Multi Famliy Syndication?

Question

Hey Everyone! I know a little bit about Multi-Famliy Syndication and I really want to learn more and specifically learn how to get started in this. I would love to hop on a call and or meet up to talk about this!

My name is Devin and im 23 Years Old, a licensed Realtor and future investor, I really want to learn and take action on as much as I can.

any advice for starting out and where to begin would be greatly appreciated!

Evan Polaski · Answer

@Devin Cokley, I am curious why you want to get started in syndication, especially when you started off by saying you don't know anything about it?

I understand this could be taken as a bit of a dig, and it is not intended to be that in anyway.

Personally, I would start with reading some books.  The Best Ever Syndication Book by Joe Fairless and The Hands Off Investor by Brian Burke.

If you want to be an LP, you need to have the financial wherewithal, so focusing on being a highly successful realtor would be the first start, so you have money to invest (and many require you to be Accredited, but not all).

If you want to be GP, you need to know how to source deals, run deals, accounting, marketing, managing people, manage risk, you will likely want to know about construction, permitting, leasing, landlord laws, etc. You will want to know about financial analysis, how returns work, waterfalls, legal documents, liability protection, possibly 1031s, tax issues, SEC compliance and securities laws, proper reporting, forecasting, budgeting, property maintenance, etc.

Scott Trench · Answer

I agree with the advice to go work for an operator (or a lender). This is a great market to get started in, because operators are getting absolutely smoked, and in many cases losing 100% of equity, handing the keys back to the bank, and there is just general turmoil in the markets. If you can get started as an entry level analyst putting out fires, you will get invaluable experience that will serve you throughout your career. 2024 is where the action is and couldn't be a better place to start... assuming you can find someone who is hiring.

Brock Mogensen · Answer

I suggest starting with a deal on your own first then work into syndication.

My first deal was a duplex house-hack then the second deal was an 89-unit apartment syndication.

Building experience and lining up with the right partners is critical.

Sherry Patterson · Answer

Hi @Devin Cokley I actually love this! I love that you are young and have set a goal and going after it! I applaud you. You did not say you were ready to go out and do one today. You said you wanted to learn, so not sure why everyone is jumping on you. I am a syndicator and I sure wish I would have learned at your age, I would be retired now! I also wish I would have learned at the beginning of my investing and just skipped all the nickel and dime stuff that does in fact flush $100 down the toilet and more sometimes. Start with building a network, your network is your net worth. You can't be a syndicator unless you are a specialist in an area such as capital raising, asset management, acquisitions or you just have a ton of money to be a key partner. Without experience no one is going to let you in as an asset manager. You can learn how to do underwriting if you are good with numbers and understand how they work when evaluating deals. This is a skill you can learn with guidance. Capital raising, anyone can do, that is where your network comes in. Many GP's on a deal get there just because they can bring money to the table from their network. There are a lot of great groups you can join to learn. I like Jorge Abreu

https://linktr.ee/jorgemultifamily.

Also Robert Helms & Russ Gray https://realestateguysradio.com/events/how-to-raise-money-fo...

I know a lot of people do Think Multifamily and Jake & Gino's group. Raisefest is coming up in Feb. This would be good to go to and they probably have a group also. https://raisefest.com/grab-your-ticket-v1#row--36794-107. There are also groups that just focus on capital raising like the mastermind I am in that is Hero Capital Raising. I can make an introduction if you are interested in that group.

I think you are on the right track asking for help and mentorship. No reason to reinvent the wheel, it has been done! Learn from those doing. Education is expensive but well worth it. So I encourage you to look into the different groups and see which best suits you. There are a few I don't recommend as well but will not list here. Happy Investing!

Evan Polaski · Answer

@Devin Cokley, per Erik's comments, I would certainly look for REIA and other real estate meetups to attend in your area.  This can be a great way to actually talk with people that are more experienced than you and a casual way to ask them questions.

Erik W. · Answer

Have you flushed a $100 bill down the toilet yet? I'm slightly kidding, but not much... An old RE mentor of mine said, "You aren't ready to invest in rental property until you can flush a $100 bill down the toilet without thinking about it." That was 18 years ago. Inflation being what it is, that's probably $500 now, and of course that will clog the toilet, which means you'll have to call a plumber and pay him $300 to clear the line for you... All of which is a normal day in the world of real estate investing.

If you're going to do syndication, multiply that amount of $ "flushed" x 10.

I'm not here but bust your bubble: you seem like a spirited young man ready to make your way in the world, and that's good. We need guy and gals like you who are spitfires and ready to take on the world. But I'm also a realist. Syndicate is hard. Really hard. And sometimes you screw it up.  Doing it right is even harder. There are reasons why people get paid $200,000 to put together a syndication, maybe 1 person in 50,000 is really good enough at all the moving pieces and parts to make it happen.

Full disclosure: I have not syndicated a deal myself, but I do my own deals with private money, and I also have two other guys with whom I regularly collaborate who do syndicate and who have solicited my funding in the past. I will tell you this: they lost $35,000 of their own money on their first deal when it didn't pan out and the investors pulled funding due to things that weren't really the syndicators' fault. Bad timing, a dishonest seller, and some twists of legal hurdles that we thought could be overcome turned out worse than expected. Ran out of time and opportunity to close the deal, and the money partners scattered, as was their right under the syndication. Money spent was money lost.

It's not a business for the meek or for the broke. Syndications involve millions of dollars, and no one will want to back you if you aren't willing to back your own project. That means throwing your own money into the deal. On a smaller project (<= $5 million) I can't imagine investing in any syndication unless the syndicator(s) themselves were willing to contribute at least a 5% stake. Anything less tells me they don't believe enough in the project and/or don't have enough experience to do a deal. On a larger project, you might get away with only 1%, but now were talking 10s of millions of $.

Let's say your "smaller" project is $5 million. Something like a nice little 60 unit apartment complex. That means you as the syndicator would probably need $250,000 in the deal-minimum-to inspire confidence in your investors.

Now if you don't have that money yet don't give up. First, I suggest helping out an experienced syndicator on a few deals and get paid in knowledge and experience mostly. Meanwhile, sell 40 houses, live like a starving agent, and save up your cash stake for the future deal.

How will you convince an experience syndicator to let you do grunt work on their deal? Lunch/dinner is a place to start. You may have to make your pitch to 10-20 folks before finding  someone willing to give you a shot. Remember how we talked about flushing $100 bills? Here's your chance to see if you're prepared to spend money without any guarantee of making any.

Meanwhile, there are books to read and YTs to watch and podcasts to listen too, but most are going to be heavy on high-level and hype and low on nitty gritty, daily details. Raising Private Capital by Matt Faircloth is a good starter for how to raise money, and it works for small deals too, so even if you don't end up syndicating, you can at least start doing some smaller deals on your own. Good luck!

Chris Seveney · Answer

you looking to invest in a syndication or start a syndication? If the latter my recommendation would be to try and go work for an operator, as managing a syndication and investors money, is more than just managing an asset

Multi Famliy Syndication?

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