All Forum Posts by: Theo Hicks

That's why a passive investor should always perform their own due diligence on the deal, the team, and the market before investing.

For the deal, you want to review their underwriting assumptions (debt, rents, annual income and expense increases, etc.).

For the team, you want to review their track record of successfully taking deals full cycle

For the market, you want to review the fundamentals (population growth, job growth, job diversity, median income to median rent ratio, etc.)

The limited partner/passive investor is someone who invests in syndications. Sponsors are the ones who are involved on the general partnership side.

Most syndications have a minimum investment amount. The lowest I've seen is $25k, but $50k to $100k is more common.

Some syndicators accept non-accredited investors, but will still have a minimum investment amount.

1. $200 to $300 per unit per year for reserves is common

2. Any upfront expense should be paid via raising capital or creating an operating account fund (which you raise capital for)

3. Same as any upfront cost - you'll want to raise the capital. Any cost that is incurred from contract to close can come out of your pocket, but you can reimburse yourself at close

Also, $170,000 operating expenses on $512,020 of income (~33%) seems quite low.

Generally, passive investors receive a return of capital upon a supplemental loan, a refinance, or a sale.

As others have said, the costs of putting together a syndication isn't worth it until you are in the millions of dollars. I would have your one investor have an active role in the deal so that it is a JV.

You don't necessarily need to do a syndication on a small level to do deals on a bigger level. In fact, you don't necessarily need to do a MF deal (Joe Fairless syndicated his first deal after investing in 4 SFRs). You'll need to either have a preexisting network of high net worth individuals or leverage past experience to raise capital (plus put together a credible, experienced team).

Use macro market factors like job growth and population growth to select a city/MSA. Then, learn more about that market to select a few neighborhoods to target (following the strategy outlined by @Alina Trigub)

Hi Eli,

Start reaching out to real estate brokers and attending meetup groups in your market.

As others have said, you need to determine how much capital you are capable of raising. Take that number and divide by 30% to 35% to determine your MAX purchase price. So, for a $2M deal, you would need to raise $600,000 to  $700,000.

Of course, you'll need to educate yourself on the process and create a team before you start looking at live deals.

There are multiple BP threads that list out active apartment syndicators. 

If you aren't accredited, make sure you let them know up front. As @Michael Dang mentioned, 506(b) offerings can accept non-accredited investors, but I know a few syndicators who do 506(b) but still only accept accredited investors.

And as @Brian Metz mentioned, you can download a free Simplified Cash Flow Calculator by purchasing the book.