Loan sponsor/guarantor for a syndication

[Jared Carpenter]

Loan sponsor question - where can one be found?

The quick answer that comes to mind is to network through local RE events and conferences, etc...however, how did some of the more seasoned investors find success with this early on in their RE ventures?

Thanks!

[Brian Burke]

Thanks for the shout-out @Karen Margrave!  @Jared Carpenter you would probably find that right here on BP, maybe someone willing to do it will chime in here or send you a PM.  Otherwise, it would most likely be from your circle of friends/colleagues/family.  The thing is, the loan guarantor (that's what it is, not a "sponsor"--that's a word used to wash clean what this really is--a guarantee) is taking on a lot of risk.  If you fly the nest with all of the company cash, the guarantor is on the hook.  If you commit fraud in obtaining the loan, the guarantor is on the hook.  If you file bankruptcy on the entity, the loan can turn full recourse to the guarantor.  So needless to say, the guarantor needs to have a certain level of trust that you won't do those things.  Trust is earned, not advertised for.

If you are wondering how I did it when I was getting started, here's an answer you won't want to hear.  I have been my own guarantor on everything I've borrowed on the entire half a billion dollars in real estate that I've bought.  I never "hired out" the guarantor function (nor do I act as guarantor for anyone else's deal--for me there's more downside than upside).  Instead, I started small--with single-family houses (for which I could qualify for financing with what little I had to my name back then).  Then, over time, as my balance sheet and reserves grew, I increased the size of my acquisitions.  It took me two decades to be buying $20+ million properties.

Certainly you can do it faster than I did.  One of the ways is to do as you suggested--finding a loan guarantor to put up their balance sheet and name--someone who trusts you enough to sign on the dotted line when you can't.  Depending on your own balance sheet and track record, that might be fairly easy, or completely impossible, or somewhere in between.