Single family syndication?

[Stephanie Martinson]

Hello everyone,

Has anyone done syndications on a small level and invested in a single family residence with investors' money?  I'm looking at doing one with 1 investor buying in at $50,000.  

House- $175,000

Repairs- $15,000

Hold period- 3-5 years

8% preferred return- Around $4000/annually (money from rent minus mortgage)

20-30% return at closing

Then I would keep the leftover annually and at closing minus carrying costs.

Any idea if I need a securities lawyer or if I can just sign a promissory note?

Am I missing something?

Thank you for your help!

Steph

It seems like a bit of work for a small deal, but I wanted to try a syndication at a small level while I'm looking for deals at a bigger level.

[Amy Wan]

Hi Stephanie,

That deal is likely too small to syndicate. You should just go take one check from one person (not more than one person), and call it a day. Otherwise, if you truly do need multiple checks, you should bundle a number of SFRs into one syndication offering. Otherwise, the transactional cost of legal docs alone (starting at 7.5K) will not be worth it. All your profits will be going to the lawyer, not you and the investor. (I mean, I'd take it, but I'd strongly advise against it).