Getting going on syndicating

13 Replies

Hey BP

I’m looking to get into syndication and working with larger multi family units. I have a real passion for this niche in real estate investing. I’d love to find someone local to me, northern NJ, who is looking to work with someone.

I've started by doing some market research in a few areas. I hired a VA to do some data entry for me and skip trace owners. I have a few lists of 100-200 apartment complexes with units from 10 and up. I'm looking for emerging markets as well as markets local to me.

My next step will be to break down those lists to find at least 50 subject properties that have potential. After I’ve done that I’m going to reach out to local brokers to that area and see if anyone knows the owners of those places. Or I’ll directly call the owners if I have their information.

I have a bunch of people with cash ready to go. I can easily source 500-1.5m in cash from sophisticated investors and accredited investors I know directly. I’ve read multiple books on the subject and I’m trying to learn as much as I can. The thing I really need is real life experience.

I’m trying to do a mini syndication on a 9 unit building with a value add. I put an offer in already and reach out to some investors. I have 600k secured ready to go if the offer goes through. I have a property manager who can get it rented and manage it for 7%. This property is in an emerging market that’s next to an established market. It’s a block from the beach and can be rented as a vacation rental even, but I don’t want to do that.

Take some time to talk with securities attorneys and figure out who you'll use for your business. Be sure to factor securities attorneys fees into your underwriting. You may find you need balance sheet partners to help you qualify for loans, so dedicating time to building those relationships would be beneficial as well.

@Charles Seaman

A little of both. I’m diving head first into this and I want to make sure it’s right. I’ve done single family flips a small multi and I just am not a fan of the smallness of it all. One small home takes up so much of my time. I’d rather tackle one building in that time.

I’m really looking for someone who would be willing to help me learn or maybe if I can work with them to learn. I have no problem taking the backseat of a deal I started to set up if it helps me learn.

Preferable id love to be local to that person but it’s not a must. I know most of the deals are done out of state so i can work remotely with them.

@Eric Giovannucci

Tell me a little about it. Is it in a path of progress? Are there existing buildings that need to be updated? Do rents typically support a note?

What is happening in that area that would entice someone to move there or rent there.

@Dennis Yosco you are well on your way. It sounds like you want to bring in an equity partner/mentor who not only has operational experience but loan experience as well. Make sure you have correctly accounted for a new tax assessment, insurance (costs are up), renovations (costs are up), operating budget, and reserves. And yes, as Taylor says, make sure it is feasible to syndicate a building that size as legal fees are not cheap. Once everything is air tight, put a professional prospectus together highlighting the strengths of the market, deal, and most importantly you. From what I can tell, you bring a lot of value.

@Dennis Yosco , I am voting third on the talk to attorneys.  Typically, when you are looking at smaller deals, the attorney fees you will occur become disproportionately high relative to the overall deal and profit available from the deal.  

BiggerPockets is a great resource, but I would also add that you should be seeking out networking events local to you as well, as that would likely yield the best chances of finding a local partner/mentor.

@Evan Polaski

I’m going to head to some meet ups next. I’m also going to start my own.

The small building I’m working on is more of getting a group of friends together to buy and rehab a small building. I call it a mini syndication but in all honesty it’s just purchasing a building.

@Rick Martin

Thank you, I try to get fully invested in something when I find it. I really want this work and this is the path I want my life to go to. I just want to learn from an experienced individual because they’ve made the mistakes I’m trying to avoid.

Im working with partners now to do some flips. I can honestly say that the way I think a person is going to be when you partner vs they way they actually are is starkly different. When you expect someone to perform as you do but then they add no value it really defeats you. Im going to step away from that and go into syndicating. I’ll let them do the flips.

@Dennis Yosco . Great start!  I would recommend you consider joining a paid coaching program. They can be expensive, but this really launched my commercial multi family business. I learned much more much faster than I ever could have on my own. That said, there is a lot more information out there now than there was when I started years ago. Good luck!

@Dennis Yosco looks like you're doing all of the right things, have you thought about looking at syndication in the Midwest (Indianapolis, IN, Columbus, OH, Kansas City, MO)? Great thing about syndication is that you can invest in a market that you necessarily wouldn't be able to break into. There is constant growth in "midlevel" cities in the Midwest. Good luck!

Hey @Dennis Yosco it sounds like you're going to kill it! I second @Paul Moore 's advice on joining a mentorship program. Not only do you get to work with an experienced sponsor to learn from their mistakes and avoid making them yourself, but if you join the right one, you will get access to a network of other multifamily investors who you can partner with. This is INVALUABLE, especially since multifamily real estate is a RELATIONSHIP-based business. 

PM me if you have any questions about how to pick the right mentorship program.