All Forum Posts by: Christine Bellish

 Hey Justin! In regards to your question: "do you think it may be a better idea to go the Syndication route at first or do you think it is better to just dive right in and look to purchase my own property?" It really depends on what your ultimate goal is - if you are looking to create TRULY passive income, then syndication is a great option. If you want more hands-on active real estate investments, then buying something yourself could be the way to go.

Either way you should do some more homework before diving in, but the amount of work required from you as a passive investor in syndication is very limited - you need to do research on syndicators and build relationships with them to figure out which ones you like and trust, and then you need to evaluate the deals they are offering to make sure they are viable and decide which ones you want to invest in. Once you invest you don't have to do anymore work.

If you are buying a property yourself you have a lot to consider before purchasing the property (as many already mentioned), then once you close you may have to do renovations, find tenants, handle maintenance/repair requests, and capex issues that come up. If you hire a property manager, you still have to manage that person and make sure they do a good job.

If you invest passively in a syndication it can be a great way to learn, whether you decide you want to continue to be totally passive, or you decide you want to get involved on the GP side of things eventually...if you lean towards the later, you should really make sure you are investing with a sponsor who is responsive and will be available to answer your questions/mentor you - you should be assertive and look for opportunities to get more involved, like asking to join them on property tours and listen in on their calls with property management.

I personally love syndication because when you invest with a reputable syndicator, you are trusting an expert to do what they are good at. It's like trusting your dentist to do your dental work, your plumber to do your plumbing work, and your attorney to handle your legal issues, etc.

There are pros and cons to doing either or both, it's just really dependent upon your personal preference.

 Yes!!! I absolutely echo what @Marco Bario said. If you are getting completely passive investors involved in the deal you are entering into the securities space and you need to consult a securities attorney. If that's the case you'll need to have them create a private placement memorandum to share with the passive investors.

You mentioned you have an LLC, but you may have to create a few more: usually the way I see deals structured is as follows: one LLC for the active investors, another LLC for the passive investors, another LLC for the property (and the active and passive LLCs own their respective percentages of that LLC). Not to mention, if there are a few members of the active investors LLC, the members of that LLC may want to hold their interests in LLCs.

If you are structuring the deal as a syndication there can be limits to the number and type of investors who can participate - there are two types: 1) 506b syndications allow an unlimited number of accredited investors and up to 35 non-accredited investors - you cannot market or advertise it, only people who you have personal relationships with can participate. 2) 506c syndications allow an unlimited number of accredited investors only, and you can market/advertise it 

Depending on the size of the deals you are working on, it might make more sense for you to structure it as a partnership or JV because securities attorneys fees can be very expensive, but either way, I would 100% recommend your first step be to consult an attorney!

Hey Dave! A lot of people have had success gradually building up their portfolio of SFH or smaller multifamily rental properties and then they level up into larger assets - it's a great path and has worked for many, but it's definitely not the only path. You are smart to consider getting involved in syndication if you are looking to scale quicker. Investing as an LP (passive investor) is a good way to get started, whether you want to become a GP yourself in larger deals eventually, or if you are just looking for more TRULY passive income.

Love that you are considering leveraging your equity to continuing investing. As long as you are making more than the interest you're paying, it's a win. With rates still at historic lows, we have had a number of investors who took out HELOCs recently to invest in our recent syndication deals. 

If your goal is to earn more TRULY passive income and have more time freedom, then investing in syndications is could be a great option for you because regardless of the systems that you have in place for your single family homes, you still have some work to do - initially it's finding the deals and everything that goes along with that, and then once you close, even if you have a property manager in place who fills it with tenants and deals with maintenance requests, you still have to manage the property manager and handle any major issues that arise - as a passive investor in syndications all of your work is done up front evaluating the syndicator and the deal - once you wire your money your job is done. 

To Zach's point - finding a sponsor you trust is the most important. 

You asked for a way into syndications other than networking, and I honestly believe networking is THE way. I met the syndicator I invested with passively for the first time (and who I currently partner with on the GP side of things) at a real estate meetup event in NYC! 

Even if you do research on your own by Googling, and reading the threads here on BP, the next step should be to connect with people directly and have more in-depth conversations. You can set keyword notifications here on BP for syndication (and similar words) so you can get notifications when it's being talked about, and then you can message the people who are talking about it directly - maybe they are syndicators, or maybe they've invested passively and recommend some good sponsors. Getting references (especially from people you already know and trust) is always a good idea!

You can also connect with syndicators on social media (Instagram, Facebook, LinkedIn, etc) - for those that are active on these platforms it can be a great way to get to know them better, and then when you find ones you like, you should message them to set up time to chat one-on-one because ultimately that's how you'll get to know them and build trust (or not), and figure out whether they are the right fit for you to invest with.

 Thank you for sharing this story!!!!! Love to hear it. Definitely think there is a place for both do-it-yourself investors, and hands-off passive syndication investors. Personally, I think I will probably always do a little bit of both, but I am grateful for syndication because it's giving me an opportunity to scale much faster than I could have by myself. The reality is there are only so many hours in the day to get things done, so being involved in truly passive projects is life changing. Even if you hire everything out, put the systems in place and rely on other people as you purchase your own properties - there is a level of ongoing work involved to run that business. For people looking for more time freedom and flexibility, passive syndication investments can provide that in a way that purchasing properties yourself just can't.

My husband and I did a nightmare gut reno project on a 2 family 100 year old house that went over budget and over time (horrible contractor) - it ended up working out well as a BRRRR and we have it rented to two awesome long term tenants now - we are happy with the cash flow, more than doubled our equity and got most of our cash back after the refi, but we have PTSD from that project, so syndication was a life saver - to be able to make similar returns for doing no work, just seemed like a no brainer for us, especially after that kind of experience.

For that project put our own life's savings on the line, believing in ourselves that we would be successful in taking on that project with no experience (which we were, but it was horrible lol), which is why trusting someone who is a professional, who has a track record of experience, to do what they are good at just makes sense. We think of it like this: you trust a dentist to do your dental work, you trust your electrician to do your electrical work, you trust your attorney to handle your legal issues, so why not trust your syndicator in real estate projects when that's what they do!

 Taylor and Evan gave great advice: references, referrals, research, and relationship building. As someone who is a control-freak myself, and who has owned and managed smaller rental properties locally, when I heard about syndication I was bit a skeptical too, which is why it took me nine months of doing research about syndication and getting to know different sponsors before I decided to invest passively for the first time. You have to ask a lot of questions, and the syndicator you are potentially investing with should have no problem answering them in a timely manner. There are a lot of syndicators and a lot of deals out there, so if anything feels or looks off to you, you can find someone else and another deal to invest in. Getting to know the GP is so important, and if you are feeling uncomfortable, say that, and see how they respond. I think their response can be very telling.

Also, most people don't actually read the paperwork - the PPM is long and full of legalese, but it outlines all aspects of the deal - including what happens if something goes wrong, on what occasions passive investors have voting rights, and how to remove a general partnership team that is not performing. I suggest you take a look at it and ask questions before making this type of investment for the first time. Part of the reason why I decided to invest with the GP team I did for the first time is because they were voted in two times to save other deals from foreclosure when another sponsor wasn't performing. It's not just about what people can do when things are going as planned, but it's how they handle and overcome challenging times.

Additionally, I think this goes without saying, but make sure whoever you are investing with has a great track record. You can speak to their other investors as a reference. 

@Dan Barman - yup, I'm in Jersey - used to live in Jersey City. You may need to speak with a securities attorney, as opposed to a real estate attorney though to figure out what is permissible. Even though most syndications operate under 506b or 506c exemptions under Reg D (don't need to register as a security), they are still regulated by the SEC and considered securities because there are passive investors involved. If you are speaking to a securities attorney they don't have to be local to NJ - my securities attorney is Gene Trowbridge and he's based in CA.

Hey @Steven Le! Great question. Well, one way to get started is by investing passively in a syndication first- it's a great way to learn. I wrote more about how my husband and I personally got involved in syndication earlier in this thread in my reply to Bruce - how we met our partners, how we built a relationship with them, invested passively with them, provided them with value and eventually ended up partnering on the GP side too. Check it out!

Also happy to hop on a call to chat with you more about it! Message me and we can coordinate a time.

 but to the other guys' comments on this thread - make sure however it's structured is legal!!!

 Hey Guillermo - this is a great thread! You explain the basic fundamentals and benefits of investing in net lease real estate well. I think people are the most familiar with multifamily rentals, so a lot of investors don't consider these types of properties when they're getting started, but they definitely should especially because net lease properties don't require as much management (less turnover, less expenses, quality tenants), which should make for an easier experience for newer investors than a value-add multifamily project that involves managing construction projects on top of everything else.

A few mentioned that these properties have a higher barrier to entry because they are more expensive to purchase - like any other asset class, it really depends where, but another way to get involved in this type of acquisition without the large upfront cost is to invest in a syndication that's acquiring net lease assets - most minimum investments are $50K that I've seen, but that's definitely more doable than $500K, especially when you're just getting started. Being a passive investor is a great way to learn - see how the deals are underwritten, the markets are chosen, the deal is presented to investors, etc, and it helps get you experience without having to take on all the burden. And if you ultimately want to go out and raise money to acquire a net lease asset personally, it'll probably be that much easier after gaining this experience because you can speak to that experience to help boost your potential investors' confidence. Getting the first one under your belt is always the hardest, but the good news is there is only one first one!

Thanks for getting this conversation started about net lease!

 Hey Justus - I apologize if my comment seemed like a dig at you - it wasn’t meant to be in any way! Sometimes the tone doesn’t come across the right way, so I am truly sorry if you took it negatively. 

I absolutely agree with everything you said! Yes, of course you do have to start somewhere. No one wakes up with experience, you have to take action and go out and do something to gain experience, and I applaud you for doing that, and for using this platform as a tool to learn. 

I am not discouraging you from being an active real estate investor. I was just echoing the sentiment someone else expressed on this post in response to your statement about not having the time to spare. Was suggesting that a more truly passive form of real estate investing like syndication might be a better option for you to consider, and I say that from my own experience - because I got involved in a project that almost broke me, a BRRRR that ended up working out, but was a nightmare for 9 months. After that experience I am personally more interested in more passive investments like syndication, so that's where I'm coming from.

Again, my apologies, I was just providing a different option for you to consider, not trying to discourage you from getting involved in something you are passionate about. I wish you the best of luck in whatever next step you take!