still do, but do you think it could be worth it to invest as an LP on another group's deal FIRST (I have one in mind) to be able to have a hands on approach of the aspects of investor relations, structure, analytics, presentation, and how to handle that effectively, etc.? I really like the idea for the education in the macro but also am keeping in mind if my heloc capital is tied up for a year-2 years in the micro, it could really delay things. But also, that is just MY personal capital. We will begin starting to raise capital and learning the intricacies of it soon, and I have heard many stories of people putting together big deals for the first time with none of their own cash.

What do you think?

Have a great day!

Kyle

Kyle, I started by investing as an LP and it was helpful, but I wasn't thinking about becoming active until later. It did give me an appreciation for the seriousness of the syndication documents, a PPM, OA and SA, which are needed for a syndication. For those you need an experienced SEC attorney. As an LP, however, you are really on the outside looking in.

But if you know you want to learn the business, try to find a sponsor/syndicator who will let you volunteer to help the team out on a deal. If they will let you follow them around and listen in on meetings, site inspections, etc., I think that would be more helpful. You don't have to be part of the deal itself, if you can find someone. Good luck.

Hi Stony! That is a phenomenal idea! Thank you so much for the advice, I know of a few sponsors that actively put deals together that I can reach out too!

0 Reply

Kyle Curtin

OP

Real Estate Agent · Tewksbury, MA · Member since 2020 · 494 posts · 284 votes

4y

Quote from @Dan Rowley:

@Kyle Curtin Absolutely it's wise and very valuable to be LP investor first!

Thank you so much Dan!

0 Reply

E. C. "Stony" Stonebraker

Rental Property Investor · Coral Gables, FL · Member since 2016 · 199 posts · 266 votes

4y

@Kyle Curtin, if you haven't already read Joe Fairless' book, I highly recommend you do it. It is very thorough and complete about multifamily syndications and will give you an excellent jumpstart. It is the "Best Ever Apartment Syndication Book" available on Amazon, et al.

1 Reply

Brian Adams

Syndicator of Large Apartment Buildings · Glen Mills, PA · Member since 2009 · 1k+ posts · 1k+ votes

4y

Quote from @Kyle Curtin:

Quote from @E. C. "Stony" Stonebraker:

Quote from @Kyle Curtin:

Goooooood morning BP!

For my next property, I have had the vision to break into the small commercial multi family space (6-25 units) on a local level, and have taken action and started the journey down that path. I have pivoted everything I am absorbing (podcasts, books, folks I reach out to to connect) towards this sector of REI and have a written road map with my business partner on how we are going to get there and the forecasted steps that need to be taken. My main question is, I have about 70-80k in equity that I am hoping to leverage via a HELOC on my househack in the coming months on an 100% LTV. It was my intention to leverage this capital as skin in the deal when a worthwhile opportunity arose and still do, but do you think it could be worth it to invest as an LP on another group's deal FIRST (I have one in mind) to be able to have a hands on approach of the aspects of investor relations, structure, analytics, presentation, and how to handle that effectively, etc.? I really like the idea for the education in the macro but also am keeping in mind if my heloc capital is tied up for a year-2 years in the micro, it could really delay things. But also, that is just MY personal capital. We will begin starting to raise capital and learning the intricacies of it soon, and I have heard many stories of people putting together big deals for the first time with none of their own cash.

What do you think?

Have a great day!

Kyle

Kyle, I started by investing as an LP and it was helpful, but I wasn't thinking about becoming active until later. It did give me an appreciation for the seriousness of the syndication documents, a PPM, OA and SA, which are needed for a syndication. For those you need an experienced SEC attorney. As an LP, however, you are really on the outside looking in.

But if you know you want to learn the business, try to find a sponsor/syndicator who will let you volunteer to help the team out on a deal. If they will let you follow them around and listen in on meetings, site inspections, etc., I think that would be more helpful. You don't have to be part of the deal itself, if you can find someone. Good luck.

Hi Stony! That is a phenomenal idea! Thank you so much for the advice, I know of a few sponsors that actively put deals together that I can reach out too!

@Kyle Curtin

Can you find deals?

I am looking for people to find me deals, such as value-add multifamily properties, prefer off-market, that are built after 1980, B/C class property in B area with pitched roofs, individually metered, with value plays such as low rents, poor management, high vacancy and a motivated/flexible seller.

I am targeting properties 200+ units and prefer 500+ unit deals.

I can buy deals over $100+ million, the bigger the better.

My primary target markets are Dallas, TX and Atlanta, GA and target other markets where there are strong jobs and economic growth.

Feel free to message me.

1 Reply

Colton Hahn

Specialist · Member since 2021 · 322 posts · 273 votes

4y

Quote from @Kyle Curtin:

Goooooood morning BP!

For my next property, I have had the vision to break into the small commercial multi family space (6-25 units) on a local level, and have taken action and started the journey down that path. I have pivoted everything I am absorbing (podcasts, books, folks I reach out to to connect) towards this sector of REI and have a written road map with my business partner on how we are going to get there and the forecasted steps that need to be taken. My main question is, I have about 70-80k in equity that I am hoping to leverage via a HELOC on my househack in the coming months on an 100% LTV. It was my intention to leverage this capital as skin in the deal when a worthwhile opportunity arose and still do, but do you think it could be worth it to invest as an LP on another group's deal FIRST (I have one in mind) to be able to have a hands on approach of the aspects of investor relations, structure, analytics, presentation, and how to handle that effectively, etc.? I really like the idea for the education in the macro but also am keeping in mind if my heloc capital is tied up for a year-2 years in the micro, it could really delay things. But also, that is just MY personal capital. We will begin starting to raise capital and learning the intricacies of it soon, and I have heard many stories of people putting together big deals for the first time with none of their own cash.

What do you think?

Have a great day!

Kyle

I would recommend being an LP first, talking with your GP and learning what they do and why. You may find out how the sausage is made and prefer not jumping into syndication just yet. Happy to chat as well :)

2 Reply

Taylor L.

Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes

4y

I started as an LP. It is a viable way to start learning the business, but making the switch to the GP side does take deliberate action and a lot of work. There's a lot that you simply won't learn as an LP.

1 Reply

Kyle Curtin

OP

Real Estate Agent · Tewksbury, MA · Member since 2020 · 494 posts · 284 votes

4y

Quote from @E. C. "Stony" Stonebraker:

@Kyle Curtin, if you haven't already read Joe Fairless' book, I highly recommend you do it. It is very thorough and complete about multifamily syndications and will give you an excellent jumpstart. It is the "Best Ever Apartment Syndication Book" available on Amazon, et al.

That sounds like an awesome recommendation, thank you!

0 Reply

Kyle Curtin

OP

Real Estate Agent · Tewksbury, MA · Member since 2020 · 494 posts · 284 votes

4y

Quote from @Taylor L.:

I started as an LP. It is a viable way to start learning the business, but making the switch to the GP side does take deliberate action and a lot of work. There's a lot that you simply won't learn as an LP.

Thank you so much Taylor!

0 Reply

Kyle Curtin

OP

Real Estate Agent · Tewksbury, MA · Member since 2020 · 494 posts · 284 votes

4y

Quote from @Colton Hahn:

Quote from @Kyle Curtin:

Goooooood morning BP!

For my next property, I have had the vision to break into the small commercial multi family space (6-25 units) on a local level, and have taken action and started the journey down that path. I have pivoted everything I am absorbing (podcasts, books, folks I reach out to to connect) towards this sector of REI and have a written road map with my business partner on how we are going to get there and the forecasted steps that need to be taken. My main question is, I have about 70-80k in equity that I am hoping to leverage via a HELOC on my househack in the coming months on an 100% LTV. It was my intention to leverage this capital as skin in the deal when a worthwhile opportunity arose and still do, but do you think it could be worth it to invest as an LP on another group's deal FIRST (I have one in mind) to be able to have a hands on approach of the aspects of investor relations, structure, analytics, presentation, and how to handle that effectively, etc.? I really like the idea for the education in the macro but also am keeping in mind if my heloc capital is tied up for a year-2 years in the micro, it could really delay things. But also, that is just MY personal capital. We will begin starting to raise capital and learning the intricacies of it soon, and I have heard many stories of people putting together big deals for the first time with none of their own cash.

What do you think?

Have a great day!

Kyle

I would recommend being an LP first, talking with your GP and learning what they do and why. You may find out how the sausage is made and prefer not jumping into syndication just yet. Happy to chat as well :)

Thank you so much for the awesome advice! Definitely a great point to begin! :)

1 Reply

Apartment Investing/Syndication- Is it wise to be an LP first?

Apartment Investing/Syndication- Is it wise to be an LP first?

Most Popular Reply

23 Replies