Sponsor for syndication

[Marquis Cobb]

Hello All, 

I recently just finished my paid mentorship for apartment syndication and ready to take down my first deal. If you know anything about commercial multifamily you know it takes a lot of upfront capital and when you are starting fresh banks require you to have someone on your team who has experience and the right net worth depending on the property. This is where I am struggling. I have been building relationships in my target market and underwriting deals. I have a deal that meets my criteria and will have good returns for investors but I cannot find a sponsor to partner with. I have reached out to many people that are also apart of my mentorship program but I never get responses. Anyone have any tips to show sponsors I'm for real or know anyone who would be interested in sponsoring a deal? 

Thank you in advance 

[Chris Seveney]

@Marquis Cobb

Unfortunately a lot of those trainings will sell you on raising money and finding a sponsor is easy, and unfortunately it is not, especially with no experience.

Keep networking and hopefully you find something

[Gerardo Waisbaum]

I agree with Chris.

I would recommend you partner with someone with experience as an operator. If you have good deals, that shouldn't be a problem. What kind of deal sizes are you working on?

[Marquis Cobb]

Quote from @Gerardo Waisbaum:

I agree with Chris.

I would recommend you partner with someone with experience as an operator. If you have good deals, that shouldn't be a problem. What kind of deal sizes are you working on?

Right now this deal I'm working on is 60 units

[Gerardo Waisbaum]

You are welcome to DM me. I'd be glad to try to help. 

[Gino Barbaro]

@Marquis Cobb

I would recommend attending events, such as Raise Fest, and meet ups, to find potential investors and sponsors. You also need to create a clear, concise business plan to share with sponsors.

Linkedin is a good platform to look for real estate investors. Do a deep dive in there to look for high net worth individuals

Good Luck

Gino

[Brian Adams]

@Marquis Cobb When I first started I had a similar experience.

When you are reaching out to people to be a loan sponsor for a deal and they aren't responding, what are you asking them to do?

[Marquis Cobb]

Quote from @Gino Barbaro:

@Marquis Cobb

I would recommend attending events, such as Raise Fest, and meet ups, to find potential investors and sponsors. You also need to create a clear, concise business plan to share with sponsors.

Linkedin is a good platform to look for real estate investors. Do a deep dive in there to look for high net worth individuals

Good Luck

Gino

 Gino, 

Thank you for the advice. Love your podcast by the way! I have been trying to build my LinkedIn profile and reached out to a few sponsors on there but only one response. I know a lot of sponsors like to build a relationship before talking business. So my initial plan was to get in touch with them some how and get on a call then present my deal, but as I said before I can't really get my foot in the door

[Marquis Cobb]

Quote from @Brian Adams:

@Marquis Cobb When I first started I had a similar experience.

When you are reaching out to people to be a loan sponsor for a deal and they aren't responding, what are you asking them to do?

Brian, 
On the initial contact I'm just trying to build a relationship and maybe get on a call with them just so they can learn more about who I am and what value I can bring 

[Brian Adams]

@Marquis Cobb locating a sponsor, just like investors for a deal takes time.

Are you raising private money for the 60 unit deal?

If so, make sure to ask the investors if they would consider sponsoring the deal for a piece of the GP ownership.

If this is your first deal, be prepared to give a big chunk of the deal away. You need the sponsor more than they need you.

[DuWayne Gregory]

I would focus on putting your team together before approaching someone to sponsor a deal for you. Doing that will give you credibility without having experience, especially if you team up with experienced people. You may have to give up a big % of the GP on your first deal just to be a fly on the wall while building a track record. 

[Justin Moy]

What market is the deal in? Maybe there's someone in here who has some connections.

[Michael Adams]

Quote from @Marquis Cobb:

Quote from @Brian Adams:

@Marquis Cobb When I first started I had a similar experience.

When you are reaching out to people to be a loan sponsor for a deal and they aren't responding, what are you asking them to do?

Brian, 
On the initial contact I'm just trying to build a relationship and maybe get on a call with them just so they can learn more about who I am and what value I can bring 

 please hit me up

[Christina Liang]

Quote from @Brian Adams:

@Marquis Cobb locating a sponsor, just like investors for a deal takes time.

Are you raising private money for the 60 unit deal?

If so, make sure to ask the investors if they would consider sponsoring the deal for a piece of the GP ownership.

If this is your first deal, be prepared to give a big chunk of the deal away. You need the sponsor more than they need you.

[Christina Liang]

I am willing to give sponsor most of the profits. Anyone can do sponsor pls reach me, I have not find a good one yet 

[Zachary Ware]

I agree with the comments shared here. Establishing partnerships with sponsors for real estate deals requires a significant level of trust, which is typically fostered through experience and time. I encourage you to persist in reaching out to potential sponsors and actively cultivate strong relationships with them. As you develop these relationships, take the opportunity to understand what sponsors are looking for. Knowing their investment incentives can provide valuable insights for future capital-raising endeavors.

[Darnell Lockett]

I know I'm several months late to this post but I'm confused @Marquis Cobb. You completed an apartment syndication mentorship program which you had to pay for, but the mentor wouldn't sponsor that deal for you? What did you actually get out of this paid mentorship if I may ask? My apologies if I'm misunderstanding your post. Getting someone to sponsor a deal for you is no easy feat, especially as a new investor. I do hope you were able to get it done however. 

[Brock Mogensen]

This is a frustrating part of many of syndication programs. Finding a sponsor is one of the most important parts of the process.

The easiest place to start is people that already know and trust you. Someone that has a good balance sheet and will makes the banks happy.  

If that isn't an option. Network, Network, Network.

[JT Turner]

It's funny you asked that Darnell. And If i  may ask, was this a MFM program ? I ask because I was considering thier program until I heard what you said is a common problem. What I'm not able to understand is if the companies teach you how to put together a solid and profitable deal, then why in the hell wouldn't they sponsor it ? So I started researching this on my own. There are many places where you can find accredited investors that have the capital, sreo, and pfs you need if your trying to get a loan that requires that info. The difference is going to be how do you structure the deal without giving up most of the profits and keeping this guy happy ? I suppose that answer will change with every Investor. There are alot of private equity firms out there that will take a leap of faith if the numbers are right and there are a pile of different loans that fit the multifamily arena.

So ive come to the decision for me personally to do this for my first time without one of those mentorship programs that promise the sky and deliver dirt. If they can do it there isnt a reason that i or you cant. Keep your head down and keep pushing. Ill see you at the top !!

[Gerardo Waisbaum]

Securing a sponsor can be challenging, especially when they have concerns about your capabilities to manage the property and keep it profitable.

So, let me share a suggestion that might make a potential sponsor more comfortable:

Offer to have them oversee the asset and property management aspects, including the control over cash flow. This gives them a hands-on role in the operational side of the deal, ensuring the property stays profitable and their interests are protected.

Signing for a loan is a big responsibility, and sponsors need to feel assured that their investment is safe. By offering them control over key areas of management, you're giving them the reins to drive profitability, while you focus on gaining invaluable experience and building your own capabilities.

It's a win-win situation - they get reassurance about the property's profitability and you get the benefit of their experience to hone your skills.

Keep pushing forward and best of luck on your journey!

[Arn Cenedella]

@Marquis Cobb

Late to the question here.

I assume you either closed on the 60 units or had to let it go by now.

I’m located in Greenville SC and that’s my preferred market but will consider other locations in South Carolina.

I’m currently a GP on over 1100 units $140AUM most in South Carolina but some in Georgia and North Carolina.

If you find something in the future and need a sponsor, please let me know.

Thank you,

Arn

[Marquis Cobb]

The mentorship mainly focused on the education and coaching. The creator of the program does sponsor deals however they focus on much larger deals

[Amir Khan]

Quote from @Marquis Cobb:

The mentorship mainly focused on the education and coaching. The creator of the program does sponsor deals however they focus on much larger deals

 @Marquis Cobb I faced the same situation (however I did not join a mentorship program). I did educate myself about syndication, networked and put together a group of high net worth people interested in doing what I wanted to do (we tried to syndicate, came close but failed). So I tried and succeeded in alternative strategy; I started with smaller commercial multifamily deals that I could do myself. I've already done one cycle (BRRRR) myself without partners and I am on track to buy bigger units, so it can be done.

[Marquis Cobb]

Quote from @Amir Khan:

Quote from @Marquis Cobb:

The mentorship mainly focused on the education and coaching. The creator of the program does sponsor deals however they focus on much larger deals

 @Marquis Cobb I faced the same situation (however I did not join a mentorship program). I did educate myself about syndication, networked and put together a group of high net worth people interested in doing what I wanted to do (we tried to syndicate, came close but failed). So I tried and succeeded in alternative strategy; I started with smaller commercial multifamily deals that I could do myself. I've already done one cycle (BRRRR) myself without partners and I am on track to buy bigger units, so it can be done.

@Amir Khan did you just get your investors to fund your smaller multifamily deals?

[Amir Khan]

Quote from @Marquis Cobb:

Quote from @Amir Khan:

Quote from @Marquis Cobb:

The mentorship mainly focused on the education and coaching. The creator of the program does sponsor deals however they focus on much larger deals

 @Marquis Cobb I faced the same situation (however I did not join a mentorship program). I did educate myself about syndication, networked and put together a group of high net worth people interested in doing what I wanted to do (we tried to syndicate, came close but failed). So I tried and succeeded in alternative strategy; I started with smaller commercial multifamily deals that I could do myself. I've already done one cycle (BRRRR) myself without partners and I am on track to buy bigger units, so it can be done.

@Amir Khan did you just get your investors to fund your smaller multifamily deals?

@Marquis Cobb I went in myself without partners/investors...

[Arn Cenedella]

@Amir Khan

That’s a good way to do it.

I see far too many people (in my opinion) with little or no actual practical experience being a landlord much less owning an apartment building of any size trying to syndicate a 150 unit $20M deal.

Why would any investors (outside close friends and family) invest their hard earned cash with someone who has little or no experience? There are dozens of deals out there run by operators with great experience. 

Would one sign up for heart surgery with a MD who had never done one before? 

There’s a learning curve here and in my mind, learn with your own capital before you learn on the job with other people’s capital. 

I fully support mentorship and there are lots of good programs out there but a new investor needs to understand the mentor needs to “sell the dream” to get students - selling the dream of owning 16 units doesn’t have the same ring as owning 200 units.

I’ve been in real estate since 1978. Sold lots of houses. Ran a size-able single family home rental portfolio for 35 years BEFORE I went to multifamily - started with duplexes, went to quads, then 12 units and last year closed on 281 units $35.5M. I believe in progress based on solid fundamentals and experience. Slow and steady. Many operators and their investors are now finding out when the market stops going up, yoy better know what you are doing or you can lose your shirt.

So I believe some personal practical experience owning and operating rental property is a good idea before moving to other assets.

People can get into syndication in two primary ways:

1) Find a deal or 2) Raise capital.

Find an experienced operator to team with and let him order teach you the business. Yours will be in a “supporting” role - compensation won’t be huge (don’t quit your day job) and learn. Over time, gain knowledge and experience so that one day 3 or 4 deals down the road, one is ready to handle the huge responsibility of taking care of other people’s cash.

One should also take stock of where they are at - what strength and capabilities they have, what income, what amount of capital, who their social and professional sphere is, etc etc and then come up with a real aka tic plan as to how to proceed.

This all can be done but it takes a cold hard assessment of reality and then consistent effort over time to make it happen.

Now that @Amir owns some rental property, he can tell his friends, family and associates about it and as they see him do well, NOW he will have more success asking for capital to do bigger deals.

There’s an expression How does one eat an elephant? Answer - one bite at a time.