Are there banks that lend to Syndicates?

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Are there banks that lend to Syndicates?

Gabriel Fung
Member since 2023 · 22 posts · 9 votes

Hi Team!

I have a syndicate of investors for a real estate project that requires about $2.2M in capital. Currently I have about $1M of verbal commitments to the fund. The remaining $1.2M has not yet been accounted for.

I can easily find more investors to fill in the remaining $1.2M, but I was wondering if there are banks that lend money to syndicates that could fill in the last $1.2M at least in part? The reason I am explore this is because the current investors would have a higher IRR (internal rate of return) if I leveraged their cash and brought back a higher returns.

Are there banks that lend to syndicates that are partially filled? If so, what are some general rules of thumb on how much they lend and what does that depend on? Any other comments and watch outs in this? 

I would be very happy if anyone could link me to any resources or individuals that could educate me on this as well1 

Thank you in advance.

Sincerely,

Gabe

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @Gabriel Fung:

    Hi Team!

    I have a syndicate of investors for a real estate project that requires about $2.2M in capital. Currently I have about $1M of verbal commitments to the fund. The remaining $1.2M has not yet been accounted for.

    I can easily find more investors to fill in the remaining $1.2M, but I was wondering if there are banks that lend money to syndicates that could fill in the last $1.2M at least in part? The reason I am explore this is because the current investors would have a higher IRR (internal rate of return) if I leveraged their cash and brought back a higher returns.

    Are there banks that lend to syndicates that are partially filled? If so, what are some general rules of thumb on how much they lend and what does that depend on? Any other comments and watch outs in this?     

    I would be very happy if anyone could link me to any resources or individuals that could educate me on this as well1 

    Thank you in advance.

    Sincerely,

    Gabe


     Yes but it depends. What is the type of deal you are doing? If it is an open ended fund with no assets picked out - no, but if you have a specific property at 123 Main st then yes you could get funding for that. Just remember leverage amplifies (heard that term from Brian Burke) returns, so if it goes well, it amplifies it, if it goes bad, it amplifies it. Also they may want a PG from you as the sponsor, so are you willing to put everything on the line?

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    • Gabriel Fung
      OP
      Member since 2023 · 22 posts · 9 votes
      1y
      Quote from @Chris Seveney:
      Quote from @Gabriel Fung:

      Hi Team!

      I have a syndicate of investors for a real estate project that requires about $2.2M in capital. Currently I have about $1M of verbal commitments to the fund. The remaining $1.2M has not yet been accounted for.

      I can easily find more investors to fill in the remaining $1.2M, but I was wondering if there are banks that lend money to syndicates that could fill in the last $1.2M at least in part? The reason I am explore this is because the current investors would have a higher IRR (internal rate of return) if I leveraged their cash and brought back a higher returns.

      Are there banks that lend to syndicates that are partially filled? If so, what are some general rules of thumb on how much they lend and what does that depend on? Any other comments and watch outs in this?       

      I would be very happy if anyone could link me to any resources or individuals that could educate me on this as well1 

      Thank you in advance.

      Sincerely,

      Gabe


       Yes but it depends. What is the type of deal you are doing? If it is an open ended fund with no assets picked out - no, but if you have a specific property at 123 Main st then yes you could get funding for that. Just remember leverage amplifies (heard that term from Brian Burke) returns, so if it goes well, it amplifies it, if it goes bad, it amplifies it. Also they may want a PG from you as the sponsor, so are you willing to put everything on the line?

       I do not have a specific property right now, but I fully intend to have one by the time I engage a potential lender to the syndicate. In short, the project is anticipated to buy large lots with old homes, demolish the home, rezone the property, and build multiple homes on top. This would take about 2-3 years. I had already done this once before, entirely on my own dime, so I have the entire process down from beginning to the end. As such, the risk of this going south is VERY LOW even in a real estate down turn, and thus I am willing to be a personal guarantee if needed.

      Glad to hear that this is possible. How would you go about finding lenders for these projects? Any any other watch outs?

      Thank you Chris.

      -G

       

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