Multifamily Passive Investing

22 Replies

Any tips on how to start with this? I would like to know if you can recommend a MF syndicator/ company who has a great track record, honest, reliable, w/ integrity and will have the investors best interest in mind, experienced! I'm new with passive MF investing. Any tips and input are greatly appreciated?

@Salome Ditmars there are many good groups to work with that fit the criteria that you're looking for.  Many of the people that post frequently in this forum are in the syndication business (myself included).  The questions that I would ask you are as follows:

1.  What is your definition of a great track record?

2.  What type assets are you looking to invest in?  Multifamily is the most common one, but some groups also do self-storage facilities, student housing, commercial properties, and others.

3.  Do you have any geographic locations that you prefer to invest in?  The Southeast and Texas seem to be favorites amongst many people on here, but you can definitely find groups that invest in other areas.

4.  What type of returns are you looking to get?

I would interview several different lead sponsors to see which ones are a good fit for you. Most will have some content out there as well. This may be a podcast, blog, youtube channel or just content on their website. Reviewing this will help you get an understanding of who they are. 

I have an article below on some important things to look for. One thing that I would add, is to find out how many deals they did in 2018 and 2019. It would be a big red flag to me if they are doing a lot of volume in this market. 

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

There are many of us in the syndication game. You can start by compiling a list of investors who appear on podcasts, reaching out to them, setting up appointments to talk, and beginning to build relationships. You'll be able to meet quite a few very quickly that way.

@Salome Ditmars there are many out there—but unfortunately there is no centralized repository to locate them. But that doesn’t mean that you can’t find them with some good old-fashioned shoe leather.

By far the best way to find great syndicators to invest with is to get recommendations from friends and colleagues who are already investing. This is easy for some people that have lots of friends investing in passive real estate opportunities. But it can be impossible for others who just don't have those resources. Fortunately, there are many ways to find great syndicators, it just takes a bit of time and effort. This list isn't exhaustive but includes most of the best ways to find quality firms to partner with.

Conferences. Experienced syndication sponsors are considered experts in the real estate field and are often invited to various investment conferences to speak in keynote presentations and on expert panels. This is a great way to hear their thoughts on markets and strategy and a host of other topics. Sometimes their speakers have trade show booths where you can speak directly with them or they are available before or after their speaking session. You don’t even have to attend some conferences, some will publish a list of their speakers and/or attendees and you could simply reach out directly after researching their firms online.

Brokers. Often, brokers of large multifamily properties put out lists of their recent transactions. Scan those lists in the markets that interest you and look to see who the buyers and sellers are. Often, those buyers and sellers are syndicators. Search them online and check out their websites.

Meetups. Similar to conferences but typically on a much smaller scale. Meetups are typically organized by other investors and have invited guests to speak to their group. Syndicators are often sought out to be those speakers. Search online for “real estate meetups” and check their websites for their upcoming speakers.

Networking events. This can range from local real estate clubs all the way up to multifamily specific events such as the National Multi Housing Council’s annual meeting. The most experienced syndicators would be more likely found at the larger events, with newer smaller syndicators found at local clubs.

Real estate websites. Sites such as biggerpockets.com have many syndicators that participate in the forums. Read what they are posting to sort out who is experienced and who is not.

Podcasts. There are dozens of real estate podcasts out there. Go to your favorite podcast app and search for real estate, multifamily, or syndication and you will find many podcasts that talk about those subjects. Many of the podcast hosts are syndicators themselves, and many of the guests on the shows are syndicators. Listen to those podcasts and you can learn a ton about the various players.

Blogs. Syndicators write blogs for their own websites and also for other websites such as BP, Entrepreneur, Forbes, etc. Reading what they have to say in those articles gives you a window to the mind of the syndicator. After a while you’ll develop a knack for figuring out who really knows what they are talking about and who is just full of it.

Company Websites. Nearly all experienced syndication sponsors have a website. Searching online for terms such as "real estate investment firms", "real estate syndicators", "real estate private equity" and most likely about a dozen or more other search terms should reveal the websites of many syndication sponsors.

News Articles. Active syndicators are frequently quoted in news articles or have entire articles written about them in trade and mainstream publications. Many will issue press releases when they close on acquisitions, which result in articles in publications like Multi Housing News, GlobeSt, and Multifamily Biz. Watch for the company names or the spokesperson’s names and search those names online to find out more about the firm.

Crowdfunding. No discussion of finding real estate sponsors would be complete without talking about crowdfunding. Crowdfunding portals don't typically invest directly in real estate. Instead, they invest in syndications, or act as a placement agent for their investors to invest in syndications directly. So yes, crowdfunding platforms are really just middlemen between investors and syndicators. While this is certainly a way to find syndications, it comes at a cost because the crowdfunding portal is a business and has to receive revenue in order to survive.

This revenue can come from the investor or the syndicator, or both. But ultimately, any cost to the syndicator is ultimately a cost to the deal, which means that at the end of the day it costs the investor.

Investors that can find quality sponsors, and do proper due diligence on them, can save an entire layer of cost by investing directly with those carefully selected sponsors versus investing through crowdfunding portals.

Good luck!

Here are a couple of developers you should take a look at Trion Properties, their principal Max Sharkansky posts here on BP, 

https://www.biggerpockets.com/blog/top-5-markets-multifamily-rentals-2019

and Feldman Equities out of Tampa (3rd generation real estate family famous for having built the terminals at Chicago O'Hare) who are among the only ones opening up downtown skyrise office buildings to accredited investors.

Originally posted by @Salome Ditmars :

Any tips on how to start with this? I would like to know if you can recommend a MF syndicator/ company who has a great track record, honest, reliable, w/ integrity and will have the investors best interest in mind, experienced! I'm new with passive MF investing. Any tips and input are greatly appreciated? 

It's important to understand that every investor comes from a different financial situation and as a different risk tolerance. So someone that would be considered to be a "great" syndicator to say an aggressive investor, will look pretty awful to a conservative one (and vice versa). So the important thing would be to identify what type of investor you are and then ask for recommendations only from similar people.

I don't know where you fall, but if you are aggressive, then there are lots to choose from (more than 100 deals a month) and they are very easy to locate. Personally, I'm very conservative, and I confine myself to sponsors that have a track record of at least one full real estate cycle with either little or no investor money lost. There are only a handful of these and they are much more difficult to find. All of them have enthusiastic investor bases, so they rarely need to reach out beyond that to fund their deals. So the best way to find them is through networking (like through an investor club).

I personally like one sponsor who has been through multiple real estate cycles without losing any investor money, puts very large amounts of skin in the game, is conservatively leveraged and has a very good 1031 exchange program. They are structured via 506b so they are not allowed to market publicly (and only through referrals). But if you are interested in them, send me a private message and I can give you more info.

@Salome Ditmars

The advise you received on your post will take you some time to process. I'd pay particular attention to what @Ian Ippolito and @Brian Burke   advised you. A small correction on @Brian Burke mentioned about the centralized location, while there's no one place, there're actually multiple places, that offer view and feedback on a variety of syndicators. You do have to qualify and be accredited in most cases to join such clubs, but they do exist. I cannot post it here due BP rules.

Also, in general, I wouldn't solely rely on a single source, rather: 1) collect feedback from various sources, 2) decide which components are the most critical for you personally, 3) weigh in on the pros and cons, 4) speak with all of the operators to add to the list of pros and cons, 5) and only then make an informed decision. 

Here're some articles to help guide you further:

https://www.biggerpockets.com/member-blogs/10850/76728-questions-to-ask-a-syndicator

https://www.biggerpockets.com/member-blogs/10850/74883-where-to-begin-when-it-comes-to-passive-real-estate-investing

https://www.biggerpockets.com/member-blogs/10850/86626-the-pros-and-cons-of-investing-via-real-estate-syndication

@Salome Ditmars Brian gave you a bunch of excellent resources. The biggest tip I can recommend is patience. You don't want to jump all over the first investment someone pitches to you. Take your time and get on a lot of syndicators lists. Over time, you will be able to weed out the part-time mediocre sponsors. 

@Salome Ditmars  Finding a good group that has all of the characteristics you mentioned above is probably the fastest and easiest way.  I'm a part of Think Multifamily and there are plenty of syndicators in the group with a lot of experience.  They're planning an event for passive investors in Southern California in the first quarter- you may look at their website and get on their mailing list. 

Originally posted by @Scott Morongell :

@Salome Ditmars Brian gave you a bunch of excellent resources. The biggest tip I can recommend is patience. You don't want to jump all over the first investment someone pitches to you. Take your time and get on a lot of syndicators lists. Over time, you will be able to weed out the part-time mediocre sponsors. 

I agree. Get yourself to a point where you can evaluate a few different groups, and be able to pick the one that suits you best for your first investment. If you can't make a distinction, then you haven't defined your criteria well enough yet. Keep talking to people and doing your homework (and asking questions like you are now!) until you know exactly what you want. 

 

@Salome Ditmars Although it is great to get referrals this is also something you should take upon yourself to get to know the sponsor and establish a relationship with them since this is your hard earned money you are looking invest with them.  My suggestion is to continue being active on BP, get out to some networking events and seminars and also educate yourself through books and podcasts.  You will see that this is a pretty tight knit community and you will soon find yourself surrounded by the right people if you put in the time and effort to connect with people.  Good luck!

Thanks everyone for your helpful input. I appreciate it very much. I’m a lifelong learner and exactly doing what you have all suggested- reading, researching, attending meetups, plan to attend conferences etc so I can continue to grow and be knowledgeable in this industry. Thanks wonderful peeps.

Originally posted by @Tj Hines :

@Salome Ditmars

Ashcroft Capital w/@Joe Fairless

@Chris Salerno with QC capital

Vinney Chopra with Moneil IG

There are so many to name I can go on and on. Good luck with your search

Thank you so much! 

 

It is important to know whether you are sophisticated or accredited. Some of the bigger syndicators here are no longer taking money from sophisticated investors, accredited only. Having said that, those same syndicators typically will have a discussion with you and share some information if they think you are on a solid track to becoming an accredited investor. I have investments with a couple of the syndicators who posted above and some who are mentioned. Brian is a solid operator with several decades of experience. 

@Salome Ditmars In addition to what has already been shared on this thread, trusting the sponsor will be paramount to you sleeping at night, and I can't stress that enough. Making sense of the deal and understanding their track record is important, of course, but I believe you should develop TRUST before you invest. Developing that trust with someone you don't know may seem like a challenge, but if you approach it correctly, you should be able to achieve a pretty solid foundation of trust.

The best way is to talk to others who have had an experience investing with the sponsor already. Simply ask the sponsor if they would be open to connecting you to a handful of investors who have known and invested with them for a long time. There is nothing that replaces a live conversation with someone who has already built that trust with the sponsor over time. Some items to touch on while you talk to prior investors:

How has the overall experience been? How accessible is the sponsor? If you have a concern, are you able to talk to them? Do they return your calls? Are they transparent? Even when they run into a problem?

Also, one of the most often overlooked components of a syndication is the reporting. When you find a sponsor you like, do yourself a favor and get clear on what your experience will be like AFTER you have invested.

Does the sponsor have a communication plan? How often will you receive progress reports? How are they delivered? What will the reports cover? How often will you see financials? When will you receive tax documents? In the sponsor's history, has the reporting always been on time?

Your overall experience investing in a syndication involves much more than the yield you could achieve. If you take the time to share some phone calls with a handful of prior investors, you should get a pretty good handle on what your experience is going to be.

The purpose of investing in a syndication is to leverage the sponsor's time, expertise and ability to source great deals, but if the experience is going to cause you to lose sleep at night, the return may not be worth it.

All the best,

Jack

Great idea. Thanks everyone. I am excited. Just finished attending webinars about Multifamily forecast in 2020. It its very encouraging. Does anyone know a reputable or comp with competitive rates to set up a checkbook IRA? Can a lawyer do this or this has to be done by an accredited IRA accomodator? I have talked to one, Sense financial, anyone with recommendation? Thanks.