SYNDICATION: Best Way to Get Started?

3 Replies

I'm looking to possibly get into a syndication deal later this year or next. 

What are the best ways to get started and find partners to start such a project?

Hi @Melanie Hartmann ,

Congratulations on being ready to take that step! I'm assuming when you say "get into a syndication deal" you mean as a limited partner where you're investing in the deal but don't have any operational responsibilities?

If so, then you're on the right track already by having several months to evaluate partners before investing. I've invested in several syndications myself, and am on the GP side of a syndication as well so I have a bit of both perspectives. Without getting too in the weeds, here's how I would lay out an approach to finding a good syndication partner (I visualize this like a funnel where the numbers get reduced at each step):

1. Determine what your investment goals are. Highest possible capital appreciation? Safest in a recession w/ predictable cash flow? Your answer here will dictate what kinds of opportunities you're looking for.

2. Determine what markets you're interested in. I think narrowing to five national markets is essential as a good market can make a deal over a 5 (or greater) year period.

3. From these two answers you now have enough to make a targeted search for operators that play in the markets you're interested in, and with the type of investments that match your goals.

4. Reach out to each of these groups and schedule a call to understand their approach. Find them on social media and signup for their newsletters. You want to start to establish a relationship with each, get a feel for how accessible and transparent they are. Everybody can show a 15% IRR on paper, but do you have confidence they're going to be straight forward with you if things aren't going well?

5. Over the course of the next few weeks review your operators' past deal OMs. Create a list of questions and send them to be answered. As your interactions with each operator increases you will probably start to get a better feel for one over the rest. Whether its their immediate responsiveness, the thoroughness of their answers, how they take the time to educate vs. just sell you, one of them will resonate with you and your goals.

6. Wait for a deal :) Good operators in this market will not have a deal every month. 2-4 a year is a pretty good clip, so you may have to wait a quarter or two before something comes up you want to invest in. Be patient and trust your relationship over just chasing the deal that shows the highest IRR!

Another factor that may come into play is your accreditation status. If you're accredited you'll have access to more deals. If you're not, there are still several 506b syndications out there that accept non-accredited, you just have to add that to your search criteria.

If you need any help with this process or are looking for referrals to start the process, I'm happy to help. DM me and I can point you to a few I have confidence in (that I have no commercial relationship with outside any existing investment with them).

Hope that helps!

@Melanie Hartmann

You've received a pretty detailed response from @Ryan Daigle . However it assumes you want to passively invest in syndications. It sounds from your question that you want to do syndications yourself.

In the latter case, I suggest you educate yourself on syndications. You can start with "It's a whole new business" book written by Gene Trowbridge, a securities attorney. There're also a ton of podcasts: I like @Whitney Sewell show on syndications. I also recommend speaking a with a few security attorneys to get a better handle on the structure and what's allowed and etc. Also, attend conferences where other syndicators are going to start networking with these people and hear them speak about their experiences. This should get you started.