question on investing in syndication

[Alex T.]

Hi everyone,

I'm considering being a passive investor in a Syndication deal. The deal makes sense to me, I understand how the syndicator will be adding value to the property, and he seems like a friendly and knowledgeable guy. I talked to his references, and am ready to proceed. There are only a couple minor concerns I wanted to run by you to understand if I should be concerned about them or not.

1. This is his first syndication, however, he has been in real estate for 20+ years and has a network of more experienced syndicators who advise him.

2. The fees going to the syndicator per PPM are a bit higher than normal (with normal being based on my understanding of this article: http://www.biggerpockets.com/renewsblog/2010/08/30...) but there seems to be enough meat left on the bone for the investors based on the pro-forma (which does use conservative estimates).

3. I was able to talk to references and advisors but was told I couldn't talk to other people investing in the deal prior to making the decision for legal reasons. Is this ok? My main concern is being sure I'm not the only one putting my money on the table.

Thanks

[Jim Groves]

I'd echo the other comments on here, but add-

2) The post that you inserted the link on is generally correct, I don't think it really differs based on geography but will differ based on size.  Smaller deals tend to come with higher % than larger ones.  Use the gross amount as a sanity check

3) I know of no laws that restrict talking to other investors except for collusion, and that doesn't apply here. The people I'm investing with is a HUGE part of my interest in the deal. Are these people with local knowledge? Will any single investor have majority control, and is that investor conflicted in any way? Do they have the capacity to fund capital calls if necessary? These are important questions that any investor should know. I'd have a very different view of the deal if most of the equity came from TIC investors.