Apartment Investing/Syndication- Is it wise to be an LP first?

[Kyle Curtin]

Goooooood morning BP!

For my next property, I have had the vision to break into the small commercial multi family space (6-25 units) on a local level, and have taken action and started the journey down that path. I have pivoted everything I am absorbing (podcasts, books, folks I reach out to to connect) towards this sector of REI and have a written road map with my business partner on how we are going to get there and the forecasted steps that need to be taken. My main question is, I have about 70-80k in equity that I am hoping to leverage via a HELOC on my househack in the coming months on an 100% LTV. It was my intention to leverage this capital as skin in the deal when a worthwhile opportunity arose and still do, but do you think it could be worth it to invest as an LP on another group's deal FIRST (I have one in mind) to be able to have a hands on approach of the aspects of investor relations, structure, analytics, presentation, and how to handle that effectively, etc.? I really like the idea for the education in the macro but also am keeping in mind if my heloc capital is tied up for a year-2 years in the micro, it could really delay things. But also, that is just MY personal capital. We will begin starting to raise capital and learning the intricacies of it soon, and I have heard many stories of people putting together big deals for the first time with none of their own cash.

What do you think?

Have a great day!

Kyle

[Percy N.]

@Kyle Curtin not sure of your market, but it would be very hard to find a decent property (even leverage on a 6-25 unit) with $80K in the markets we operate in.

My suggestion would be to get a little more insight into the syndication model by being an LP if you can find someone who is willing to help with the educational aspect as well. 

Are you accredited? If not, you will also have to find a sponsor who is accepting non-accredited investors.

I would not recommend raising funds for someone else if you are not licensed to do so.