How/Where in getting into investing into Syndicate deals?

Question

I have been doing some reading and hear all these great things about syndications and getting into and being a part of these big deals.

-How much to get started?

-Where to find these type deals?

By the way. I'm currently reading a book right now that it is pretty informative called: "Fire Yourself"

Jack Pasmore · Answer

@Nick Volz

Hey,

That's a great book to be reading — definitely lays out the mindset shift when it comes to passive income.To get started, most syndications have a minimum investment, usually ranging between $25K–$50K, depending on the deal and operator. Some will go lower, but that's a pretty standard range. If you're really serious about it, I'd focus on building relationships with operators and capital raisers — those are the people who can get you into off-market deals before they hit the public.

I'm not pitching anything, just sharing how I personally incorporate syndications into my multifamily ventures. What I really like is how these partnerships let you scale faster without having to be the one doing all the heavy lifting day-to-day.

A lot of people don't realize how many syndication opportunities are out there — they just aren't always advertised publicly. The key is getting into the right circles and building relationships with operators who consistently close deals. Once you're in their network, they'll start sharing opportunities before they go out to the wider market.

Happy to share more on how I got connected with some of those groups if you're exploring that route.

Let me know what you think of Fire Yourself whenever you finish!

Jack

Matthew Becker · Answer

I have a small syndication of 10M and am launching another in August.  Giant ones struggle because they can't move quickly enough to adjust to the market.  They get money but couldn't find deals that match the 8% they offered people, which was all based on lower interest rates and leverage.  They never knew how to find a deal or do a value ad.  They also have huge overheads and pay themselves from contributions.  They need the money to live.  Many people do them with less than 5 years of experience.  Some of these funds are ridiculous.  For example, a buddy of mine put 2M into a fund that offered 10% plus ownership—Turnkey Airbnb in Austin, TX, and the surrounding area.  I would estimate that with their overhead and market drop, they are probably 40% underwater.  They are not lendable because they use STR rent to create value, which banks won't recognize.  I warned him he would loose his ass.  He was greedy and chased money.  He has not gotten a penny out of the fund for two years, and they send him updates with pretty pictures of places that they are renting, asking for more money.   They have a good marketing team but can't produce.

But small funds, with experienced operators, can do well.  Our last project was $2.7M, and our monthly rent is $27K.  That is not amazing, but it creates a value of about 3.8M where I live.   I will hit similar numbers on each project.   Our clients will have pretty much all their money out in 2 years.  We are unique and build from the ground up, all in-house, and I already own all the land to develop.  However, there are solid funds that use fundamentals to create cash flow.  I did this with my own money for 30 years before starting a fund.

If you can make good cash flow at 7% to 8% interest, you will kill it when rates come down.  I am not saying they will come down.  I think they will go up.  But you will make money then because rents will increase if rates increase.  No one will build; we will have a messed up supply and demand curve.  This is a great time to buy.  Keep it small; keep it all.

Yes, invest in a good fund with older folks and only those who put their money in. They are not that successful if they can't put in $500K. Also, talk to five people who put money into their funds and see what they say.

Nicholas L. · Answer

@Nick Volz

just curious - are you a HNWI looking to diversify?

no need to share numbers.  but a syndication is not / should not be a beginning investor choice.  as in, i have $25K.  total.  should I house hack, or invest in a syndication?  those aren't equivalent options.  again, it's a diversification strategy.

if that's you, great, carry on.  just figured i would throw this out.  and - a lot of syndications have actually been struggling lately.  just browse the forums here on BP - there are some LONG threads about it.

hope this helps

Ryan Kelly · Answer

@Nick Volz join PassivePockets. You can network with other passive investors and see deals in real time.

Nick Volz · Answer

@Ryan Kelly Thank you sir!

Evan Polaski · Answer

@Nick Volz, there are many resources that can help:

As noted, Passive Pockets is likely a network/forum of individuals similar to you.  Many members are accredited, some are not.

As noted, there are many ways to get into syndications, if you think the risk/reward profile works for you.  Reg A and Reg CF offerings allow for non-accredited investors to invest.  These often have lower minimums.  As for why the sponsor is offering them can vary.  I will agree with Ian that some sponsors do it because they do not have an accredited investor network.  But others may use it as a way to allow investors to "taste" their offerings before writing bigger checks, or playing the game like Nike (sponsor the college teams to build brand loyalty when the player goes pro).

At the end of the day, syndications are highly risky investments, more often run by great marketers more than great operators.  They are susceptible to the same market forces as any other real estate.  They are definitely a buyer beware investment.  We are in a down market so there is a lot of skepticism right now on syndications.  I tend to lean that way, a bit, especially in multifamily, because prices are still too high to generate a yield worth my perceived risks.  Then again, I feel the same way about most rentals in today's market.

To your questions directly: How much to get started: you can find some reg a offerings that have $5,000 minimums, and some 506(b) offerings that have $500,000k minimums.  Most of the offerings focused on retail investors are $25k-50k mins, some up to $100k.

Where to find them: listen to podcasts.  Most hosts and guests on real estate podcasts have a syndication available.  Passive Pockets.  On LinkedIn look for anyone with a headline saying "I help busy professionals create passive income through real estate"...

Chris Seveney · Answer

Syndications are not always cut out for great things.

First determine if you are accredited. If so, then you can invest in any type of deal. If not, then you can invest in a Reg A+ or Reg CF offering or a Reg D 506b if you have a pre-existing relationship with that person.

That is where I would start is determing what you can invest in. There are groups out there (passive pockets for example) that review syndications. There are many others as well to learn more about opportunities.

Whatever you do, do your own due diligence.

Nicholas L. · Answer

@Nick Volz

yes, if you can house hack, that is a powerful, lower risk way to get started. not no risk of course, but lower risk.  it allows you to own an investment property that you purchase with financing options only available to owner occupants.

Nick Volz · Answer

@Nicholas L. Thank you brother for the feedback sir. I am not a HNWI just yet. Lol:) I was just curious in that it seemed to be a good investment, and I assumed that it was for an established investor. I will definitely check out the forum a little deeper on the syndications like you mentioned.

You would suggest that I maybe buy first a multi-family with a few units to start and possibly live in one to start? I again appreciate your feedback, so thank you again!

How/Where in getting into investing into Syndicate deals?

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