Syndication Confirmation for New Deal

[Ryan Rogers]

Looking at purchasing a move-in ready 3bd/2ba property for $115,000 and I think it's worth $130,000 ish. Plan is to rent for $1,200 and I believe I can get renters in the property in less than two months. I plan to use the lender I just used to purchase my primary residence and she said I can get a conventional loan, right around 5%, with 25% down ($28,750) on the property. I have $10,000 ready to throw at this deal and am wondering if syndication can help. I know I have 4-5 buddies that I could most likely get to come in for 2-5k a piece.

Plan is to purchase the property, get renters, refinance, pull out my down payment (if appraised at expected value). Contractually for my partners, I am considering guaranteeing a monthly return on their money with the option to get 100% of their money back after 12 months if they don't want to continue investing with me. Wanting some expert advice before I pull the trigger. Thoughts?

[Danielle Wolter]

@Ryan Rogers I'm not an expert, but I believe syndication is typically for large deals and involves lots of regulations, lawyers fees, etc. You wouldn't syndicate a small deal like this. I would recommend finding a private (like your buddies) or hard money lender to come up with the rest. You could also see if the seller is willing to do seller financing. However, I would double check your numbers to make sure this is a good deal. With the monthly return you plan on paying to private or hard money lenders, along with the mortgage, expenses like repairs, capex, vacancy, management, it seems your margins may be rather thin.