Which syndicator to choose?

Question

I am a little bit overwhelmed by the number of possible syndicators advertising online, in podcasts or various meetings. While an accredited investor, I am looking to get my feet wet with different syndications with a low entry buy-in around 10k~25k each before investing more in the next years.

I would like to get into syndication for commercial properties (office, retail or multi family). While this investment as limited partner will be passive, I wish to learn as much as I can from the process and if possible get involved to gain some experience.

I am sure that there are some less reputable companies out there that look pristine on glossy paper fliers. And my due diligence starts here by asking which syndicator did you work with and would recommend?

Ian Ippolito · Answer

@Mike S.  a decent amount of my real-estate portfolio is invested in syndications/crowdfunding. My personal experience is that many times the syndicators that are doing the most to publicize themselves, are often targeting an unsophisticated investor audience. As a conservative investor, I usually find very little to like in those types of deals. On the other side of the spectrum are some very top-tier sponsors (the ones that have weathered at least a full real estate cycle with little or no investor money lost) that have such a loyal clientele that their deals fill up very quickly without advertising on Facebook, etc. You can find these by networking or joining a good investment club.

If you're looking for office and multifamily together, Grubb has multiple cycles of experience with very little money lost (although the multifamily is construction which may or may not be a match depending on how conservative or aggressive you are). If you are conservative and looking for a pure multifamily play, there is a sponsor who has multiple cycles of extremes with no money lost. They operate under 506B and cannot solicit so PM me if you want to referral. Another one with multiple cycle experience in office is Christina development. If you are looking for triple net lease there is another one operates under 506B with full cycle experience, that again I can give you if you PM me.

Michael Bishop · Answer

@Mike S. you'll certainly learn a fair amount about the process as an LP, but if you really want to get involved in the day to day you'll likely need to find a Sponsor who is willing to let you get in on the GP side in return for some specific skill(s) you bring to the table (deal sourcing, underwriting, capital raising, bookkeeping, etc.). LPs are typically excluded from being actively involved in syndicated deals for a number of reasons.

Additionally, the reputable Sponsors you are looking for aren't extremely likely to let you in at $10K. $25K, maybe. As they're reputable and have a strong track record, they likely have a long list of investors interested in getting in their deals and can thus demand a $50-100K minimum. The less investors there are in the deal the less back office work involved (less time commitment, less room for mistakes, fewer resources needed, the list goes on).

Ian Ippolito · Answer

@Charles Kao, , I agree it’s important to look at it syndicator individually. And in the situation you’re talking about: it’s hard to imagine that many of those sponsors who believed they were bulletproof pre-2008 had actually gone through an entire full real estate cycle and experienced a downturn. Either way: due to the timing of the great recession, anyone that has gone more than full real estate cycle today tends to have a lot more humility.

Kay Kay Singh · Answer

@Mike S. A lot of expertise is already given by so many experienced investors and syndicators here.Your best vet would be to learn about the multifamily syndication yourself by either reading some books or listening to a bunch of podcasts, then you will be more confident to invest in the syndication deal and in the learning process you know how to vet a syndicator and there are some articles here on bigger pockets to. Here are some successful ones.

List of Successful Syndicators

• Joe Fairless  - https://www.ashcroftcapital.com
• Ivan Barratt - http://www.barrattassetmanagement.com
• Grant Cardone - https://cardonecapital.com
• Neal Bawa and Jean Marc - http://financial-attunement.com
• Kira Golden - https://directsourcewealth.com
• Brian Burke - https://praxcap.com
• Tag Birge and Andrew Held - ttps://www.birgeandheld.com
• Brian Adams - http://www.adamsinvestorgroup.com
• Vinod Chopra - http://moneilinvest.com
• Chad Doty - https://37parallel.com
• Kevin Bupp - https://sunrisecapitalinvestors.com  (mobile Home Parks)
• Scot Meyers - https://selfstorageinvesting.com (Self Storage)
• Hunter Thompson - https://cashflowconnections.com
• Devin Elder -http://www.djetexas.com
• Michael Becker -http://www.spiadvisory.com/

Joel Owens · Answer

It all varies.

I am not interested in 10k investors. It's too much hassle. I look for 6 figures minimum per investment.

I would rather have a network of investors that believe in the product and can invest over and over again with a long term relationship.

Those who tend to put small amounts tend to be not as committed to the sponsors and are moving money in and out with less of a long term relationship component.

Charles Kao · Answer

@Ian Ippolito I agree with this quite a bit actually.  I do want to point this out that you still need to look at each syndicator individually because there are exceptions. In the leadup to the crash there was so much confidence in recession proof strategies and it led to poor assumptions and overaggressive investing, so personally investing in somebody who has acquired all of their deals in the runup we have had would be a concern.

Alina Trigub · Answer

@Mike S.

I can certainly relate to your comment about being overwhelmed. This is exactly how I felt when I started out as a passive investor in syndications. It definitely helped me to transition over to the active side down the road!

It takes a lot to take the leap and invest in a property you've never seen in person with a deal sponsor you've never met (or have met but don't know too well.) So as others already mentioned, you need to do the leg work upfront in order to be comfortable with making this leap. Definitely educate yourself on the syndications as a process in general and on the asset class(es) you're planning to invest in.

Here's a list of potential questions you can ask a deal sponsor: https://www.biggerpockets.com/member-blogs/10850/7...

Also, you can do a reverse engineering and search BP for folks that have been passively investing in syndications and can offer their feedback.

Last but not least, if you want to stick to lower minimums as you mentioned $10k or so, then crowdfunding maybe your only option. Most deal sponsors (outside of crowdfunding platform) tend to have $50k min investment.

Feel free to PM if you have more questions.

Best!

Yannik Cudjoe-Virgil · Answer

@Mike S.     The previous post is right. Very seldom if any are you going to run into a good operator that is will take on a LP investor at 10-25k. The juice is not worth the squeeze. Like he said the less investors the better. If one takes 10-25k on a 1m dollar raise, im sure you can imaging how much of a headache that will be.

I would look for a team with a strong track record and providing returns. Most importantly, vet the sponsor team BEFORE investing with them. Make sure that they have good character and they can deliver!

- Yannik

Ronald Rohde · Answer

I would find a local investor who has done a syndicated deal. I would budget $50k as minimum.

Trevor Ewen · Answer

@Mike S.

Completely understand the desire to get started at the $10k to $25k range. It's nice to try things out with less money on the table. However, for most syndicators it's too low a number for the amount of cost and communication on their side. $50k tends to be the going rate for the bottom end.

I've done private loans in the below $50k range, but even that partner admitted he used it primarily as a method to build trust and connections (which I understood and appreciated). Also, he thoroughly delivered, so I would be happy to send more money his way.

In my experience, the best syndicators do some advertising but the bulk of their focus is on building relationships. If you're good, you'll never have to work too hard for money. Three thoughts to help you filter:

1) If the numbers are too good to be true, they probably are. Take a confident 12% over an over-confident 20%.2) If the syndicator is investing outside of a market where they have a proven track record, then I would not be in on the first deal. I would wait to see if they can invest in an outside market before jumping in. For instance, if an Atlanta based investor was now working on their first Little Rock based deal, I would wait for the second or third. They will learn a great deal about remote management on that first one.

Which syndicator to choose?

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