Risk Managment While Scaling Your Business

[Kyle Swengel]

Hey everyone,

I am looking for resources on risk management when moving from small residential real estate to medium size commercial multi family (20-50 units). Specifically how to set up your contracts in a safe and beneficial way for your partners, and how to set up your financing in general to handle things that come up during the deal.

I am looking to make the move up to that through a syndication in the next year in Tucson AZ where I own small MF’s; just want to learn as much as I can before I do that.

Any other resources or general advice/guidance would also be appreciated. Thanks!

Kyle

[AJ Shepard]

@Kyle Swengel

Congrats on working on your business and scaling up! We set out in 2019 to do a syndication in Portland Oregon much like what you are talking about and it’s really about researching and educating yourself on how to set up the deal. Our first syndication was about 1.3m and 9’units. The best piece of advice that I think we received when first starting out was to mock up a deal. Put one together that was sold previously and make it look like what your next deal wants to be.

This serves two purposes. First, it requires you to go through the motions without a timeline and allows for you to put together the required and necessary documents to perform a syndication. Next, it serves as a marketing piece to talk with and have a non pushy conversation with investors. It’s a lot easier to say you can’t invest now, but if it looked like this is this something you’d be interested in ( you also can’t market an active deal to a new relationship if you are going under 506(b) exemption).

Once you have a deal under contract it’s much easier to edit rather than create when you have a strict timeline.

Hope this helps!