How can non-aacredit investor passively invest in multifamily?

Question

Trying to scale up from SFH and learn more about the multifamily business while maintaining a full time W-2. How could a non-aacredited investor passively invest on a 40+ units multifamily?

We are aware that some of these type of deals may require at least 50k to partner and also understand that 506c exemptions are for acredited investor only while some 506b exemptions allows up to 35 non-aacredited investors but where/how could we find these type of opportunities?

Thanks in advance for your guidance and advice.

Oleg Shalumov · Answer

@Henrique Sousa I would recommend joining a local meetup and see if other people invested with syndicators and ask for recommendations.

Tyler R. · Answer

@Henrique Sousa It sounds like you are trying to be a limited partner (LP) on a deal, is that correct? If so, there are many big syndicators (Neal Bawa, Lane Kawakoa, Jake and Gino, Michael Blanc, Rod Khleif, Grant Cardone, Joe Fairless) that you could research and see if their strategy, alignment of interest, and method of communicating with you agree with your preferences and invest on their deals. I know that Jake and Gino do monthly webinars with their syndications, and they walk you through the financials, management, and repositioning of the properties. Of course, you will have to look for those sponsoring a 506b syndication (I'm not an attorney, just for informational purposes only).

I would second what @Oleg Shalumov said as well. See if you can find a local multifamily meet-up, and try to meet syndicators there. If you'd like to be a more active investor, begin to form relationships with investors at multifamily meetups that would allow you to pool resources and joint venture (JV) on a deal. I would spending a good 6-12 months though learning multifamily if you want to JV or be a general partner (GP) on a deal. This is where a multifamily mentor comes in very handy -- helps expedite your learning  curve.

Lee Ripma · Answer

@Henrique Sousa

Exactly what others have said, network with local investors and you’ll meet someone with a 506b syndication. According to a talk I went to 94% of syndications are 506b. The catch is you can’t advertise these so you have to get out to network with folks.

Jared Carpenter · Answer

@Steve Hall

Your math is sound Steve, more wondering what markets such properties exist in.

Thank you for sending these listings across. Basically you just do an advanced search on loopnet for 40+ units <$3m - more tertiary markets, but you are absolutely correct there is a lot available.

Steve Hall · Answer

@Jared Carpenter Yes Jared, that is what I was saying. Are you questioning my math, or the fact that you don't think 40+ units exist for less than $2m?

Here's 3 to get you started:

https://www.loopnet.com/Listing/1707-N-Ashley-St-Valdosta-GA/15146171/

https://www.loopnet.com/Listing/2516-Perry-Park-Ave-Perry-IA/15619635/

https://www.loopnet.com/Listing/900-Ross-St-Vernon-TX/15517298/

Jared Carpenter · Answer

@Steve Hall

are you saying there are markets that you can find a 40+ unit complex for around $2m?

Charles Soper · Answer

There are also a number of syndicators here on BP that you could reach out to.  So as not to risk busting any particular SEC rule I would suggest you might start looking at the the profiles of a few of the people who have responded to your post.

Trevor Ewen · Answer

@Henrique Sousa

@Lee Ripma is correct. I invested in a 506b before I was an accredited investor (fortunately, I am now).

I can definitely talk to you more about the process. There are some hurdles you do have to jump over from the perspective of the syndicator. These 'sophisticated' investors can be a huge liability for them if not properly managed.

Todd Dexheimer · Answer

All 506(b) offerings can allow up to 35 non-accredited investors. Not all sponsors will allow them. The key is to reach out to sponsors and ask. If they allow them, then you need to build the relationship. The key is to network with successful companies that do syndications and to get them comfortable with you and you comfortable with them.

You can also form an LLC and team up with several people to put your money into the LLC that invests into the syndication. Talk to your attorney before doing this to be sure it's set up properly.

Kay Kay Singh · Answer

@Henrique Sousa there are lot of syndicators who do 506 (b) syndication where they can have upto 35 non accredited investors in the deal and it does not have to be small property but it can be large property having 200-300 doors or even more because larger properties are more scalable or more profitable and sponsored by track record syndicators.Yes most of the these deals have a minimum of $50000 investment and do not hesitate to ask if they can accept lower investment and sometimes they do.

How can non-aacredit investor passively invest in multifamily?

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