How to choose a RE syndication company?

[Reza Khosravani]

I'm planning to invest in RE as a passive investor, and was wondering how I should pick a syndication company. I'm overwhelmed by the number of choices. Is there a way to short-list based on total assets or historical IRR?

[Charles Carillo]

@Reza Khosravani

When I have passively invested in deals, it is with companies that I have built a relationship with. Since most syndications are 506-B deals, you are required to have a preexisting relationship with at least one of the general partners before investing. I would start reaching out to different syndicators, setup calls and start building a relationship with them.

Lastly, comparing groups by IRR alone might not be the best method. The strategy used for a deal they purchased in 2013 might differ from a deal they are purchasing in 2021. I would see the experience of the general partners, how many went through 2008 with multifamily properties? As we saw in 2020 with rents staying relatively flat; buying properties and jacking rents (typical value-add strategy sold by gurus) is not a strategy that works in every phase of the market cycle.