Requirements for investing in multi-family syndications

[Gavin Tam]

Hi all and thanks in advance for your insights. 

I'm new to REI and after spending some time examining the many investment options , I found myself back at multi-family. I'm interested in making my first investment but without much experience I think investing in a syndication seems to be the better way to start. I have a sense of how to find the sponsors that do the deals, but wanted to ask if there any general requirements for investing in a syndication? For example, do I have to be an accredited investor?

What else should I be considering? How much should I invest in my first deal (ie, what are the minimums)?

-Gavin

[Michael Le]

Different types of syndications have different requirements. The most common one (Reg D 506b) has the requirement that you know the sponsor and that you are either accredited or sophisticated. Reg D 506c syndications do not require that you know the sponsor but you have to be accredited. Generally the minimums are set by the sponsor and they are commonly $50k but can be lower and much higher.

There are also crowfunding platforms out there that allow you to invest with none of those requirements (I think). And they do allow lower investment amounts.

How much you should invest will depend on how much liquidity you have. I would say you probably shouldn't put more than 10% of your liquidity into any one deal.