All Forum Posts by: Jeffrey Donis

Syndication is a big word for a simple process that is not easy. Feel better? Okay, let me break this down “parade rest” (to its simplest form). To put this simply, the process as it applies to apartment syndication is the pooling of money from investors to purchase a large piece of real estate that they might not have been able to purchase themselves.

The prefix “Syn” means together. One of the things you will find interesting about multifamily investing is that it requires a team that has synergy. Resources provide better results when they are employed properly. It helps you minimize risk (Limited Partners); “Get Your Time Back” while “Owning More of America”.

There are a few relationships that are created during the multifamily syndication. We will focus on the two, Passive Investors and Sponsors, that you are more likely to be a part of. Passive Investors are busy professionals who love what you do but is aspiring to create more option at a predetermined time in the future. They might have already retired and had an appreciation of keeping their capital working. Sponsor is also busy professionals who get a great deal of fulfillment of being a good steward of the Passive Investors’ capital.

The Passive Investors are oftentimes referred to as Limited Partners (LP). Limited meaning your liabilities are limited to the capital that you invest. All other liabilities are taken on by the Sponsors.

The Sponsors are oftentimes referred to as Syndicators, Managers, or General Partners (GP). When speaking about profession the word syndicator is used; when speaking in terms of the Limited Liability Company that is created for each acquisition the word Manager is used; and lastly, when speaking in terms of the deal structure GP is wildly used. Sponsor will be used to generalize the meaning.

The choice is yours.

Be an LP and continue doing what you love or take on the associated responsibilities and liabilities of a Sponsor.

-Hutch The Marine Investor

These are some great questions. Look when it comes to property Managment, my biggest issues of always surrounded upon three things: accounting, maintenance, and leasing. Find out how many employees they have in each department. Now compare that with the number of units they manage. If they are managing 1000 units and only have 1 employee scheduling all maintenance, that’s a problem. Do they have a maintenance supervisor who oversees/ QCs contractors? You’ll need a second opinion from a trusted individual often.  Does the accounting department provide you information you need when you need it such as P&L monthly with itemized/ categorized expenses. Thirdly, how quickly and often are they getting lease is renewed and units filled? The difference between a good and great for me has been a text message informing me that the unit is coming due for a lease renewal and they ask me if I would like to make any changes. I text back what is the current rent and what would the market allow? Have they had issues paying? They usually respond same day and then I make a decision on where to go. That’s good service.

@Jeffrey Donis don’t forget to sell yourself as a good owner and investor. Working with property managers is a relationship business so make sure you can help them as much as they are helping you

You might want to read our series about how to “Screen a PMC Better than a Tenant”: https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

Great list! Also would like to add referrals and references are gold! We recently found our potential PM for an upcoming deal by visiting one of the competing properties that was turned around.  

@Jeffrey Donis My pleasure! We operate in 11 cities with over 6,400+ properties under management and we are never afraid to teach along the way!

Do not hesitate to reach out. I am always available via email and or phone 24/7. 

Best of Luck, 

@Jeffrey Donis

Remember when interviewing those four companies there are other alternatives to help reduce expenses without sacrificing quality. The cheapest guy of the four isn't always the best overall and unfortunately many owners find this out when it's too late.

Here is an article that you might find helpful and I love sharing with clients and potential clients looking for us to manage their property. I believe this article will serve you and your team well as you are interviewing those companies. It lists 20 questions you need to ask a property management company broken down into there segments from learning about them and their experience, learning about their systems and how they operate and finally a few to help you make that final decision on if they are a good fit.

https://www.biggerpockets.com/...

Best of luck!

Think you're on the right track, but my suggestion:

1) Give them the I&E on your property

2) Ask them, what 3 things would you do to increase NOI

Makes working with them easier, keeps them focused on what's important and allows them creativity to solve your problems.

"Do you require me to list the property with you during its sale?"  Yeah, in OR you can't make a contract chained to a listing like that, but they do have ways around that like a "termination fee" which will get credited back if you use them to list.

I'd also ask if they can do a summary on income and expenses and trends - Like is the avg rent up the past two years, what's happening with water costs, etc in graphical (ex-eng, sorry) format.

Other item happening more is what happens to your data?  If they use AppFolio, if you terminate, do you get the log-on.  Some of these PMs are getting to be real a-holes and you just can't export that info easily so you almost need to take over the log-on.  However, AppFolio won't help (not picking on them since it's common) since their contract is with the original PM and they just can't transfer that info.

@Jeffrey Donis. It took longer than I thought. Maybe about a year and a half. I learned the ropes while I also passively invested. This gives you a "behind the curtain look" how other operators run their deals and communicate, etc. I know of many people who dive into a mentorship program, and it can accelerate the process. Like anything though, it is how much you put into it, and how committed you really are to get the results you want. If you are committed, you can get there choosing either path, as long as you continually educated yourself, network constantly, and be willing to take action. I say take some time, and discover which hat you would like to wear within the syndication team. Underwriting, acquisitions, asset management, raising capital, investor relations? Get to understand where you can add value to a team.

I wish I had more insight on this but I am not as involved in that area of the market so I do not track it. The only anecdotal information I can offer is that it seems there is a $20m+ deal every week announced in the TBJ and the going rate is somewhere around $150k/unit so there is probably some decent availability for 100+ unit buildings. Mind you, the acquiring groups are usually out of larger markets (New York, Boston, International, etc.) where their local returns are not acceptable.