Looking to get into larger investments and possibly syndication

20 Replies

I am an experienced investor with over 70 properties. I have great cash flow with my properties but I am looking to scale my business.

I am looking for advice on taking the leap into larger properties when I don’t have a ton of cash on hand.

I am also interested in some learning more about syndication as I am looking to get away from the fully hands on investing we have been doing for 15 years.

Any help or advice would be appreciated. I am in the Vegas/Henderson area and am open to networking opportunities. Thanks!

@Sarah Smith congratulation on waiting to scale up. 

The short answer is that if you want to learn to Syndicate, raise money and grow in that way you need to take on some education. I can recommend you talk to @Gino Barbaro & @Jake Stenziano from Wheelbarrow Profits podcast.

 You mentioned that you own 70 properties, do you have any equity in them so you can refi some of it out and use it to grow your portfolio? 

@Sarah Smith to free up cash, can you sell or refi some of your 70 units? 

The other way to make the leap is to syndicate or partner. I have some articles to help get you started. Getting educated will help you avoid mistakes that can set you and your investors up for success. 

https://www.biggerpockets.com/member-blogs/10145/83067-limited-partner-s-guide-to-investing-in-the-right-deal

https://www.biggerpockets.com/member-blogs/10145/73373-opm-how-to-syndicate-with-success

https://www.biggerpockets.com/member-blogs/10145/72118-syndication-the-ins-and-outs-of-real-estate-syndication

@Todd Dexheimer thanks! I will take a look at those. Yes, I should be also be get some decent cash from my other properties. We are also doing a large remodel project right now that we paid cash for. I plan to refi that when we are done to get all of our cash back and get our sweat equity out as well.

@Sarah Smith For larger multifamily, in my opinion, its hard to beat Fannie and Freddie for financing. Non-recourse debt, low rates, good amortization, long loan terms, I/O if you want it. My personal opinion is having long-term, fixed rate debt is a must at this point in the cycle.While they primarily look at the deal, they do also underwrite the general partners. One of the boxes you have to check is having multifamily experience.

You could partner up with someone that has the experience to check that box. You bring the equity, partner brings the experience. This gets you in the door so you can do deals by yourself in the future.

@Sarah Smith . Hello Sarah. You do have resources that you can pull capital from. Also you have a network of people you have done business with. Your local REIA Group is another resource to tap into. Find syndicators in your market place to connect with. Joe Fairless has a great free resource.

https://joefairless.com/apartm...

@Sarah Smith - you mentioned that you want to get away from the fully hands on investing you've been doing. As a syndicator, i've never been more "hands on" with any other type of investing. There's so many moving pieces and people involved that it's a full time job. Is that what you're looking for or are you more interested in the passive side of things?

Either way, the advice is the same. I would find a great partner/sponsor to team up with and learn from them. There is a lot of similarities between SFH investing and multifamily, but also a bunch of things that won't transfer over. I'd be happy to help or give advice on the route I took.

@Lucas Miller thanks for your thoughts. The more I look into; I can totally see what you are saying. I think it may be wise for me to try and free up some capital and invest as a limited partner to learn the ropes and see how everything operates. I am always willing to learn and love opportunities to partner with people to find a win/ win relationship.

@Sarah Smith

Some good responses here. I agree with what @Lucas Miller has shared. I think starting out from the back door as LP gives you a great way to learn and make some residual income at the same time. Nevertheless, before investing via syndications (just like with anything else), one needs to educate herself prior to taking action. 

While your SFH background is helpful, it is not sufficient to start investing right off the bat. Plus it sounds like you're still debating whether you'd want to be active or passive.

Here're a few articles to get you started:

https://www.biggerpockets.com/member-blogs/10850/84064-what-type-of-investor-to-be-when-i-grow-up-active-or-passiv

https://www.biggerpockets.com/member-blogs/10850/79257-deciphering-syndication-investment-terminology

https://www.biggerpockets.com/member-blogs/10850/77215-the-power-of-passive-real-estate-investing


I can also give you a few books suggestions. PM if interested. 

My very best!

Hi Sarah,

Based on your experience, you should have no issue transitioning into raising capital to syndicate deals. The first step is to determine how much money you are capable of raising. That will determine what sized deals to look at.

Are your 70 properties all SFRs or do you have multifamily experience? If you haven't done a MF deal before, you'll need to work on your MF education or find a partner who has MF experience. Plus, you'll likely need help with the underwriting and asset management.

Nexts step is to start building your team. Start with a property management company and then start reaching out to brokers to create a deal flow. You'll also want to find a mortgage broker to help you with financing and real estate and securities attorneys to help you with the PPM and operating agreements.

From there, you start looking at deals!

Agree with @Theo Hicks --if in those 70 properties, you have some multifamily (or the type of property you want to syndication, if you're doing a different asset class), that nice thing is that you have a track record to tout to investors. There are a ton of syndication podcasts out there nowadays, and even more syndication coaches. You'll also want to touch base with a securities attorney along with way to figure out what you need to know going in.

Sarah,

Your 15 years of experience and the size of your portfolio says a lot about your experience. Assuming the books show good profits and other details passive investors will want to see, you will do fine.

My suggestion is slightly different from the LP route. You may have sufficient assets to run a 'baby' syndication. Something I am working on with a person in Philadelphia. The logic is you use some of your current assets to launch a deal for your network of investors. Less about profits for the GP (you) and more about a Minimum Viable Product (MVP) so you can build a syndication track record. You would want to use a solid lawyer and follow best practice. The key here is to deliver a great user (LP investor) experience while you learn the ropes. By using something you already control, you have very solid numbers and understanding of the assets.

Using an analogy that many can connect with, you want a successful first date with the investors (using all the syndication steps, process and documents). You are playing the long game here rather than trying to maximize your profit on the 1st deal. You are learning to master the CRM and investor communication requirements. Building from your strengths.

This 'model' is something I learned working in Silicon Valley. You want to over delivery with the early customers (LP investors in RE). It is more about what you learn and having raving fans than it is about the profits to you at the start.