Any RE syndications that you guys recommended?

Question

Looking to hopefully start investing in some syndications passively. Looking for some recommendations that accept non-accredited investors, thank you

Lane Kawaoka · Answer

@Jaime Osuna

If you are non-accredited you need to seek 506B offerings. I was there at one time when I got tired of little rentals back in 2016 and went full into private placements as a non-accredited investor at the time. You probably know this but 506Bs allow a limited number of non-accredited investors to participate. However, the general partner cannot openly advertise or market these offerings, so you might need to do some networking and digging to find them.

You can go to the SEC Edgar website. It's a great resource that provides a massive data dump of real estate deals, but be prepared for a lot of information to sift through. Most of the deals you'll find there are 506B offerings, which means they accept non-accredited investors.

On the other hand, we have 506C offerings, which are relatively new. They came about with the JOBS Act around five to six years ago. These offerings allow general partners to openly solicit their deals through various channels like billboards, podcasts, and social media. However, there's a catch: they can only accept accredited investors, not non-accredited ones.

The government introduced 506C offerings as a way to open up the market, but they wanted to protect less sophisticated investors. That's why they restrict the participation to accredited investors only. To invest in a 506C offering, you need to be accredited and provide third-party certification, which can be a bit of a hassle. You'll need a letter from your attorney, investment advisor, or CPA, which may require some billable hours or a pre-existing relationship with the professional.

In contrast, 506B offerings do not require third-party certification. You simply self-certify by checking a box stating whether you're accredited or non-accredited. If you're investing in a 506B offering as a non-accredited investor, you just need to mark the box stating that you're a sophisticated investor.

Keep in mind that the majority of deals out there actually accept non-accredited investors. It's the 506C offerings that are the minority. Sometimes people get fixated on becoming an accredited investor and feel disappointed that they can't participate in those deals. However, there are plenty of opportunities available for non-accredited investors if you network and connect with reputable sponsors.

Remember, building a secure network is key in this industry. Attend events, meet past investors, and get involved in communities where you can learn from others and find good sponsors. This way, you'll have access to a wide range of investment options that suit your needs. As you venture out I would constantly trying to size up the participants and seeing where their net worth is. Most meetups and real estate clubs are not the place to be as they are lower net worth houseflippers... its even tough to find those buying OOS.

Colton Hahn · Answer

The easiest way to find syndicators is to post on BP and mention the word "syndication" haha

In all seriousness check out Left Field Investors, they have a wealth of knowledge on 506b offerings (non accredited offerings)

Spencer Chun · Answer

@Ian Ippolito That is great advice. I have made some connections with sponsors through some of my professional networks but would love to hear from you as far as some sponsors you have had a good track record with. PM sent. Thank you.

Todd Dexheimer · Answer

Search the forums and listen to podcasts. A large amount of syndicators go onto podcasts and these forums to talk about their business. Many of them will not take non-accredited investors, but some will. Accredited or non-accredited, make sure you build a relationship with the sponsor and do a deep dive due diligence into who they are.

What should you look for?

1. Experience: Have they gone full cycle on deals and how long have they been in the game?

2. Team: Who makes up the company and what are their roles and experience?

3. Overall business plan: Market, sub-market, strategy, building class, etc

4. Underwriting: Fully transparent and is it actually conservative?

5. Alignment: Is the sponsor investing a large sum of money into the deal. If the deal goes south how are they effected?

6. Sponsor profit: Look for sponsors that have lower fees and higher performance splits. Also, look for splits that make sponsors a nice profit. You want them to be motivated. If they have a 10% split and just take fees, then what is the incentive to perform when times are tough?

Vessi Kapoulian · Answer

@Jaime Osuna: Connecting with the operator one on one is best (and also required by the SEC), which allows you to get to know one another and determine mutual fit based on your own personal investment goals and criteria. There are multiple ways to find operators/syndicators - local meet ups, conferences, or passive investor forums like Leftfield Investors. I encourage you to subscribe to the syndicators' newsletter or podcast or other social media, which allows you to get to know them and follow their progress over time to help you determine if it is a good fit. Happy to chat one on one re my personal experience with the process.

Chris Seveney · Answer

@Jaime Osuna

Go to https://www.sec.gov/edgar/search/#

Browse by filing type “QUALIF”

Keyword: real estate

There are all the sec registered offerings that accept non accredited investors who can also solicit

Evan Polaski · Answer

@Jaime Osuna, as Todd noted. As a non-accredited investor, you are effectively limited to 506(b) offerings. And these groups advertise all the time, but they are advertising a business not an investment.

There are a fair amount of podcast hosts and guests that run 506(b) offerings. Normally with one or two google searches on the host/guest's name you will find a website with them listed and "Join our Investment Club" or "Start Here" or "Learn more", or something along those lines. From there, you fill out the form, have a call with the sponsor, and then they can start sending you deals after 30 days or so (again, part of the general interpretation of pre-existing relationships that are needed for 506(b) offerings).

Honestly, the hardest part about finding 506(b) deals is many groups have moved to 506(c), and those that remain 506(b) tend to be the groups that have networks large enough to not need to market anyways, but there are some out there.

Nicholas L. · Answer

@Jaime Osuna

i have to ask - what are your goals in looking for a syndication?

Ian Ippolito · Answer

Every investor has a different risk tolerance, comes from a different financial situation, and has different financial goals. So a sponsor that's great for one investor will probably be terrible for another (and vice versa).

I'm a conservative investor, so when I invest in multi-family I prefer sponsors that have at least one full real-estate cycle of experience, little to no money lost, low leverage, and high skin in the game.

And there is an apartment operator that has multiple real estate cycles of experience (decades) with no money lost, low 65% less LTV, and high 10%+ skin in the game. They do require that the investor be an accredited investor.

They market under 506B so are prohibited from posting publicly on the Internet and instead function by referrals. So if you're interested, private message me and I can give you their details.

Chris Seveney · Answer

@Jaime Osuna

For non accredited an offering that was qualified by the sec through regulation a+ would be your best bet. Also could go through a crowdfunding site as well. Most syndications you will see are 506c because it’s more affordable than the other two and you are dealing with accredited investors so their is less risk on their part (and less oversight)

Any RE syndications that you guys recommended?

Any RE syndications that you guys recommended?

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