Multifamily Syndication Dead?

Question

For someone looking to break into syndication in the next coming years, given the competition and lack of deals, is it still something worth breaking into?

John Fortes · Answer

I can understand why you would think so per your post but in all reality, what size deals will you be looking at? What markets will you be purchasing in? What class assets are you looking to invest in?

Nailing down those might help you move forward. End of the day, don't worry about the competition and work on the operational aspect. Learn as much as you can in any way, shape or form and get the ball rolling as you begin to understand the model.

If you really think about it, people have to start somewhere and there is someone starting now and will succeed in doing so, why can't that person be you?

Evan Polaski · Answer

@Mason Faust, it is never dead.  And while now might not be the "easiest" time to get in, I cannot think of a time that is.  Right now demand is high for multifamily, so there are less deals, but there are also a lot of investors interested in it.  In lower demand times, there are deals, but less investors, so you are always having to work hard to find something.

To add a little color: a company I used to work for raised money to buy retail strip centers.  They started in 1992.  The principles went to a conference where Sam Zell was speaking in 1993 or 94, and Sam's entire speech was about the consolidation of the industry and how the small players were getting eaten up because they didn't have the access to the deals or capital.  And yet, here we are in 2020, 25 years later, and this consolidation never happened.

Starting any business is daunting.  There are always 1,000 roadblocks in your way.  It comes down to hustling and knowing your big goals, setting markers to hit to get there, and grinding away.  If the first path doesn't get you there, then you change course and charge ahead some more.

Paul Moore · Answer

@Mason Faust, I wrote a book called The Perfect Investment, trumpeting the wonders of multifamily syndications. But right now I'm recommending that most new multifamily investors gain knowledge, pull together a team, gather a tribe. Or expand to another asset type (like mobile home parks or self-storage) for the moment. Preparation, shadowing, reading, BiggerPockets involvement... all keys to being ready when the time is right.

John Casmon · Answer

Syndications won't be dead, but I would urge you to focus on developing specific skills and consider joining a team or partnering up to make up for inexperience. This will make it much easier to see success than trying to learn it all and go at it solo in a hyper-competitive market.

Greg Dickerson · Answer

Syndication is pooling capital and or other resources to do bigger deals than you can do on your own. You can syndicate any type of property, invest or business not just multifamily real estate. There are always opportunities in every market regardless of competition. The key is to educate yourself and become an expert on your business and the markets you're after which can be geographical or sector depending on your business model.

Mason Faust · Answer

@John Fortes Yes John you’re right I’ll try to really narrow down my criteria and think big when looking to make the transition from SFH to commercial

Mason Faust · Answer

@Rodney Robinson Thanks for the comment Rodney I will work on educating myself to make the switch from SFH to commercial as I gather my team

Steve Morris · Answer

"For someone looking to break into syndication in the next coming years, given the competition and lack of deals"

I think on the smaller deals, there is still an opportunity.  There are active investors that want something more passive with tax shelter and 1031 cover.  The larger (>100 units in Portland) market is flatlined at least until COVID (and the eviction moratoria) sort themselves out.

Right now, the immediate problem is the lack of transactions (ie sales) to fuel these.  It's going to take a while and dependent on the economy and interest rates.  However, I see apartments (in Portland METRO) that could be pretty good with rehab and active mgmt - Just getting your price is the issue.

Darius Ogloza · Answer

Do not ever worry about competition.  Competition is self-correcting by nature.  Somewhere, somehow, someone is going belly up.

Rodney Robinson · Answer

@Mason Faust there is never a perfect time and it is always the right time to get started. There is always uncertainty and risk. However, if you are going to eventually get into multifamily, gaining the eduction now is key, otherwise, you will not be ready when your time or the time comes. If at all interested, my recommendation is to begin studying apartment investing and syndication, listen to a few podcasts such as Michael Blank (who regularly talks about there never being the perfect time, so the best time is now) and soak in the knowledge. I hope this helps!

Rodney

Multifamily Syndication Dead?

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