HOW can I become a trusted sponsor?

Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes

2mo

There are only two keys that unlock the door to trust: time, and performance.

Everyone wants to start big. Very few are successful at doing so. Of the few that are, few of them survive long term.

Start within your reach. The people who trust you at this stage are most likely the people that already trust you for reasons outside of real estate investments. That will naturally limit your initial scale. Then build it from there, organically.

I spent over a decade grinding small-scale. Now I’ve bought over a billion in real estate. It all started with one single family house, and the journey was years upon decades of commitment and performance. That’s the recipe.

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7 Reply

Evan Polaski

Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes

2mo

@Shawn Benteti, who are you trying to build trust with? The brokerage community for the 5-30 unit deals? Owners of deals, since you are looking for off-market? Investors?

As Brian noted, it is time and performance, primarily. But brokers/sellers primarily care about price and terms. I was in final interviews for a deal, but lost it primarily because the other bidder was same price but already had equity lined up in their fund and owned other assets. Then I found the current deal I was awarded, because the broker, seller and I all get along pretty well. I haven't closed on anything as a GP, and was honest about it, but I was also competitive on price, and close enough on terms.

And building trust with those groups are as "simple" as actually closing the deal. To me, it is investors that are harder to get on your team.

For them, it is time and performance. This is why your first deals will be friends, family, coworkers, etc. Anyone that has known you, likes you and trusts you in the capacities you have interacted with them over the years. Over time, that evolves to strangers, and the "best way" to do that is to write a book, host a podcast, guest on others, share your stories anywhere you can. It is all marketing. You are sharing what you know for free, in an effort to find those people that are interested enough to learn about it, and ultimately invest with you.

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Shawn Benteti

OP

Member since 2024 · 35 posts · 7 votes

2mo

Thanks for the responses!

@Brian Burke Very helpful feedback. Any qualities that you would highland generate good performance?

Of course, buy the property write and underwrite upside and risks well play a big role. Operationally, what separates a good stellar operator from a good operator?

@Evan Polaski Mostly looking to find Investors and build trust. I'm generally able to build good relationships with others in the industry and owners. I try to attend an event at least twice a month where Investors are hanging out and the feedback has been that I'm too new and need a resume of performing assets. Not discouraged at all, I am eager to find my niche.

And to both of your points, I am actively searching for that first deal, starting small where friends and family can participate. My thought process, is they are accredited but not large enough to handle another investment opportunity close together in time, so I need to be actively building my investor pool if I want to act on great deals that I find.

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Brian BurkePro Member
Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
2mo
Quote from @Shawn Benteti:

Thanks for the responses!

@Brian Burke Very helpful feedback. Any qualities that you would highland generate good performance?

Of course, buy the property write and underwrite upside and risks well play a big role. Operationally, what separates a good stellar operator from a good operator?

"Good performance" is commonly thought to be generating good returns, or generating returns equal to or above what you projected, or maintaining a certain occupancy level, or achieving $X rent increases, or buying for $X and selling for $Y.
And I'll agree that all of those things are important, but argue that they aren't the most important indicators of performance.
When someone invests in a syndicate, what they are essentially doing is hiring the syndicate sponsor to be their real estate investment practitioner. Think of it like they are subcontracting out the decisions to someone else.
Under this context, "performance" means making prudent and competent decisions--not just basic decisions but the difficult decisions. Decisions about what to do when the going gets tough. Decisions about selling even when on the surface the bull market looks like it will never end. Decisions on how to structure the investment and the capital for resiliency, even in the face of an adverse market. This list goes on and on.
It is these decisions (and the outcome of those decisions) over time that build trust.
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1 Reply
Shawn Benteti
OP
Member since 2024 · 35 posts · 7 votes
2mo
Quote from @Brian Burke:

Quote from @Shawn Benteti:

Thanks for the responses!

@Brian Burke Very helpful feedback. Any qualities that you would highland generate good performance?

Of course, buy the property write and underwrite upside and risks well play a big role. Operationally, what separates a good stellar operator from a good operator?

"Good performance" is commonly thought to be generating good returns, or generating returns equal to or above what you projected, or maintaining a certain occupancy level, or achieving $X rent increases, or buying for $X and selling for $Y.
And I'll agree that all of those things are important, but argue that they aren't the most important indicators of performance.
When someone invests in a syndicate, what they are essentially doing is hiring the syndicate sponsor to be their real estate investment practitioner. Think of it like they are subcontracting out the decisions to someone else.
Under this context, "performance" means making prudent and competent decisions--not just basic decisions but the difficult decisions. Decisions about what to do when the going gets tough. Decisions about selling even when on the surface the bull market looks like it will never end. Decisions on how to structure the investment and the capital for resiliency, even in the face of an adverse market. This list goes on and on.
It is these decisions (and the outcome of those decisions) over time that build trust.

I appreciate this insight. My mentor, who has shown me the ropes in the syndication space, grills into me all the time – Investors, in his experience appreciate a few key things: a business plan going the way it was pitched (meaning the syndicator makes wise decisions consistently to pivot and readjust to uphold their fiduciary responsibilities to the LPS), constant qualified communication; Quarterly reports, check-ins, having answers when questions arise (even if answers aren't what they want to hear), and this one sometimes seems small to other syndicators I've connected with but getting K1's prepared on-time is a huge positive for our LPs. There is a whole slew of things.
I agree, it's not always the returns. It's how seamless does this mutual relationship feel and how do I as LP feel the stewardship over my money is going.
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Sean O'KeefePro Member

CPA | Accepting new clients | 50 States · Member since 2022 · 1k+ posts · 871 votes

2mo

Quote from @Shawn Benteti:

I've formed a syndication firm and I am looking for some advice. At the firm that I work at, I have a track record in finding and helping acquire large multifamily in the widest. Many of the brokerages and off-market connections I have do not service the small commercial that my company is looking for as I start up – 5-30 units roughly. This is my target range based on accredited investors I know, previously had conversations with, or think will be on board.

Now, ideally I would like to acquire larger deals to get economies of scale and reduce overall risk in terms of the operations of the asset itself. But if I must start small to get big then that's what I'm willing to do.

For context, I am a very conservative underwriter, and stress test the crap out of everything before I get excited about a deal. I especially am not starry eyed when underwriting exit valuations which is where I think some go wrong. I utilize a lot of AI tools I've made myself to source and find off market deals and assist in speeding up some of the mundane tasks in real estate. I do not quite trust AI to effectively underwrite, but I do trust it to help quicken the initial pass when reading RR, trailings, and some other docs found in the deal room. I have a small group of smaller brokerages, small balance lenders, insurance brokers, etc that I have formed connections with - but nothing that creates a competitive advantage in the space. And one of my personal connections or Co-GP opportunity would have to be the loan guarantor.

How can I find and convey that I may be an investable sponsor in this space with the company starting from level 1? I know the first several will be the hardest and I want to do it right.

Thanks for any tips!

Shawn

@Brian Burke and @Evan already covered the trust building side better than I could. One thing worth getting right early, before you've got your first deal's operating agreement drafted, is how you're structuring your own comp as GP, since that decision made now is a lot cheaper to get right than to unwind later.

Sponsors typically get paid two different ways, fees and the promote, and the IRS treats them completely differently. Acquisition fees, asset management fees, disposition fees, all of that is ordinary income to you and it carries self employment tax on top. The promote is different if it's structured properly as a real profits interest rather than a fee, it can flow through as capital gain rather than ordinary income, with no self employment tax attached. But that only holds up if the underlying assets are actually held long enough. There's a three year holding period test that applies specifically to carried interests in real estate, and if the fund exits before that clock runs, the portion of your promote tied to short term gain gets recharacterized and taxed at ordinary rates instead of long term capital gains, even if everything else about the deal was clean. A lot of new sponsors don't find out about that until their first exit, and by then the structure is already baked in.

The other thing worth thinking through now, since you mentioned a personal connection or Co-GP being the loan guarantor, is that a guarantee isn't just a formality, it's what gives you or that person basis and at risk amount in the deal for tax purposes, and it's also real personal exposure if the deal ever goes sideways. Worth having that conversation with whoever's guaranteeing explicitly, in writing, before the first close, not after.

This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.

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1 Reply

Garret Rumbea

Inland Empire, CA · Member since 2017 · 151 posts · 79 votes

2mo

Thanks for sharing. Sounds like you have a similar background as myself as I also worked for a syndication firm before starting my own with a couple of partners who have more experience. We target 100+ unit multifamily because of that, and we also put in a significant amount of our own capital into our deals too. Happy to connect and share more about it if helpful.

0 Reply

Shawn Benteti

OP

Member since 2024 · 35 posts · 7 votes

2mo

Thanks @Sean O'KeefeYes, I've made a document in my business files about the different tax notes for my fee structure and profits interests. I've also detailed the multi-LLC entity structure I will use when acquiring and managing each deal. One of the struggles I've had is shopping attorneys for the creation of the legal documents. I've applied to several free legal clinics held at large universities to seek guidance on drafting PPM, LOI, OA, and subscription agreements. These legal costs could run me 15-30k+. Are there ways to make that more affordable without cutting on quality and protection?

@Garret Rumbea Would love to connect. It would be helpful to pick your brain on how you came to scale and leverage your partners experience to create your firm. Even being in the business for a while and having the great mentorship I've had, allowing me to touch many parts of the business, I feel there are a thousand things I still need to learn and be prepared for.

0 Reply

Stuart UdisPro Member

Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes

2mo

@Shawn Benteti Do you own any investment property today, even if it's much smaller than the deals you're hoping to do in the future? If so, start there. Those properties are your proof of concept and the stories you'll be able to share with friends and family, who are often the first people willing to invest.

If you don't own any investment real estate yet, that's probably the first step. It's much easier to convince investors and lenders to back you when you've already completed a deal and can point to actual results. Early on, I'd focus on cultivating relationships with people who already know and trust you. At that stage, they're investing in the person as much as the real estate.

I think a lot of people jump to syndications too quickly and underestimate how difficult it is to raise capital from outside investors without a track record. Particularly right now where it's extremely difficult to raise LP capital. It's probably not what you want to hear because it's a slower path, but it's a much more realistic progression.

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2 Reply

Shawn Benteti

OP

Member since 2024 · 35 posts · 7 votes

2mo

@Stuart Udis Thanks for the feedback! Unfortunately, yes this a realistic perspective that I've thought about. I don't particularly love the small small size deals as an investment vehicle but to your point, I may just have to start there. A lot of the deals I've been underwriting or looking for off market have been 10-20 units. Would you suggest going down to even residential 1-4 units? I agree, track record is the most important priority right now.

I currently do not own any investment properties, rather focused on building my skills in the syndication space. I do have profits interest in 7 deals that I've either sourced or run point on post acquisition. Many of these were a team effort to varying degrees with my mentor in the space, so I do not know if I could directly point to those as my track record since it wasn't just me.

Thanks again!

0 Reply

Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2mo
Quote from @Shawn Benteti:

@Stuart Udis Thanks for the feedback! Unfortunately, yes this a realistic perspective that I've thought about. I don't particularly love the small small size deals as an investment vehicle but to your point, I may just have to start there. A lot of the deals I've been underwriting or looking for off market have been 10-20 units. Would you suggest going down to even residential 1-4 units? I agree, track record is the most important priority right now.
I currently do not own any investment properties, rather focused on building my skills in the syndication space. I do have profits interest in 7 deals that I've either sourced or run point on post acquisition. Many of these were a team effort to varying degrees with my mentor in the space, so I do not know if I could directly point to those as my track record since it wasn't just me.
Thanks again!

Your best bet would be to try and go work for a syndicator and gain additional experience, as the market is very tough today for capital raising
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Shawn Benteti
OP
Member since 2024 · 35 posts · 7 votes
2mo
I currently work for a syndication and am a consultant for a private wealth multi-family office.
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Ronald RohdePro Member

Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes

2mo

You need an actual deal.

On a more philosophical level, trust is built by making a promise and delivering on the promise.

Just start talking to people and providing value, help them with existing investments for free, review GP update letters for free, etc.

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Shawn Benteti
OP
Member since 2024 · 35 posts · 7 votes
2mo
Quote from @Ronald Rohde:

You need an actual deal.
On a more philosophical level, trust is built by making a promise and delivering on the promise.
Just start talking to people and providing value, help them with existing investments for free, review GP update letters for free, etc.

Given the opportunity, a syndicated 5-8 unit deal with LP's consisting of accredited family and friends or a 1-5 units that I source entirely myself – Which one do you think helps create a better foundation moving forward when trying to create a reputation? Or is there no right or wrong way given the opportunity?
You're absolutely right, I need an actual deal.
0 Reply
Ronald RohdePro Member
Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
2mo
Quote from @Shawn Benteti:

Quote from @Ronald Rohde:

You need an actual deal.
On a more philosophical level, trust is built by making a promise and delivering on the promise.
Just start talking to people and providing value, help them with existing investments for free, review GP update letters for free, etc.

Given the opportunity, a syndicated 5-8 unit deal with LP's consisting of accredited family and friends or a 1-5 units that I source entirely myself – Which one do you think helps create a better foundation moving forward when trying to create a reputation? Or is there no right or wrong way given the opportunity?
You're absolutely right, I need an actual deal.
Why would you syndicate a 5-8 unit deal? Just take as active members in an LLC, thats friends and family range.

As noted, there is not much difference between the deals. The capital raise structure is not what people are vetting.
0 Reply
Joseph CacciapagliaBusiness Member
Lender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
2mo
Quote from @Shawn Benteti:

Quote from @Ronald Rohde:

You need an actual deal.
On a more philosophical level, trust is built by making a promise and delivering on the promise.
Just start talking to people and providing value, help them with existing investments for free, review GP update letters for free, etc.

Given the opportunity, a syndicated 5-8 unit deal with LP's consisting of accredited family and friends or a 1-5 units that I source entirely myself – Which one do you think helps create a better foundation moving forward when trying to create a reputation? Or is there no right or wrong way given the opportunity?
You're absolutely right, I need an actual deal.

Early in my career I spent a lot of time helping investors find LP equity. I believe doing the smaller deal with all of your own capital is the best way to start. Investors like to see that you have skin in the game, and don't like the idea of you learning on their dime. I made the move from being in acquisitions at a REIT to doing my own deals, and the first few made me realize how much I was supported by the systems at the REIT. I wasn't nearly as good as I thought I was. There will probably be some tough lessons learned on your first deal, and it's better to take those without hurting your future investor relationships.
A good second step is to do slightly larger deals with a single partner or very small group. This gives you experience managing someone else's money, and the responsibility that goes along with it. I learned very early on that I don't like the feeling of risking other people's money, so I opted to do deal on my own after that. It certainly limited my upside, but I sleep well not having to worry about anyone else.
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Shawn Benteti
OP
Member since 2024 · 35 posts · 7 votes
2mo
Quote from @Ronald Rohde:

Quote from @Shawn Benteti:

Quote from @Ronald Rohde:

You need an actual deal.
On a more philosophical level, trust is built by making a promise and delivering on the promise.
Just start talking to people and providing value, help them with existing investments for free, review GP update letters for free, etc.

Given the opportunity, a syndicated 5-8 unit deal with LP's consisting of accredited family and friends or a 1-5 units that I source entirely myself – Which one do you think helps create a better foundation moving forward when trying to create a reputation? Or is there no right or wrong way given the opportunity?
You're absolutely right, I need an actual deal.
Why would you syndicate a 5-8 unit deal? Just take as active members in an LLC, thats friends and family range.

As noted, there is not much difference between the deals. The capital raise structure is not what people are vetting.

Yes, I meant it as a hypothetical, meaning one option I source entirely myself or another I source but use the syndication model. Syndications really don't pencil that awesomely until the scale becomes more meaningful.
I'll take your advice and get an actual deal!
As an attorney, thinking down the road when I am scaled enough to properly syndicate, are there ways to affordably draft PPM, OA, subscriptions docs, etc or is it all about the same across the board?
0 Reply
Ronald RohdePro Member
Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
2mo
Quote from @Shawn Benteti:

Quote from @Ronald Rohde:

Quote from @Shawn Benteti:

Quote from @Ronald Rohde:

You need an actual deal.
On a more philosophical level, trust is built by making a promise and delivering on the promise.
Just start talking to people and providing value, help them with existing investments for free, review GP update letters for free, etc.

Given the opportunity, a syndicated 5-8 unit deal with LP's consisting of accredited family and friends or a 1-5 units that I source entirely myself – Which one do you think helps create a better foundation moving forward when trying to create a reputation? Or is there no right or wrong way given the opportunity?
You're absolutely right, I need an actual deal.
Why would you syndicate a 5-8 unit deal? Just take as active members in an LLC, thats friends and family range.

As noted, there is not much difference between the deals. The capital raise structure is not what people are vetting.

Yes, I meant it as a hypothetical, meaning one option I source entirely myself or another I source but use the syndication model. Syndications really don't pencil that awesomely until the scale becomes more meaningful.
I'll take your advice and get an actual deal!
As an attorney, thinking down the road when I am scaled enough to properly syndicate, are there ways to affordably draft PPM, OA, subscriptions docs, etc or is it all about the same across the board?

You're looking at $15-30k for Reg D. Maybe some guys are cheaper, as they are hurting for business now, but if $10k hurts the deal returns--its too small to syndicate.
1 Reply

Evan Polaski

Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes

2mo

@Shawn Benteti, the nice thing about residential is: you can start now with a single family rental or a quad. Use that experience to talk with investors about an 8 unit. I can't imagine anyone would tell you your experience with a quad does not qualify as direct experience to an 8 unit. An 8 unit looks very similar to a 16, and so on. But, jumping from no experience at all, even with a SFR, to a 100 units is a very big jump to make both for you, the skills needed to successfully manage them, and in the eyes of investors.

If you are running deals already, then you have experience. Yes, the titled owner does matter, and there are a lot more moving parts when you are sourcing, negotiating contracts, running DD on deals, sourcing the debt, sourcing the equity, etc, but that is not to say that your direct experiences under other banners doesn't have any value when it comes to building trust with investors.

My partners and I are under contract on our first retail center. One of my partners was the Sr VP of Property Management for a major public REIT in the retail space. He and our other partner now run a third party management company for retail centers. We have not owned retail assets directly, as principals in the past, but we certainly have a collective 70 yrs of retail operations background, from sourcing and underwriting to capital markets with me, and day to day management and leasing with my partners.

Yes, it will be "easier" to raise money when we have 4 or 5 deals done, presumably, but that 70 yrs of combined experience is real experience in overseeing investments. It sounds like you have something similar that you should be talking to LPs about.

0 Reply

Shawn Benteti
OP
Member since 2024 · 35 posts · 7 votes
2mo

Thanks! Definitely don't want to jump to 100 units right off the bat. My initial thought was to start between 5-20 units. The firm I work for focuses on 200+ unit value-add/light value-add deals. With my current connections, I can close on a 5-8 unit pretty soundly. But I have learned from many on Bigger Pockets that maybe closing on something myself outside of the syndication 1-5 units may be a bigger first step – to create proof of concept. I am pretty open minded when it comes to learning what the best steps are to start.

For context, I perform all due diligence for new acquisitions at the firm I work for, and do have a big role when sourcing debt, insurance, and have vicarious experience from my mentor regarding the conceptual skillset needed with negotiating contracts and sourcing equity.

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G. Brian DavisPro Member

Investor · Hatboro, PA · Member since 2016 · 2k+ posts · 858 votes

2mo

Starting small doesn't bother me. I'd rather see a sponsor build a solid track record than reach for a bigger deal too soon. We've seen the same thing in our co-investing club: people invest in sponsors they trust. That trust is earned over time by doing good deals consistently.

0 Reply

Shawn Benteti
OP
Member since 2024 · 35 posts · 7 votes
2mo
@G. Brian Davis thanks! This forum has been helpful. I don't mind starting small either. At first I thought small meant 20 units. I need something to just kickstart my track record. And then I can start to slowly and wisely scale.
0 Reply
Ronald RohdePro Member
Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
2mo
Quote from @Shawn Benteti:

@G. Brian Davis thanks! This forum has been helpful. I don't mind starting small either. At first I thought small meant 20 units. I need something to just kickstart my track record. And then I can start to slowly and wisely scale.

20 units is still small. Buy one and kill it!
0 Reply

Ismael El Hamdouchi

Member since 2025 · 68 posts · 28 votes

2mo

I think credibility is earned through consistency more than anything else. Investors usually want to see a repeatable process, transparent communication, and realistic expectations not just past acquisitions. Even if someone has a strong track record, regular updates, detailed underwriting, and being upfront about risks can go a long way toward building trust over time. Out of curiosity, are you planning to raise capital primarily from people you already know, or are you looking to expand beyond your existing network?

0 Reply

Todd Dexheimer

Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes

2mo

It sounds like you've got a decent starting track record of experience. Surround yourself with a good team and create a solid business plan that you can execute on.

With your current network of potential investors, start meeting with them to understand their investing appetite. Talk about your plan and the opportunity for them to invest. Don't ask them to invest, but provide them the opportunity. Also, create an email newsletter that talks about real estate, the economy, etc. Make sure everyone sees you as an RE investor.

When I first started raising money, I found it helpful to write down all of my potential investors on a list that could possibly invest $30k (that was my minimum in 2015 when I started). Then I took that list, added it all up and multiplied it by 30%. That was the money I figured that I could raise.

Best of luck!

0 Reply

Shawn Benteti
OP
Member since 2024 · 35 posts · 7 votes
2mo
Quote from @Todd Dexheimer:

It sounds like you've got a decent starting track record of experience. Surround yourself with a good team and create a solid business plan that you can execute on.
With your current network of potential investors, start meeting with them to understand their investing appetite. Talk about your plan and the opportunity for them to invest. Don't ask them to invest, but provide them the opportunity. Also, create an email newsletter that talks about real estate, the economy, etc. Make sure everyone sees you as an RE investor.
When I first started raising money, I found it helpful to write down all of my potential investors on a list that could possibly invest $30k (that was my minimum in 2015 when I started). Then I took that list, added it all up and multiplied it by 30%. That was the money I figured that I could raise.

Best of luck!

Thanks Todd, especially for the tip about x 30% for investor capital. The newsletter is something I have been working on, getting it out start of next month.
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HOW can I become a trusted sponsor?

HOW can I become a trusted sponsor?

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