advice for starting a syndication

Multi-Family and Apartment Investing
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advice for starting a syndication

Jason Thompson
Wholesaler · usa · Member since 2021 · 221 posts · 67 votes

I am a licensed real estate agent, and I am looking to start out creating syndication and am asking if anyone has any advice on how to get started; I see a lot of great deals in my market, but being a beginner investor in multi-family residential I don't have the capital to get things going? Any advice would be great thank you 

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Brock Mogensen
Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes
3y

To syndicate real estate, you either need a track record of experience or partner with someone that has the track record/experience.  Investors and banks will want to see the experience.

Prior to syndicating your first deal, you need to spend time educating yourself on not just real estate but specifically syndication. 

Underwriting, deal structure, legal processes, due diligence, asset management, investor relations - all very important components.

Syndication can be a lucrative strategy, but it's not something you can just jump into. 

It took me 12 months of studying everything I've outlined above before I felt ready to syndicate my first deal. 

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y

    @Jason Thompson

    My advice is You should not start syndicating until you have significant experience. You will need $20k in startup costs plus you should invest atleast $50k in your syndication and have a track record to show investors what you have for experience

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  • Dennis Rogov
    Real Estate Agent · Voorhees, NJ · Member since 2019 · 32 posts · 14 votes
    3y

    The best way to find investors for syndication you first have to determine if you will need 506b investors or 506c

    506b can be anyone you have an existing relationship family, friends , business partners or 

    506c are accredited investors only and don’t require a relationship 

    You then should join local network group
    chamber of commerce 

    Local real estate investor group 

    BNI

    Start building relationships with people and educate them on your prospective or prior deals that you done.

    1Reply
  • Charles Seaman
    Apartment Syndicator · Charleston, SC · Member since 2017 · 519 posts · 631 votes
    3y

    @Jason Thompson There's four (4) things you need to do when starting out in syndication. In short, getting the capital needed is possible, but doing so will take time and effort. Keep in mind that there's two (2) different types of capital that you'll need. The first is equity. This is typically raised from investors and it's used to close on deals and to operate the asset(s) after closing. The second is risk capital. This is the capital that's provided for everything from the time that the LOI is accepted until closing (ex. EMD, loan application fee, securities attorney retainer, due diligence expenses, etc.). Risk capital is provided by people on the GP team, so you'll need to make prospective partners aware of your need for risk capital if you're unable to lay it out yourself.

    1.  Pick a target market (only 1-2 markets when you're starting out).  It sounds like you're ahead of the game here because you're focusing on your local market, which certainly makes things much easier.  Remaining focused allows you to develop market knowledge and to build better relationships.

    2.  Find partners.  Similar to a marriage, you want to be diligent about picking the right partner(s).  Get to know yourself well and get a firm understanding of what you're good at.  In short, this business comes down to finding deals, finding money, and running deals.  Figure out which side you belong on and find people that can handle the remaining tasks.  As you gain momentum, you'll realize that each of these tasks are full-time commitments and that they'll quickly become more than any one person can handle.  Also make sure that your values align.  Complementary skill sets are important, but there's more to a partnership than just that.

    3.  Find investors.  People often think "find the deal and the money will come."  This can be an effective technique with a single-family home.  It's quite difficult to do (and sometimes illegal) when purchasing multimillion dollar multifamily properties through a syndication structure.  You need to spend just as much time finding investors as you do finding deals.  Attracting capital will be tough when you start out due to not having a track record.  In addition to finding investors, you'll also need to find other syndicators that you can co-GP with until you're able to raise capital for your own deals.

    4.  Find key principals/sponsors.  A key principal/sponsor is somebody that has the net worth, liquidity, and experience to qualify for a loan.  This is important, but there's a greater value to building these relationships.  If you do a good job building these relationships, then you can ask the key principal/sponsor if you can use their track record when speaking with people.  If they say yes, then that will be a big help to you.  Being that this business is all about track record, using somebody else's track record allows you to get a track record before you have your own.  This helps you attract both deals and investors.

    7Reply
  • Brock Mogensen
    Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes
    3y

    To syndicate real estate, you either need a track record of experience or partner with someone that has the track record/experience.  Investors and banks will want to see the experience.

    Prior to syndicating your first deal, you need to spend time educating yourself on not just real estate but specifically syndication. 

    Underwriting, deal structure, legal processes, due diligence, asset management, investor relations - all very important components.

    Syndication can be a lucrative strategy, but it's not something you can just jump into. 

    It took me 12 months of studying everything I've outlined above before I felt ready to syndicate my first deal. 

    8Reply
  • Jason Thompson
    OP
    Wholesaler · usa · Member since 2021 · 221 posts · 67 votes
    3y

    Thank you everyone for your input and advice it truly is appreciated

    0Reply
  • Doug Spence
    Investor · San Diego, CA · Member since 2016 · 1k+ posts · 975 votes
    3y

    @Jason Thompson Are you already in a mastermind group that focuses on multifamily? If not, I would join one asap. You have to start surrounding yourself with people that are already doing what you're trying to do. You could also hire a mentor to help you out on your first syndication. Have you invested in a syndication as an LP yet? Another thing you could do is invest in someone else's deal as an LP and find ways to provide value to them in hopes they bring you on their next deal. 

    Good luck and keep us updated!

    5Reply
  • Mohammed Rahman
    Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes
    3y

    Hey @Jason Thompson - I'm guessing the deals you're finding are mainly residential? 

    If so, a quick tip that has worked for me in the past is to just attend some real estate meetups in your area (or host one yourself). Most other investors, lenders, buyers, etc. will also attend because they want to be around people that can bring them deals. Good luck. 

    0Reply
  • Account Closed
    Investor · Denver, CO · Member since 2022 · 184 posts · 78 votes
    3y

    I'd first read The Passive Investor by Brian Burke. 

    1Reply
  • Eric Lizama
    Rental Property Investor · Temple, TX · Member since 2021 · 15 posts · 14 votes
    3y

    Brock nailed it on the head. You need to educate yourself before ever thinking of jumping into a syndication. Residential and commercial real estate investing is not even in the same playing field. 

    Educate yourself and find a mentor or an experienced syndicator to get started. 

    1Reply
  • Jason Thompson
    OP
    Wholesaler · usa · Member since 2021 · 221 posts · 67 votes
    3y

    Thanks for all the advice, guys. I have joined a mastermind group, but I reside in Canada so the group was small and dissolved to nothing. I have a limited network based on Bigger Pockets, primarily found in the United States. I have ten years of experience as a real estate agent. I have flipped two houses with my wife, and I have read virtually every book on the Bigger Pockets bookstore (see attached image). My wife and I relocated recently, and we are starting real estate in another Province, so we need two years of proof of income to qualify for a conventional mortgage. We have two children under the age of 2 and very little Equity to tie up in a deal. I've read the book "investing in real estate with no (and low) money down" and have been trying to find multifamily residential deals where the seller is willing to do a vendor takeback. I am working on finding Partnerships and networking out here in Nova Scotia.  I am analyzing a deal a day and am determined to succeed for my family. Based on this information, any other advice would be very much welcomed. Thank you so much, guys; I appreciate all of you. 

    4Reply
  • Stevo Sun
    Calgary, AB · Member since 2021 · 327 posts · 176 votes
    3y
    Quote from @Jason Thompson:

    Thanks for all the advice, guys. I have joined a mastermind group, but I reside in Canada so the group was small and dissolved to nothing. I have a limited network based on Bigger Pockets, primarily found in the United States. I have ten years of experience as a real estate agent. I have flipped two houses with my wife, and I have read virtually every book on the Bigger Pockets bookstore (see attached image). My wife and I relocated recently, and we are starting real estate in another Province, so we need two years of proof of income to qualify for a conventional mortgage. We have two children under the age of 2 and very little Equity to tie up in a deal. I've read the book "investing in real estate with no (and low) money down" and have been trying to find multifamily residential deals where the seller is willing to do a vendor takeback. I am working on finding Partnerships and networking out here in Nova Scotia.  I am analyzing a deal a day and am determined to succeed for my family. Based on this information, any other advice would be very much welcomed. Thank you so much, guys; I appreciate all of you. 


    Would love to follow your progress on this topic. Fellow Canadian here, I want to caution that Canadian rules around syndication could be wildly different than in the states. I'm in Alberta, so ASC has rules around what's allowed and what isn't (mainly aimed at protecting the public/investors). Good luck on your journey! Post updates!

    1Reply
  • Jason Thompson
    OP
    Wholesaler · usa · Member since 2021 · 221 posts · 67 votes
    3y
    Quote from @Stevo Sun:
    Quote from @Jason Thompson:

    Thanks for all the advice, guys. I have joined a mastermind group, but I reside in Canada so the group was small and dissolved to nothing. I have a limited network based on Bigger Pockets, primarily found in the United States. I have ten years of experience as a real estate agent. I have flipped two houses with my wife, and I have read virtually every book on the Bigger Pockets bookstore (see attached image). My wife and I relocated recently, and we are starting real estate in another Province, so we need two years of proof of income to qualify for a conventional mortgage. We have two children under the age of 2 and very little Equity to tie up in a deal. I've read the book "investing in real estate with no (and low) money down" and have been trying to find multifamily residential deals where the seller is willing to do a vendor takeback. I am working on finding Partnerships and networking out here in Nova Scotia.  I am analyzing a deal a day and am determined to succeed for my family. Based on this information, any other advice would be very much welcomed. Thank you so much, guys; I appreciate all of you. 


    Would love to follow your progress on this topic. Fellow Canadian here, I want to caution that Canadian rules around syndication could be wildly different than in the states. I'm in Alberta, so ASC has rules around what's allowed and what isn't (mainly aimed at protecting the public/investors). Good luck on your journey! Post updates!

    Thank you Stevo, have you had much luck on here? The market in Calgary is doing well at the moment no? Thanks again Stevo. 
    0Reply
  • Stevo Sun
    Calgary, AB · Member since 2021 · 327 posts · 176 votes
    3y
    Quote from @Jason Thompson:
    Quote from @Stevo Sun:
    Quote from @Jason Thompson:

    Thanks for all the advice, guys. I have joined a mastermind group, but I reside in Canada so the group was small and dissolved to nothing. I have a limited network based on Bigger Pockets, primarily found in the United States. I have ten years of experience as a real estate agent. I have flipped two houses with my wife, and I have read virtually every book on the Bigger Pockets bookstore (see attached image). My wife and I relocated recently, and we are starting real estate in another Province, so we need two years of proof of income to qualify for a conventional mortgage. We have two children under the age of 2 and very little Equity to tie up in a deal. I've read the book "investing in real estate with no (and low) money down" and have been trying to find multifamily residential deals where the seller is willing to do a vendor takeback. I am working on finding Partnerships and networking out here in Nova Scotia.  I am analyzing a deal a day and am determined to succeed for my family. Based on this information, any other advice would be very much welcomed. Thank you so much, guys; I appreciate all of you. 


    Would love to follow your progress on this topic. Fellow Canadian here, I want to caution that Canadian rules around syndication could be wildly different than in the states. I'm in Alberta, so ASC has rules around what's allowed and what isn't (mainly aimed at protecting the public/investors). Good luck on your journey! Post updates!

    Thank you Stevo, have you had much luck on here? The market in Calgary is doing well at the moment no? Thanks again Stevo. 

     BP is heavily focused on US for obvious reasons. Calgary market did not experience the crazy increase in price like Ontario, so the correction has been modest. 

    0Reply
  • Paul MoorePro Member
    Commercial Real Estate Fund Manager · Lynchburg, VA · Member since 2015 · 1k+ posts · 1k+ votes
    3y

    Hi @Jason Thompson! I was a residential real estate investor for well over a decade and I spent 3 years in commercial real estate before I discovered syndication. It is a fantastic avenue for experienced investors, per the comment from @Chris Seveney. 

    After reading all of the books, I highly recommend you join a coaching program to teach you to syndicate, give you contacts and put you on the right path. You will likely find a lot of prospective partners as well. You might even be able to partner with the coach! A lot of people do that. 

    You might also want to pick up the book It's a Whole New Business by Gene Trowbridge, which goes over a lot of the syndication terminology and details. I think this would be really helpful for you. Make sure you get the latest edition of the book! Good luck and happy investing!

    Podcast Guest on Show #533
    0Reply
  • Jensen Escobar
    Member since 2022 · 18 posts · 9 votes
    3y

    Hi Jason!

    Another way to learn how to use other peoples money is to joint venture with someone. Although its not the same as starting a syndication it can be at a lot smaller scale which can be more forgiving for mistakes. They can bring in the money and you can provide the leg work. 

    0Reply
  • Jason Thompson
    OP
    Wholesaler · usa · Member since 2021 · 221 posts · 67 votes
    3y
    Quote from @Jensen Escobar:

    Hi Jason!

    Another way to learn how to use other peoples money is to joint venture with someone. Although its not the same as starting a syndication it can be at a lot smaller scale which can be more forgiving for mistakes. They can bring in the money and you can provide the leg work. 


     That is not a bad suggestion thank you Jensen. 

    0Reply
  • Jason Thompson
    OP
    Wholesaler · usa · Member since 2021 · 221 posts · 67 votes
    3y
    Quote from @Paul Moore:

    Hi @Jason Thompson! I was a residential real estate investor for well over a decade and I spent 3 years in commercial real estate before I discovered syndication. It is a fantastic avenue for experienced investors, per the comment from @Chris Seveney. 

    After reading all of the books, I highly recommend you join a coaching program to teach you to syndicate, give you contacts and put you on the right path. You will likely find a lot of prospective partners as well. You might even be able to partner with the coach! A lot of people do that. 

    You might also want to pick up the book It's a Whole New Business by Gene Trowbridge, which goes over a lot of the syndication terminology and details. I think this would be really helpful for you. Make sure you get the latest edition of the book! Good luck and happy investing!


     Hi Paul thank you for the response, as per a coaching program have you heard of keyspire? I have no idea where to start to look for a coach. Its funny I just purchases this book from amazon yesterday, have you heard of it? I added "it's a whole new business" to my cart for my next read thank you. Have a great day Paul. 

    0Reply
  • Todd Dexheimer
    Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    3y

    My advice is get experience or partner with experience. I started off buying 1-20 unit buildings and flipping homes for many years before my first syndication. Most of my coaching clients either have experience or partner with others to gain the track record. You don't need to have 10 years of experience, but you do need to be sure you surround yourself with a team and partners that have experience. 

    Here are some articles to get you started.

    https://www.biggerpockets.com/...

    https://www.biggerpockets.com/...

    https://www.biggerpockets.com/...

    0Reply
  • Jason Thompson
    OP
    Wholesaler · usa · Member since 2021 · 221 posts · 67 votes
    3y

    Great advice thanks Todd

    0Reply
  • Paul MoorePro Member
    Commercial Real Estate Fund Manager · Lynchburg, VA · Member since 2015 · 1k+ posts · 1k+ votes
    3y
    Quote from @Jason Thompson:
    Quote from @Paul Moore:

    Hi @Jason Thompson! I was a residential real estate investor for well over a decade and I spent 3 years in commercial real estate before I discovered syndication. It is a fantastic avenue for experienced investors, per the comment from @Chris Seveney. 

    After reading all of the books, I highly recommend you join a coaching program to teach you to syndicate, give you contacts and put you on the right path. You will likely find a lot of prospective partners as well. You might even be able to partner with the coach! A lot of people do that. 

    You might also want to pick up the book It's a Whole New Business by Gene Trowbridge, which goes over a lot of the syndication terminology and details. I think this would be really helpful for you. Make sure you get the latest edition of the book! Good luck and happy investing!


     Hi Paul thank you for the response, as per a coaching program have you heard of keyspire? I have no idea where to start to look for a coach. Its funny I just purchases this book from amazon yesterday, have you heard of it? I added "it's a whole new business" to my cart for my next read thank you. Have a great day Paul. 

     @Jason Thompson no I have not heard of keyspire. There are a lot of programs out there and they have sprung up like weeds in the past decade since the JOBS Act. Good luck and happy investing!

    Podcast Guest on Show #533
    0Reply
  • Jason Thompson
    OP
    Wholesaler · usa · Member since 2021 · 221 posts · 67 votes
    3y
    Quote from @Paul Moore:
    Quote from @Jason Thompson:
    Quote from @Paul Moore:

    Hi @Jason Thompson! I was a residential real estate investor for well over a decade and I spent 3 years in commercial real estate before I discovered syndication. It is a fantastic avenue for experienced investors, per the comment from @Chris Seveney. 

    After reading all of the books, I highly recommend you join a coaching program to teach you to syndicate, give you contacts and put you on the right path. You will likely find a lot of prospective partners as well. You might even be able to partner with the coach! A lot of people do that. 

    You might also want to pick up the book It's a Whole New Business by Gene Trowbridge, which goes over a lot of the syndication terminology and details. I think this would be really helpful for you. Make sure you get the latest edition of the book! Good luck and happy investing!


     Hi Paul thank you for the response, as per a coaching program have you heard of keyspire? I have no idea where to start to look for a coach. Its funny I just purchases this book from amazon yesterday, have you heard of it? I added "it's a whole new business" to my cart for my next read thank you. Have a great day Paul. 

     @Jason Thompson no I have not heard of keyspire. There are a lot of programs out there and they have sprung up like weeds in the past decade since the JOBS Act. Good luck and happy investing!


     Thanks Paul, have a great night. 

    0Reply
  • Taylor L.
    Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
    3y

    Check out Shane Melanson. He is Canadian and does real estate syndications. His book and other content should have solid information for Canadians.

    0Reply
  • Jason Thompson
    OP
    Wholesaler · usa · Member since 2021 · 221 posts · 67 votes
    3y
    Quote from @Taylor L.:

    Check out Shane Melanson. He is Canadian and does real estate syndications. His book and other content should have solid information for Canadians.


     Thanks Taylor

    0Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    3y

    I would highly recommend finding a syndicator who can bring you in to help on some aspect of the deal where you can bring some expertise or assistance.  That way, you get some of the equity for your participation, plus you get to shadow a syndicator through a deal.

    Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
    0Reply
  • Jason Thompson
    OP
    Wholesaler · usa · Member since 2021 · 221 posts · 67 votes
    3y
    Quote from @J Scott:

    I would highly recommend finding a syndicator who can bring you in to help on some aspect of the deal where you can bring some expertise or assistance.  That way, you get some of the equity for your participation, plus you get to shadow a syndicator through a deal.


    Hi J Scott, thank you for taking the time to write to me. I finished your book the other day, "Real Estate by the Numbers," which has allowed me to add a few more powerful metrics to my underwriting methods. That is excellent advice. Who do you know that is looking to interview an apprentice Syndicator? I hope you have a great day J Scott and thanks again! 

    0Reply
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