All Forum Posts by: Brad Sumrok

Hi everyone this is Brad Sumrok and I am excited to be attending BP Con as an attendee and exhibitor. Many of you may know of me as I have been investing in Apartments - mostly Syndications - for 22 years and have invested in over 11,000 units. Also you may know me for my educational events and mentoring programs and as I  have mentored some of the most successful apartment syndicators out there...

 I am coming to the event to learn (always be learning---) and to expand my network  (always be expanding)---

Reply to me here so we can connect in "Connect in Cancun"!!! 

Here goes...the voice of "unreasonable"...I just posted this on Facebook today...

"I see on popular on-line forums many people saying not to syndicate a deal until you start slowly and build up a track record...

Worse they are saying not to pay a "guru" thousands of dollars that claims they can help you do that...

Just take it slow and safe...

I do agree there is a lot of wisdom in that approach, don't get me wrong....that is the "safe" path for most people...

But to me that's like saying study hard, get good grades, go to college, live below your means, and accumulate a nest egg and pray that you die before you run out of money...that is also the path that most people choose...

But what if a newbie can actually successfully syndicate a large deal on their first deal, by getting educated, leveraging people with experience (attorneys, investors, mentors, brokers, prop mgmt companies, etc) and learning to do it "right" in spite of all the risks? And have "skin in the game" and not take large upfront fees and large carried interest/waterfalls/etc...and not just close it successfully (which many people can do) but actually meet or exceed their projected returns and feel confident that they can do it???  

Well I know this is possible. 

So you can go slow or you can go faster...

And the good news is, you can choose your own path and your own pace. People with no job/money/credit/team should not be trying to syndicate their 1st deal...but for others it is definitely the right way to go! 

My comment here is - of course listen to everyone who posted here, and then decide what you are going to do and how. 

I have syndicated / owned / controlled over 3,800 doors and know what im talking about. 

@Quincy P. I have syndicated deals since 2008 and have done over 3,000 units. 

Ive has many mentors. Here is what I look for: Is the mentor actually doing what you want to do? Can they prove it? Does the mentor have successful students doing what you want to do? Can they prove it? Does the mentor provide a support system of service providers and potential investors or do they only offer coaching and education? Does the mentor provide everything they have or is there a Constant upsell? Brad

I mean under contract.

We have adjusted investor expectations to earn high single digit cash returns and a 5 year projected total return to 70%. We are buying deals 8 this year And 6 more under control totaling 1,665 doors. Message me for more info.

Syndicators can make money by charging various fees and taking carried interest (related to the work and expertise that they put into deal). Some examples are a split of the profits, monthly asset management fees and acquisition fees. One example of a 121 unit deal that I recently syndicated and sold after 27 months - on a $4m purchase price we had a $120,000 acquisition fee and also had 20% of the ownership interests above and beyond our capital contribution so when we sold for over $8m we lead at syndicators made $730,000. The Investors got a 173% ROI over the 27 month holding period. Of course I have been doing this now for 16 years and have built up a track record. On your first syndication I suggest lower fees for yourself and make sure your deal performs as projected so that you too can build up a track record. Over the years you can make a lot of money syndicating deals but it takes time and expertise and track record.

As a rule of thumb you need 3-6 months of debt payments as post closing liquidity (cash on hand) and a net worth equal to the loan amount. Thats one of he benefits to syndicating and working woh other investors- easier to qualify for loans with multiple guarantors. Also be careful about using your IRA as the Downpayment as that may be a prohibited transaction for your IRA. Seek competent tax and legal advice.

Are you asking how to get the financing and the equity the deal? Or how to split profits between investors?

I had an experienced team help me with my first deal including an experienced apartment owner reviewing my underwriting assumptions and an experienced GC walk the property with me to help assess the rehab costs. Also do you have a loan term sheet from a Multifamily lender? Strongly recommend you do the same, you don’t want to make any costly mis-steps.