Please no character assassinations or attacks on the forums. I tend to agree that syndicating to unsophisticated and non-accredited investors has lots of liability and risk for those investors who tend to not fully understand these types of investments.
It's a decision various syndicators evaluate to see if they want to do or not.
Different investors can have different goals when investing in syndicates. Some who are just over accredited investor status usually need that money to work real hard from a cash flow perspective when investing. This can be especially true if they make under 100k a year at job or business and not much annual income (excess cash). Their net worth gain instead was tied to some big event where they bought bottom cycle and have had a run up.
Conversely I tend to see the accredited investors making 500k, 1 million a year at their jobs or business looking more at long term equity growth. They already have tons of cash so just more taxes to pay.
There are syndicators that have the business model of portfolios and taking fees where they hope over volume they average out into the positive over time with the losers, the break even, and the winners. Personally I like value add properties where there is strong upside as a sponsor. I don't like thin deals because any blip in the markets could ruin the pro-forma projections.
Multifamily isn't this darling that people think it is. It can be cyclical just like any other asset class. I saw in the last downturn what happened with multifamily. New projects never started, projects in process halted and became fractured and stagnant causing all kinds of issues for the tenants already there. ( At that time I saw regular lease up buildings being converted from some rentals to condo's they could sell for people to own.)
Existing multifamily flatlines for rents and landlords ran half off rent specials, waiver of security deposit, reduced rents, etc. just to try to maintain occupancy and keep vacancy down so the debt could be serviced. Additionally if rents flatline or do not keep pace with inflation the cash flow dollar is reduced and if property taxes rise, insurance policies, etc. the tenant does not pay for or reimburse typically like a retail property so that can further eat into projected returns. In a downturn class A topline renters start moving to cheaper properties like older class A or B type properties that still have amenities but cost per month Is much lower.
Lot's of lenders right now will almost do anything to lend on multifamily. In a lot of ways it's topped out where reward ratio is low and risk factor is high. As for accredited investors and their individual demands a syndicator running a business model really doesn't have time for that. They can't individualize every single deal and have an investor take 20 hours of their time just so that investor gets comfortable investing 50k in a deal or 100k. To run a systematized business you have to create a model that stays the same over and over and you widen your funnel for passive investors that meet that criteria and accept the plan.
It's just like my commercial real estate brokerage business. If I had to readapt every single deal to the way that particular investor wanted to do things versus a system that stays the same it would be hard to run an efficient and profitable business.
