New Investor Seeking Guidance on Syndications

[Anthony Blanco]

Hello BiggerPockets Community,

I'm thrilled to be part of this dynamic community of real estate enthusiasts! My name is Anthony Blanco, and I'm excited to introduce myself as a new investor based in the Greater Sacramento Area.

Background: I come from a construction background, specializing in residential rehabilitation. Currently, I'm pursuing a BA degree in Business with a focus on Finance and a minor in Real Estate. In my professional life, I work as a construction sales professional, primarily in the commercial and industrial sectors.

Goals: My journey in real estate investing is driven by several key aspirations:

• Applying theoretical knowledge to practical investment scenarios.
• Connecting with fellow investors to share experiences and insights.
• Exploring collaboration and partnership opportunities for mutual growth.
• Committed to continuous learning and professional development.
• Building a sustainable real estate portfolio for long-term wealth creation.

Why Syndications? After thorough research and introspection, syndications have emerged as my preferred avenue for real estate investment. Not only do they align with my long-term ownership goals, but they also offer scalability and the opportunity to own apartment complexes, which deeply resonates with my background and aspirations. I'm drawn to the collaborative aspect and the potential for learning from seasoned syndicators.

Questions About Syndications: As I embark on this journey, I'm eager to learn from those who are actively involved in syndications. Specifically, I'd appreciate insights on:

1. Finding LPs: How do you go about finding limited partners (LPs) for syndication deals?
2. Payment Structures: What are the typical payment structures for LPs in syndication deals, and how is payment conducted - quarterly, every other quarter, monthly?
3. Reputable Sources: Can you recommend reputable individuals, companies, books, or any other sources of credible information to learn more about syndications?

I'm genuinely enthusiastic about connecting with individuals who share my passion for syndications and are willing to share their experiences and wisdom. Your guidance and insights would be immensely valuable as I navigate this exciting chapter in my real estate journey.

Thank you in advance for your time and contributions!

[Joshua Christensen]

Quote from @Anthony Blanco:

Questions About Syndications: As I embark on this journey, I'm eager to learn from those who are actively involved in syndications. Specifically, I'd appreciate insights on:

1. Finding LPs: How do you go about finding limited partners (LPs) for syndication deals?
2. Payment Structures: What are the typical payment structures for LPs in syndication deals, and how is payment conducted - quarterly, every other quarter, monthly?
3. Reputable Sources: Can you recommend reputable individuals, companies, books, or any other sources of credible information to learn more about syndications?

 Good morning Anthony,

A. Finding LPs - A great book on this Raising Capital for Real Estate by Hunter Thompson.  LP investors will be based on your syndication structure 506(b) or (c).  Under a (b) stucture, your LP investors must be known to you before you do the deal. You cannot advertise to "NEW" contacts after your deal is structured per SEC rules.  You cannot advertise publicly on (b) deals.  You start having conversations and building an investor list long before you need the money.  

(C) deals can advertise publicly and all investors must be accredited by the SEC rules.

B.  Payment structures. This is open on every deal.  80/20, 70/30, Pref, Promote, etc.  These can get somewhat complex.  Find your syndication partners and discuss these options with them.  It all comes down to the strength of each deal & importantly, aligning the interest of the LP investors before the GP team.  

C. Reputable Sources.  Rob Beasly has a couple of books out on underwriting.  Hunter Thompson is the Capital Raising expert.  Read anything on Private Equity structures as most syndications follow those models.  Study and understand the SEC rules for accredited investors and 506 (b) or (c) rules from their website.  

CAUTION:  Be careful of syndicators who use absolute terms like Always or Never or Inflation Protection, etc. as these are fluff.  The reality is that there is risk in syndications and you are taking on millions of dollars of investor capital.  You're essentially becoming a wealth manager for your investors and have a fiduciary responsibility to protect their capital.  No guarantees and that's why there are Syndication attorneys and SEC rules in place making sure that accredited investors understand the risk they are taking.  They bet on the Jockey more than the Horse.  You are the Jokey, the deal is the horse.  

Best wishes to you.