Syndication: Sponsor & Raising Capital relationship.
- Hello All, I might be asking an obvious question but wanted to clarify what I’ve been hearing lately and the importance of partnerships for successful syndications. From my learning through videos, podcasts, research and meetings it looks like some syndicators do it all: raise capital, find the property, structure the deal, manage the asset and property manager and, is in charge of the sale of the property after xx number of years. Depending on the syndicator, the income streams can be acquisition fees, asset management fees and a % of the equity at sale.
- Other syndicators will do everything previously mentioned but will use partners to raise the capital needed for down payment, closing costs, CAPEX and so on. In that case, those syndicators are known as "sponsors".
- My questions are:
- 1- is the above correct?
- 2- If so, how much does the company that raises the capital usually charge as fee to raise the capital? What would be an expected participation at sale?
- 3- any suggestions on finding and vetting sponsors?
- Any feedback will be much appreciated.
- Thanks in advance.
Most Popular Reply
@JP Donoso If you are interested in being a passive investor, I would start by reading The Hands-Off Investor (Brian Burke) or Passive Investing in Commercial Real Estate (James Kandasamy). These books will give you a great foundation on syndication investing. There are lists of syndicators out there. I'll PM you a link. You can also find syndicators on the podcast circuit. I would recommend The Real Estate Guys Radio, Passive Wealth Strategies or Passive Investing From Left Field.