Best loan products for a syndication?

Question

What are the best loan products to use when doing a syndication? The downpayment is raised equity and the rest will be debt.

Evan Polaski · Answer

Best loan product on a 2-4 family is very likely going to be a loan through a local-to-regional sized bank or credit union.  That is likely the only people that will lend on an LLC with midwestern purchase prices.

The bigger issue, as alluded to, if you are truly syndicating this deal, a budget attorney and filings will still likely cost you $5k, and very likely be more into the 10-15k range.  Proportionately the the assumed amount you are raising, you likely won't have much of a return left for your LPs after all is said and done on the 4 family scale of things.

The key with syndication, both from an LP and GP perspective, is to get into deal that are otherwise not typically accessible to most individuals.

Brock Mogensen · Answer

Syndicating a 2-4 unit might be too small..but doable. Smallest deal I have syndicated was $500K. But I think your goal should be at least a $1M deal for syndication to really make sense. For debt, I personally prefer working with local banks. Targeting traditional financing - 75% LTV, 25 Yr AM, 5 yr Term.

Robert Ellis · Answer

if you are looking at syndication, I'd look larger than a 2-4 unit. Even if you are a beginner, there isn't enough cash flow for people to invest in a fund from one property. the last syndicator we worked with out of the Bay Area / San Francisco CA had 40+ investors for a 2.1 million dollar purchase of a 47 unit that was already cash flowing.

Chris Seveney · Answer

@Corbin Dunn

Local lender to the area you are investing in or go with DSCR loans. As mentioned I wouldn’t syndicate one asset I wouldn’t do anything less than $1M

Corbin Dunn · Answer

Small multi-family (2-4 units). Primarily in the midwest (Ohio, Indiana).

Carlos Ptriawan · Answer

Why do you want to syndicate a duplex or fourplex is beyond me. It's too small for cheap housing. You just need two or three investors to fund the unit with local credit union. Nobody can beat CU rates for SF/small MF.

Devin Peterson · Answer

Depends on what type of property you are referring to. Large apartments? Multifamily? Hotels? etc. Narrowing down the market and the property type will help answer

Best loan products for a syndication?

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