All Forum Posts by: Brock Mogensen

First and foremost, you have to build trust with the sponsors you are investing in.  This is probably even more important than the deal itself.  Track record and referrals are a great way to vet a sponsor.  You are "protected" with the legal documents you sign to participate in these deals, to a certain extent.  But I recommend building relationships with a few different sponsors.  Follow their journey for some time and decide which one you build the most rapport with.

The loan structures for a syndication deal will be the same as an ordinary deal..generally.  In a traditional syndication, the LP's do not sign their name on the loan.  So, you'll want to make sure that you'll satisfy all the lender requirements as a sole guarantor.  Sometimes banks will try and get the LP's to sign on the loan but that might not go over well with your LP's. 

It's very hard to put a blanket statement on what is defined as "good" for each metric. It's all subject to the market you are investing in, the type of asset (A, B, C), and the business plan for the property. I don't like to put too much value on the cap rate, because if it is a value-add deal, cap rate doesn't really matter. To me the 3 most important metrics are cash on cash, IRR, and equity multiple. Generally, I like to see a year 1 CoC of at least 8% with opportunity to increase it. An IRR of at least 15%. And equity multiple of 2x within 5 years or 3x within 8-10 years.

First it really depends on what your long-term goal in REI is. Do you want to be 100% passive? Or is your goal to run your own syndication deals? If you want to be 100% passive, investing as an LP in a syndication is a great route to take. If your goal is to make real estate investing your full-time career, running syndication deals as a GP is a great way to do it.

You'll definitely want to engage an attorney to help you with this. For each deal you do, you want each to have its own LLC. Up to 35 investors are allowed in a non-accredited 506b offering. An attorney with experience in real estate partnerships and syndications will be able to help you get this set up. Operating Agreement, Private Placement Memorandum, and Subscription Agreement are the three docs you generally need.

Awesome to see you are getting into syndication!  I've done 7 of them now and truly love the model.  In regard to a mentor, it's going to be tough to find someone (that actually knows what they're doing) that is willing to dedicate lots of time helping you..unless you provide them value or pay.  I'm happy to provide some quick guidance, as I'm sure others will as well. 

Private money will be the cheapest way.  Hard money will be easier but much more expensive.  If you have someone in your network that will lend you the $40K at a set interest rate, that is the ideal way to do it.

Investing in a syndication as an LP is a great vehicle if you are looking to be 100% passive.  You definitely want to vet the sponsors you are thinking of investing with.  Tons of sponsors out there, each with different niches and experience levels.  I recommend having a network of a few different sponsors as well.  That will allow you to compare deals and ultimately more deal experience.

Happy to share some of the decks we've used in the past to raise capital.  I actually have a template version I can send you too.  Just dm your email.

 You can begin the process with the lender before having all the docs finalized.  You want to engage the lender as soon as possible.  Within the first few days of having the deal under contract..ideally.  Financing always takes longer than you think so you'd rather start that process sooner rather than later.  They won't need the final operating agreement until way later in the process.