Syndicating your first deal

[Rafael Porter]

Any advise? When starting out, what kind of deal structure should you use. I was thinking of puting together a fund and investing in a couple of properties over time and taking a small fee but share in profits later down the line. 3-5% Management Fee with maybe 30% profits later down the line after a preferred return of 10-15% for the investor.

Any thoughts would be great. Thanks in advance.

[Account Closed]

Also for your first deal syndicating, what you should do is talk about your investments like you are doing it yourself. If you are talking to the right people, they will be interested, because if you don't come off like you are "selling" them, then they will sometimes ask if they can invest in you.

For example, I did a deal a few years ago (before I had my fund all set up). I was running everything through an LLC with partners taking equity positions as partners. I had this one project where the total cash outlay was 80k. I wrote a whole proposal thing and actually I had 2 people who were going to invest in the deal. A third person has been interested so I sent them my proposal and said something like... hey take a look at this deal. Is this something you are interested in? Unfortunately this deal is fully subscribed, I guess I could ask the other investors if they would like to take a smaller position... or I could lower my own equity position but that means I would have very little skin in the game(I made it seem like a real pain in the butt).

Next thing I know, I've got an investor throwing their money at me, threatening to get mad at me if I couldn't get them in on the next deal. Thats how you should approach it. Have a deal so good that people can't keep their hands off of you, and then exclude them (people want to be a part of something others are not apart of - exclusivity).

Good luck, V