All Forum Posts by: David Thompson

Hi Mark,

I wrote a blog article on this exact question.  Here's my perspective and I hope it helps. 

https://www.biggerpockets.com/blogs/9145/63405-syn...

Dennis,

I think you have an interesting angle.  Simply, how can I help a syndicator.  Finding deals and raising capital may be the two most common or best ways.  I think you need to ascertain what you are good at or what you think you are good at / interests you (like really passionate about it).  You'll need that fuel because most folks are holding down FT jobs and balancing family, and have this burning desire to do something bigger.  To have the energy to do that requires something you enjoy doing as it won't seem like work (another job) but something fun that will keep you going.

You can then start networking and talking to a lot syndicators.  Here on BP, clubs, local conferences around investing and syndication, private equity firms in cities near you, etc.  Get to know these folk and what are their criteria.  Matching criteria is key because a good deal from your standpoint may not be good for the syndicate.  Good syndicators want win / win scenarios.  They want their investor to win first, they want to win and they should want you to win so that once that relationship starts, vesting time in it benefits both parties and becomes stronger and more reliable down the road.  

Here's a blog article on 10 steps for vetting sponsors, in there you will find some tips on fees / structure that I see most common.  I would say in general the better you get at bringing value, the more you can negotiate.  This may be simply a pay per play fee (part of the acquisition fee perhaps), or part of the equity stake, both, etc.  If you go the raising capital route there are some SEC rules to learn about that are important when working w/a syndicate and the syndicate's compliance team / legal should be well versed in it so that both of you are doing things the right way.  How you are compensated, other activities you are supporting the syndicate (due diligence, investor relations, etc) is important and being an equity stake holder (part of the general partnership) are areas to get an understanding in.

 https://www.biggerpockets.com/blogs/9145/53959-vet...

To me Scott, if you suddenly come into a ton of cash, why do you think you can actively manage it.  Active management involves knowing one niche very well and that's not diversification even if you are insanely good at it.  Next, I would assess my resources.  Do I have the time, skill, interest and capital (assume yes on the latter) to invest effectively.  If not on the first three, then diversifying into several solid choices would seem to make sense and learning / working w/experts on what those best areas are.  

You should certainly entertain syndication where you are putting your money w/experts.  With a little research, you can find niche areas that have performed well over a long period of time, have solid downside support if we go south on the economy and have trends / winds at their back.  Then find operators who have a track record of success in that niche and have them educate you on opportunities in their niche.  I currently favor MF apts (value add) in the strongest markets, self storage and mobile home parks.  Here's an article to review on vetting sponsors and 3 blogs on 3 different niches to consider.  

https://www.biggerpockets.com/blogs/9145/53959-vet...

https://www.biggerpockets.com/blogs/9145/53820-why...

https://www.biggerpockets.com/blogs/9145/53820-why...

https://www.biggerpockets.com/blogs/9145/62927-6-r...

Hi Steve,

I think you will find as I talk to a lot of investors that accumulating more houses over time creates more challenges as it doesn't scale real well.  I would look into MF and specifically, assess whether you want to keep being active or more passive.  If active, start looking at small MF.  If passive, start looking at being a limited partner in MF syndication deals.  You could start there and then branch into some other strong areas that give you some geographic and niche diversification.  We are very active in the DFW area in apt syndications if you want to start there folks can give you some ideas.  Be patient, get some good feedback here but don't forget to assess your time, skills, money and temperament to factor into your decisions.  Here's a blog post on why I like investing in MF apartments.

https://www.biggerpockets.com/blogs/9145/53820-why...

Hi David,

Syndication is a big topic.  Are you wanting to be active or passive?  I find a lot of investors looking to invest out of state and diversify would benefit from partnering as a limited partner in syndicate deals and learn the ropes to start.  Earn and learn is how I like to think about it.  It's technically passive but I have investors who are passionate about it and w/intention, you can learn a lot by being an investor in a deal (being intentional w/your learning, asking questions, etc).

I've posted on this as an alternative to DIY where you can still learn a ton (link below).  If you get into it, you can see that syndicates typically work as a team.  There are various roles from finding the deal, raising the capital, managing the asset, investor relations, etc.  If you can carve out a role on an experienced syndication team why not look into that as an approach.  Learn and leverage experts, earn along the way, partner with them at a deeper level over time.  Eventually start your own deal but you have some background to get you going and a beefed up resume of experiences.  That will be important for investors and lenders down the road.

You want to pick a niche that interests you because syndication is simply the pooling of money from limited partners, managed by a general partner who has the expertise in a specific niche. Apartments, self storage, mobile home parks, even SFR properties can by syndicated, etc. Attend local meetups focusing on your area and you'l likely find local partners and syndicators that you can learn from and seek guidance. If you want to form your own syndication, attend a conference, study, find some partners that have skill sets that complement you.

As a passive investor looking to participate in out of state syndications, there are a variety of syndicates on BP as well that can share some ideas w/you.  It's a great space. 

https://www.biggerpockets.com/forums/432/topics/30...

https://www.biggerpockets.com/forums/432/topics/30...

Brian,

Depends on your goals. Do you want to do SFR, MF, other? What time, skills, interests and capital do you have? I think starting out and just getting some SFRs is not a bad approach but the evolution typically is to multis for a variety of reasons. You can do that by yourself, w/partners, etc. You could also find a coach and go faster / bigger. So, here it is:

1) Assess yourself (including your family situation)

2) Establish goals

3) Find mentors, coaches and experienced partners that have done what you want to do and go big faster

Here's some ideas on what you could accomplish (link below).  Don't be shy, think big, network and you will find incredible people in this business doing some awesome things and most are good folks that want to help and share their successes...this gives you some ideas and gets you there w/more confidence so you can do what you want to do, with who you want to do it, help more folks and essentially have more choices in your lives.  BP is a great start. Contribute as you learn more, share and help the next ones as you grow your business.

https://www.biggerpockets.com/blogs/9145/61278-wor...

Brian,

Depends on your goals. Do you want to do SFR, MF, other? What time, skills, interests and capital do you have? I think starting out and just getting some SFRs is not a bad approach but the evolution typically is to multis for a variety of reasons. You can do that by yourself, w/partners, etc. You could also find a coach and go faster / bigger. So, here it is:

1) Assess yourself (including your family situation)

2) Establish goals

3) Find mentors, coaches and experienced partners that have done what you want to do and go big faster

Here's some ideas on what you could accomplish (link below).  Don't be shy, think big, network and you will find incredible people in this business doing some awesome things and most are good folks that want to help and share their successes...this gives you some ideas and gets you there w/more confidence so you can do what you want to do, with who you want to do it, help more folks and essentially have more choices in your lives.  BP is a great start. Contribute as you learn more, share and help the next ones as you grow your business.

https://www.biggerpockets.com/blogs/9145/61278-wor...

Cathy,

Experts will tell you that the goal is to find properties you can improve and move up to match the higher quality area.  Class B/C properties in A/B areas respectively makes sense, or areas that are gentrifying and in the path of progress on there way to higher quality areas.  If the schools, streets, shopping and entertainment areas look like a C, attracting residents to pay the higher rates by upgrading the property to a A/B as you suggest (higher than the surrounding area) is typically not going to work out so well.  Occupancy and rents will not likely meet your expectations.  If you see an area undergoing transformation and in the path of progress that can work out but has risks in how that development progresses and in what direction.  The lowest risk strategy would likely be finding that B/C property in stable A/B areas.

Zach,

I think you will still find opportunities in the large value add apartment space through syndications with reputable companies that have experience in their niche. Typical returns we are seeing is preferred 8%, CoC 8-9% and IRR of 18 - 20% for a typical 5 year hold. Value add syndicators like to refi or add supplemental loan after renovations in ~ 2 years which can increase those returns a bit but most want to show you numbers that are conservative (under promise / over deliver). If you are not happy with the deal meeting these parameters or your criteria move on. There are still opportunities out there. Couple tips on vetting sponsors which to me is the # priority. Once you've got a sponsor or two you like you can generally be more confident of their offers as you get more comfortable with their model /strategy.

https://www.biggerpockets.com/blogs/9145/53959-vet...

Hi Maurice,

Good that you are getting some good thoughts on putting together deals.  Essentially, you'll an investor wants to know about 3 main things:

1) The Market

2) The Deal 

3) The team

Here's a blog article on top tips I've learned from raising over $10m in capital on RE deals.  Also, please ensure you have some solid legal inputs on soliciting investors for your project.  It's important you know the rules (SEC and state).

https://www.biggerpockets.com/blogs/9145/53037-1m-...