All Forum Posts by: Benjamin Aaker

I love doing syndications. You can do them for smaller amounts, but I recommend joint venturing below $1M due to the costs of setting up a syndication. If you go that route, here's what I recommend:

1. Read up on syndications. Raising capitol for real estate by Hunter Thompson is a great place to start.

2. Talk to a few banks and find out what they are offering. Select one.

3. Decide how much return you will pay to your investors.

4. Speak with an attorney who does these deals. The attorney should approve the next steps before going forward.

5. Write up a pro forma that beautifully shows the details of your deal and your projections. There should be disclaimers on it.

6. Write up a list of friends/family who are potential investors and begin talking to them.

Clearly not an exhaustive list. This kind of deal should be done after a lot of careful research. Let me know how it goes.

@Danette C. Thanks for the follow up. I love Never Split the Difference and Best Ever Apartment Syndication. Thanks for the recommendations on Multifamily Investors and Hands Off Investor. I'll put in my book order.

Hey @Robert Shedden, Great question. I see you'll be refunding the entire amount. I think that saves any headache. While it's academic now, you did mention that he did well on the background check. There is a cost to doing this and it does seem like refunding the balance after the background check fee would be appropriate. I think the best idea given on this thread is to go with the cashier's check at the time of signing. Using an app to do the payment is convenient but then there is the problem about the asynchronicity of the signing of the lease with the receipt of money. What happens in that time caused all the problems here.

For those who don't plan to receive money at the same time as lease signing (I'm thinking e-signing of the lease) then there needs to be some kind of deposit to hold agreement that is signed when the money is paid. A learning experience. Thanks for posting.

@Zach JonesI mean that the 1031 means you are selling your property and won't have that income any more. Of course, you will be purchasing a new one. With the LOC, you keep the property and its income.

@Thomas Kwan: You will go to a commercial banker, just ask to speak with one at your local bank. You will be getting a commercial loan. Terms will be less favorable as the limited liability protects you but makes it more risky for the bank. 

Good luck with the refinance. Let us know how it goes.

Ask the seller to get this done. If the lender won't make the loan because of this, your deal will fall through on the financing contingency. Neither buyer nor seller want that.

Nice work doing all that reading. Next step is to start evaluating deals. My favorite book is The Millionaire Real Estate Investor by Gary Keller. This book will help you with your evaluations. 

Hi @Andrew Burgess,

You are looking for a commercial (or business) line of credit. A HELOC (home equity line of credit) is for your personal residence. It typically has a lower interest rate but is secured by your home. The BLOC is secured by the investment property. A bank will usually issue a BLOC for up to 80% of the equity. So if the property is worth $200,000 and you have $100,000 in equity, the bank would lend you up to $80,000. The interest rate is higher and is variable. You will have to pay for an appraisal to start and there is usually an annual fee of a couple hundred dollars.

Avoid the national banks. Find local banks in the area where your property is located and ask to speak with their commercial lender. Ask for a business line of credit and tell them what you plan to do with the money and how the new property will generate cash flow to pay off the LOC. Good luck.

When you start syndicating, finding investors is the hard part. You usually have found a deal and now need money. People want to know why they should trust you, an inexperienced syndicator, with their money. Later on, they see what great things you are doing and want to be part. Your challenge at that time is keeping the deals coming.