Who is the best MF syndicator?

Question

If you had to choose one MF syndicator to drop $100k with, who would it be and why?? I would look for principle protection as well as IRR for the main factors for me. Let me know your thoughts please!

Ian Ippolito · Answer

Caleb, it’s not possible for one operator to be the best multi family syndicator for everyone. A conservative investor will have a very different idea of what best is versus an aggressive one.

Also, the criteria you are using are opposites. Protection of principal is generally diametrically opposed to high IRR.

I would recommend first taking a step back and figuring out how much risk you are comfortable with, and deciding if you are conservative or aggressive or somewhere in between on the spectrum.

Personally I’m a conservative investor and so at this stage of the cycle I am only looking at sponsors with at least one full real estate cycle with no money lost. And if they have multiple cycles with no money lost and that is even better. Sponsors like this will not have the highest projected IRR, and are also generally keeping leverage low, which again drives down the projected IRR.

If you are conservative, then another thing you are going to want to see is a lot of sponsor skin in the game to mitigate the fact that the promote incentivizes them to push the risk envelope. But if you are aggressive, then you’ll want to see the opposite so you can get the highest projected IRR.

So it’s important to figure out first where you stand first.

Jay Hinrichs · Answer

those named above are well known BP sponsors

@Ivan Barratt  has the qualities of those above and some pretty nice deals as well I don't think you could go wrong with any of them.. A lot of it comes down to who has a deal when your ready to drop your investment and whether they are only taking accreds or have positions for non accreds and not insinuating in any way your not accred  but some folks miss that part..

Taylor L. · Answer

My own deals!But if I had to place it with someone else, my list of people to invest with would include (but not be limited to) @Brian Burke, Vinney Chopra, Joe Fairless (Ashcroft), Matt Faircloth... there are more, but that's starting with a list of folks who have experience and character.

I would caution you against putting IRR as one of your top criteria, because less scrupulous or less experienced folks are tempted to promise investors higher, less realistic/conservative IRRs to attract investors. IRR is absolutely relevant, but only after experience and character of the sponsors and downside protection.

Alina Trigub · Answer

@Caleb Clay

BP offers you the resources to do your own due diligence. While people like @Brian Burke & Joe Fearless top the list, there're plenty more of other good operators on BP and outside of it.

One more food for thought: if you all you have to invest is $100K, don't drop it with a single operator, diversify and split between two deals.

Laslty, make sure to educate yourself on the asset class and on the syndication process as well prior to taking action. "Best ever syndication" book is a good resource for it.

To guide you further with choosing the syndicators, here's a post that offers a list of questions to ask the sponsors:

https://www.biggerpockets.com/member-blogs/10850/76728-questions-to-ask-a-syndicator

Trevor Ewen · Answer

@Caleb Clay

Instead of naming a person (which comes down to opinion and relationship, in most cases). Instead, I will tell you an archetype I would seek out:

The person I would seek is a seasoned operator that has built up a business in a specific local market and asset class over the last decade. They have worn many hats, as all syndicators do. But, the sweet spot is management. Management makes the difference, and they are more concerned with operational overhead than their marketing materials or their conference speeches.

This person has a large number of investors in their community. They have indicated that they are so confident in their abilities, they are willing to involved close friends and family members. They are organized, honest, and never take on more than they can handle. They run experiments to determine the best approach, and focus, focus, focus on a specific asset class. For instance, they don't presume experience in class C, residential management makes you a whiz at self storage.

They are concerned about poor performers, within and outside of their team. They are concerned about investors who distract the project and take up an inordinate amount of their time. They know how to leverage others to compensate for their weaknesses. They are growing their network for the next decade, not the next week. They use data, they have a slow hand in a hot market. They have a heavy hand in a depressed market. They see opportunity where others see tedium. They give back to the community.

By the way, if you know someone who fits this description, I definitely want to talk to them :)

Ivan Barratt · Answer

Thank you for the kind words @Jay Hinrichs

Cody Degel · Answer

Has anyone personally worked with Michael Blanks’s syndicate team?

Charles Kao · Answer

@Caleb Clay

Are you only looking to invest passively for the future and beyond or will you want to be a general partner in the future? For me personally I have seen alot of syndications with very long interest only periods which helps on cash on cash return but personally perceive to be an unnecessary risk to boost cash on cash return while lowering internal rate of return because of principal paydown.  It would be very important for me to invest in someone with a similar philosophy although I will say my answer now compared to just two years ago would be different.  With that being said I think there are many good options for asset preservation and with 100k you likely could invest 50k in two deals. If asset preservation really is your biggest goal look at the terms of the deal of the syndicator.  I took on a partner on a joint venture recently and while we could have done a 25 year with interest only period to boost our cash on cash return we choose to do a 20 year fully amortized loan on a 6 year ballon to maximize internal rate of return. Lastly I think IRR is a confusing measure when factoring discount rate and net present value and prefer using return on investment.  It's much more clear how it is calculated and less assumptions in place plus you can clearly see how principal paydown will affect your return on investment upon exit.

Caleb Clay · Answer

Thank you all for sharing and insights! I will continue to do some research while taking all of this info for better decision making!

Marcus House · Answer

Caleb, I was where you are about 90 days ago.  @Ian Ippolito is spot on and I can share with you from personal experience that @Joe Fairless and @Ivan Barratt are solid.  If you wish to chat further feel free to reach out to me offline and I would be happy to share some of my lessons.

Who is the best MF syndicator?

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