Becoming a Syndactor

[Chris Sawtelle]

Hello everyone! 

I am a real estate investor in California who started out researching single family homes and ended up investing in multifamily. I have been studying up on syndicating and really want to dig into the nitty gritty with someone who has experience. 

My intent is that I will collect investments from friends, family, and colleagues (all non-accredited investors). I understand the trials and tribulations of working with friends and family, but I am willing to take these on for my first deal.

My experience in real estate isn't super extensive but I am a data engineer for my day job with a background in statistics and finance. This is all to say that I feel confident that I can manage a distressed apartment complex with fairly good numbers and a few issues. I could be crazy, that is not what I want to talk about. :)

My question is what are the options for financing a project ~$1-2 million dollars if I can come up with agreements to collect a down payment of what I am assuming would be 30%. Also assuming the legal side is taken care of such as filing with the SEC, although advice on that is appreciated.

1) What kind of lenders would make this deal?

- Are there specific deals for this type of arrangement?

- Are interests rates similar to investment properties at this level of financing?

- Can it be done without a balloon-type loan? Ex traditional 30yr or even 20yr financing?

2) What are the personal requirements to get this kind of loan aside from property numbers like debt coverage ratio?

- Cash reserves requirements?

- Experience requirements?

I am sure this can be just a kicking off point for extended discussion if anyone is willing to engage. :) 

[Jessica Connor]

Hi Chris, I think you would want to contact a syndication attorney to properly set up the syndication (i.e., collecting your non-accredited investors into the proper LLCs and such) (e.g., see content on this website: Syndication Attorneys) and then also talk to lenders as well. But probably better to have the syndication set up before talking to lenders, since you can read online about commercial financing requirements (these I think are more straightforward than setting up the syndication). Hope this helps!