Looking to financing options for a syndication participation

[Pablo Medina]

Hello,

I'm planning to buy shares in a syndication investment that are worth $100,000.  I would like to put 50% cash and finance the rest through a credit line, against stock options. Does anyone know someone that can help me asess if this is feasible? 

Thank you

Pablo

[Scott Trench]

First off, I will advise against this. 

Investing in a syndication involves surrendering control of the timing of payments and overall success of the investment to the general partner putting together deal. The deal, in most cases, will already be leveraged, likely with ~30% equity and 70% debt. Taking another round of leverage on your personal capital will compound returns and losses, and I wouldn't advise doing it. Especially since you will likely need to use short-term financing solutions for the credit, which can put you in an uncomfortable position.

If you want to invest in the syndication, I'd just put in $50,000 instead of $100,000.

Second to answer your question if you decide to press on despite my warning not to do it, here's how: 

- A lender likely won't let you use the syndication as collateral for this, most likely, so you will have to borrow against some other type of collateral. 

- The other options include all the other assets in your life - you can take out a HELOC, use your 401(k) to take a loan, or borrow against your stock portfolio (most brokerages, like Robinhood and e-trade) allow you options to take out margin loans, and if you have a large portfolio, this can be a good source of liduidity).