Recently closed 2nd International Syndication in Caribbean Belize - More Lessons Learned
Hello Everyone,
This is our second installment of our International Syndication experience.
What we can say is that it does get a wee bit easier the second time around, and that was helped by the fact that our Development now has around 150 units built, so potential investors can actually see that what we said would happen is happening.
Looking back now, I am shocked that we were able to pull off the first round using just a concept, the strength of our team, and the strength of the market.
Since our Project is a ground up international development there are lessons to be learned that are similar to, but not exactly the same, as putting together a U.S. based Syndication. In the U.S., most Syndications are for Projects where similar ones have been built or are being built, and can provide a frame of reference for potential investors. This is not always the case internationally.
A few things that we have realized this time around that others may find helpful:
1) We are still the deal - by this I mean, our ability to convey that we know the market inside and out shows competency, investors are investing in us as the sponsor more so than the Project at this stage. So show your competency in something, even if this is your first real estate Syndication, hopefully you have some experience investing profitably in real estate. Let prospective investors know that you have succeeded at something.
2) 3rd party validation is key - We were able to use news articles, travel websites and new airline routes as collateral information to prove to investors that what we are saying about our market, others without a vested interest are corroborating. It is great to be able to point to Tripadvisor, Delta, American, United, and Southwest airlines, some of the biggest brands in the world, as being bullish on our market. Find news articles that validate your Project and its market as well, and it will go a long way to convincing potential investors.
3) Meaningful Progress - Make sure that whatever International Project you are syndicating is making meaningful progress towards completion, or at least towards the next Phase of Development. It may require you to make frequent trips to the Project if your onsite team is not adept at sending you photographic or video updates in a timely fashion. Then relay those updates to potential new investors to keep them abreast of what is happening, they really like it when you can say that you have been to the Project multiple times yourself.
4) Return to those who initially passed - This dovetails nicely with #3 and is useful for any Syndication no matter where in the world it is. Potential investors who initially may have passed on your opportunity may have been saying "no, not right now", not "no" forever. Reconnect with potential investors and see where they are in their investment life, all they can do is pass again.
Hopefully this will help you with Syndication in General, but International Syndication specifically.
Next time we will talk about using the JOBS Act and specifically Reg D 506 (c) general solicitation to attract accredited investors.
We will have experience with this in the next few weeks and I will report back what it is like to advertise for investors and present an investment opportunity to a group of prospective investors that we have no prior connection or affiliation with. (we are even going to run our first ad in the marketplace here on biggerpockets).