Multi Family Syndicate Recommendations

Member since 2022 · 6 posts · 2 votes

Does anyone have any recommendations for a good syndicate with a track record in multi family. I already have some investments with Ashcroft. Was wondering if there were any other firms I should look at.

Thanks,

Marc

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Brian BurkePro Member

Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes

@Marc Warren, this is a great time to research potential investment providers, learn more about their companies, and investigate track records. But if you are looking to make an investment now, be extra cautious.

No matter what you see or read about any syndication sponsor, if they are offering you an investment opportunity now, scrutinize it very carefully. Maybe they have the deal of the century, and if so, great. But in my humble opinion, which I'll probably take heat for, and maybe I'm wrong, is that right now isn't the best time to be buying.

There are two reasons why sponsors might be buying right now. 1. Because they have found a great deal (I haven't found any but that doesn't mean they don't exist). And 2. to generate fees to keep their office doors open. I suppose there is also a third reason: they think they found a good deal, but they are wrong.

As you do your research, seek out firms that are financially solid enough that they don't have to buy anything at all and can still pay their company overhead. Watch out for groups that have built a huge mouth to feed and must transact to feed it. There are more than a few of them out there.

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Senate Eskridge
Investor · Twin Falls, ID · Member since 2015 · 200 posts · 117 votes
3y
@Marc Warren I am a Multifamily Syndicator and I know several I can refer you to. I would be happy to chat sometime.
0 Reply
Jacob St. MartinPro Member
Investor · Charlottesville Virginia · Member since 2021 · 348 posts · 346 votes
3y
Marc, one of my business partners on a single family deal is a new syndicator. He doesn't have a huge track record yet but he is a really great investor and a great person. I would be glad to make an introduction if you are interested.
1 Reply
Joseph Gozlan
Real Estate Agent · Plano, TX · Member since 2015 · 734 posts · 511 votes
3y
Andrew Cushman is great!
I'm a syndicator myself but when I needed to deploy my SDIRA money, he was my first choice.
You can find him here: https://www.vpacq.com
Brian Burke from Praxis capital is also top line syndicator!
https://praxcap.com/
4 Reply
Marc Warren
OP
Member since 2022 · 6 posts · 2 votes
3y
Thanks!!!
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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y
@Marc Warren
Have you considered a note fund? More diverse portfolio with 100’s to 1000’s of assets and does not rely on one asset.
If so let me know I can send more info on ours
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E. C. "Stony" Stonebraker
Rental Property Investor · Coral Gables, FL · Member since 2016 · 199 posts · 266 votes
3y
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Marc Warren
OP
Member since 2022 · 6 posts · 2 votes
3y
Happy to speak with you offline. thanks
0 Reply
Brian BurkePro Member
Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
3y
@Marc Warren, this is a great time to research potential investment providers, learn more about their companies, and investigate track records. But if you are looking to make an investment now, be extra cautious.

No matter what you see or read about any syndication sponsor, if they are offering you an investment opportunity now, scrutinize it very carefully. Maybe they have the deal of the century, and if so, great. But in my humble opinion, which I'll probably take heat for, and maybe I'm wrong, is that right now isn't the best time to be buying.

There are two reasons why sponsors might be buying right now. 1. Because they have found a great deal (I haven't found any but that doesn't mean they don't exist). And 2. to generate fees to keep their office doors open. I suppose there is also a third reason: they think they found a good deal, but they are wrong.

As you do your research, seek out firms that are financially solid enough that they don't have to buy anything at all and can still pay their company overhead. Watch out for groups that have built a huge mouth to feed and must transact to feed it. There are more than a few of them out there.
Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
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Marc Warren
OP
Member since 2022 · 6 posts · 2 votes
3y
@Brian Burke - The reason I'm looking is because the offerings I'm seeing from the sponsors I know, are not nearly as compelling as they were a couple of years ago. I wasn't sure if the market has changed, or if they just haven't found good opportunities.
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E. C. "Stony" Stonebraker
Rental Property Investor · Coral Gables, FL · Member since 2016 · 199 posts · 266 votes
3y
@Marc Warren, Brian is a solid guy in this business and worth listening to. You are correct that the deals are not nearly as lucrative as before 2020. The market has been on fire the last decade or so but now, with higher interest rates, returns are not what they were and many sellers have not adjusted to the slowing market, but believe their properties should get higher prices which aren't justified in this market.
1 Reply
Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y
@Marc Warren
Market has absolutely changed. While people think higher interest rates means higher returns for investors, that is not the case right now - returns are going to be lower because MF syndication relies heavily on ability to borrow which is more expensive
Make sure to do a lot of due diligence on the deals you review.
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Brian BurkePro Member
Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
3y
Quote from @Marc Warren:

the offerings I'm seeing from the sponsors I know, are not nearly as compelling as they were a couple of years ago.
I don't want to be the Grinch that stole Christmas, but some of those deals that looked compelling a couple of years ago might actually turn out to be less compelling than they once looked. I'm already hearing stories of "compelling" deals gone awry. It'll be interesting to see how this plays out.
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Brock Mogensen
Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes
3y
Tons of great syndicators out there. I would first start with defining what market and type of deals you want to invest in. If there is a specific market you specifically want to focus on that will narrow down your search. On the other hand, recommendations from other LP's that have invested with that syndicator is a great way to connect with reputable firms.
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Marc Warren
OP
Member since 2022 · 6 posts · 2 votes
3y
@Brock Mogensen - what i liked previously was when interest rates were around 0, i could get cash on cash between 7%-8% and still have significant upside. Now, with interest rates around 4%, i'm seeing cash on cash between 1%-4%. I miss the nice balance between income and growth
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Jim PfeiferBusiness Member
Investor · Dublin, OH · Member since 2014 · 241 posts · 495 votes
3y
I would recommend you find a Community to help you find quality sponsors. When I first started investing in syndications I listened to podcasts and read books to find operators. It was difficult to know if they were great podcasters/marketers or if they were great operators. If you have a Community of like-minded investors, you can all share your best and worst experiences and you will end up being able to sort through and find quality operators in the asset classes that interest you. Syndications are long term, illiquid investments that are completely out of your control. The only way to know if it was a good investment is when it has gone full cycle - but you don't know that until you invest - unless you use a network or Community to help you. I am a full time passive investor and my results are much better now that I am leveraging my Community. Trust transfers. I wouldn't use the yellow pages to find an attorney or a CPA - I would ask people I trust. It's the same with syndication operators - except you can't ask your neighbors of friends because it's unlikely they are investing in syndications - that is where a Community of investors can help! Good luck!
4 Reply
Duke Giordano
Investor · Passiveadvantage.com · Member since 2019 · 164 posts · 91 votes
3y
Brian thanks for your comment, and I agree,
As always great to hear your opinion, and your honesty is always appreciated. I agree with Brian, in this environment be very wary of many deals as it is just not easy to pencil out profit without finding a special deal. That is why it is important to have tools and metrics one can use to illuminate this obvious deal inefficiencies for limited partners to be aware of.  Here are a few examples that are not hard and fast, but important nonetheless in this environment.
1. Fundamentally, when an interest rate on a loan is at or above the going in cap rate that is a hard deal to pencil.
2. Fundamentally when one need to use 50-55% LTV, you lose some of the compound effect of leverage on a deal, that makes it hard to pencil.
3. Any deal with a bridge loan right now, run away from... FAST
4. in the above scenario, operators are often trying to offset/overcome the above variables with risky rent growth assumptions in the 6=% rate annually, and this is a dangerous assumption.
There is only so many levers to pull and push.  I am basically sticking with MF deals with fixed rate debt, tolerable prepayment penalty which are very very hard to find. Possibly a MF deal with Class A shares less than 15% of total LP (Fixed rate return, no upside at back end, but need to get 10% or more return), vs possibly ATM deals to capture bonus depreciation. That is honestly it right now. Having said that, as Brian alluded I think there will be very interesting buying opportunities in the next 6+ months as bridge loan fixed rates expire and when these deal come about one needs to be ready. STAY TUNED
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Account Closed
Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
3y
Interest rates change everything. From the deal perspective of course it eats into cashflow. The more the leverage the greater the effect. But also it raises the bar on what makes a deal interesting to a LP. If the risk free return rate (say 10 year T bills for example) was less than 1%, the 8% preferred return syndication is great. When the risk free rate is 4% or 5% why give up liquidity and take risk for an additional 3%? So from both sides syndicated deals look less appealing in high interest rate environments. @Brian Burke is absolutely correct. There are very few good deals around and the best syndicators will hold their existing properties and not buy at the moment. If they did their underwriting conservatively and didn't over leverage they can ride the cycle. Those that were aggressive and expected low interest rate forever will lose money. The tide is going out..lets see who is naked and who is not!!
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Andrew FreedBusiness Member
Investor · Worcester, MA · Member since 2020 · 1k+ posts · 1k+ votes
3y
@Marc Warren - I second Andrew Cushman (who I've heard good things about) and Brian Burke (who wrote the Handsoff Investor, a fantastic book). Those are who I would choose to syndicate right now, however I personally think I can make more as an active investor in this cycle hence that is where all my funds are going right now.
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Ian IppolitoBusiness Member
Investor · Tampa, FL · Member since 2015 · 1k+ posts · 1k+ votes
3y
Quote from @Marc Warren:

Does anyone have any recommendations for a good syndicate with a track record in multi family. I already have some investments with Ashcroft. Was wondering if there were any other firms I should look at.
Thanks,
Marc

Marc, I know of one that has pretty hard-to-find qualifications. They're very experiernced with multiple real estate cycle experience in value-added multifamily and no investor money lost (ever). Conservative debt at 65% LTV or less. They put major skin in the game at 10% minimum. And they also offer a 1031 exchange pipeline.

They market via 506b so aren't allowed to advertise on the public internet ( and can only market privately by word-of-mouth). So if you private message meI can give you their details.
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Rick MartinPro Member
Rental Property Investor · Redondo Beach, CA · Member since 2017 · 411 posts · 477 votes
3y
@Marc Warren The climate has certainly changed. 2022 has been a challenging year, with interest rates squeezing cash flow down from where we were a few years back. That is just the reality. Still, you want to continue the velocity of your money. I may be in the minority, but I think there are still suitable investments to be had, as long as it has the proper debt structure and the assumptions are defensible. For instance, if you can find a deal with fixed-rate debt that factors in inflation and possible rising cap rates (I believe in the near term), this is better than letting your money erode with inflation. You could then be looking at attractive refinancing options two to four years down the road. "Retrade" had been a bad word for the longest time (you never want to nickel and dime a seller), but we have had to (justifiably) renegotiate prices this year to factor in rising interest rates, rising costs, and insurance rates. This has led to some healthy improvements in a deal once under contract to close. At the very least, it has provided us with a buffer. We have a severe housing shortage and that simple economic fundamental balances out the FED's action. I see that problem being around for a while. We need housing.
Oh yeah, I should answer your question. There are good operators out there. Start having conversations with some, knowing what is important to you. Be careful, but don't be scare either. "Scared money, don't make no money."
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Lucia Rushton
Realtor · Dallas - Fort Worth Metroplex, TX · Member since 2016 · 1k+ posts · 925 votes
3y
Quote from @Marc Warren:

@Brian Burke - The reason I'm looking is because the offerings I'm seeing from the sponsors I know, are not nearly as compelling as they were a couple of years ago. I wasn't sure if the market has changed, or if they just haven't found good opportunities.

@Marc Warren the market has definitely changed. we expect to see less syndication deals in the coming months. while you saw great potential returns marketed the last 12-18 months, not all of those deals will successfully achieve their exit strategy so you may have dodged a bullet.
1 Reply
Brian Adams
Syndicator of Large Apartment Buildings · Glen Mills, PA · Member since 2009 · 1k+ posts · 1k+ votes
3y
@Marc Warren I am so excited!!
The market has definitely changed and some investors are scared to make moves. The shift has cleared the way for real buyers like myself to acquire assets at discounts. I have $100 million in equity ready to deploy on the right deal at the right price.
The tide has gone out and exposed those who may have overpaid recently. I believe this creates an opportunity to buy deals and my company is targeting $250 million in deal flow in 2023.

As a former CPA, I know how to underwrite conservatively and I know my numbers.
Last year I bought a 1,000 unit in Atlanta, GA and the deal is going great.
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Todd Dexheimer
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
3y
There are a ton of syndicators on here and a ton that are being interviewed on podcasts. I'd spend some time writing down names.
Right now, be patient. There will be plenty of opportunity coming down the pipeline. Link up with a handful of experienced operators and get to know their business.
It's a great time to be learning and connecting with companies. Watch how they act and react over the next year or so.
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Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
3y
Quote from @Marc Warren:

Does anyone have any recommendations for a good syndicate with a track record in multi family. I already have some investments with Ashcroft. Was wondering if there were any other firms I should look at.
Thanks,
Marc

My view is with the cap rates and interest rates being so close to each other, traditional residential syndicators that relied on either rehabbing units and/or fixing management deficiencies are not going to produce adequate return to justify the risk. This eliminates a very large percentage of syndicators including many that have been very successful in the past. Traditional non-residential and new development syndicators have similar challenges.
Look for syndicators that are leveraging a more sophisticated value add. A value add that can produce an NOI increase that is far in excess of rehab of units or fixing management deficiencies. Note, a significant increase of NOI as a low cost can result in value increase that results in the interest rate increase having minimal impact.
BTW I recently (closed about a month ago) saw a syndication that was comprised of multiple properties of which some of the individual efforts were larger than any full cycle syndication completed by the syndicator. One of the sponsors was a well-known RE agent (has a TV show). The syndication had every appearance of being a syndication that was primarily formed to reduce the risk of the GPs. Somehow, they achieved their investor goal (I suspect because of the name of the RE agent and not the quality of the syndication).
It is always prudent to be careful, but I believe this is more warranted now for investors looking to join syndications than any time in the last 10 years.
Good luck
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Allan C.
Rental Property Investor · Member since 2018 · 826 posts · 810 votes
3y
@Marc Warren I invest in Ashcroft, Praxis, BAM and a few smaller ones. Praxis not doing any deals aside from debt funds as you sense from Brian’s comments above, and the other sponsors still think syndicating in this market is great.
I suspect many smaller syndications are not going to meet expectations since small syndicators seem to keep selling to each other, and that is a risky exit plan in this market.
I also anticipate a few large syndicators having a FTX or Madoff moment in the future. Many funds are getting too large for human nature and lack of financial oversight like SOX to stay corrupt-free.
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