How to gain more competitive advantages?!

Question

I am an in-progress syndicator. I have 3+ years of acquisition and asset management experience through a syndication firm that deals with value-add 3-5 year holds.

I am eager to create a company and have completed many of the steps on the path to having my own business. I have underwritten lots and lots of deals and brought them to various mentors and potential investors. Here on BP, many people have given advice that I should focus the early stages on where my competitive advantage is.

Though I am eager and excited to acquire and build my brand, I realize I don't stand out in any one aspect. I don't come from money or have lots of connections but I am active in networking and attending events - the capital sourcing aspect of the business is not yet one of my strengths. I enjoy and am good at financial modeling, but is it a big enough advantage to other competitors, probably marginal. Asset management, for the majority of my employment I interact with them at an arms length away and have not been designated to interview or hire the property management in my current job.

Is there any advice on how I can improve my competitive advantage prior to my first deal? Are there niche areas that I maybe overlook that will help me gain the trust of investors and mentors?

I appreciate your help here on BP!

Chris Seveney · Answer

My strength was in asset management and modeling - so I brought on a partner whose strengths were my weaknesses which were sales and marketing and raising capital. Fast forward 3 years and we have 800+ investors and over $40M because we feed off each other - so building a team can be a differentiator as many try and go out it alone

JD Martin · Answer

I wouldn't worry too much about improving your competitive advantage before your first deal. You say you are good at financial modeling but lousy at property management (I'm paraphrasing here). Do as @Chris Seveney says and find that team member/s that's going to mitigate your weakness, and turn out a solid return for your investors, and your competitive advantage will be "Shawn's REITs provide a solid return, every year, without cap calls and losing our principal". If you've seen the damage in the syndication market lately, that will be a hell of a competitive advantage by itself.

I don't think this is an area where you're going to fake it till you make it, unless you want to be a future BP post about a good talker who burned through all his LP's money. Put together the right deal and your reputation is going to precede you. Good luck!

Robert Rixer · Answer

Capital raising and modeling are necessary but they're not competitive advantages. You need to drill down to the core of the business and ask yourself how are you actually adding value? There's 2 main ways to do this:

1) Figure out how to acquire deals below market price.

2) Figure out how to maximize NOI.

If you can do these 2 things better than most, you'll succeed.

Evan Polaski · Answer

@Shawn Benteti, there are several factors at play here.

Financial modeling, without strong market insights, is not a competitive advantage.

Asset management without knowing the ins and outs of property management is not a competitive advantage.

To attract capital, when starting out, your goal is certainly to highlight your strengths, but it is also to cast a wide net and first get people to know you, then like you, then trust you.  This is being yourself, amplifying your strengths, and generally sharing insights that you have learned, or continue to see in the market.

Then, as JD points out, once you start building a track record, the conversations will change a bit.  People will still be investing in YOU first and foremost, but it becomes a little bit less about your vision and the opportunities, like the first few deals, and more diving into what you have done and how new opportunities align with what you have done.

Shawn Benteti · Answer

Thanks Robert! That is helpful advice.

How to gain more competitive advantages?!

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