Syndication and Raising Money to buy RE assets

Real Estate Agent · Member since 2023 · 4 posts · 2 votes

Good morning! I am interested on understanding how to develop and structure a syndication. I'm seeing several people pull funds together to invest in real estate and I'd lime to know the pros, cons, how a contract with investors should be structured, the kind of deals this model works best for etc.. what ever there is to learn about starting out this way. Any insight would be appreciated. Thank you!

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Brock Mogensen

Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes

Prior to starting to talk with attorneys I would recommend familiarizing yourself with the syndication process/structure first.

A great book to check out is Best Ever Apartment Syndication by Joe Fairless.

Understanding GP/LP structures, syndication underwriting, deal buy box, capital raising strategy is key before you start paying legal fees for doc set up.

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Jon K.
Rental Property Investor · Perry Hall, MD · Member since 2016 · 591 posts · 606 votes
3y
I strongly recommend you hire an attorney that specializes in syndications for this purpose. One in particular (Mauricio Rauld with Premier Law Group) runs a large private Facebook group called the Real Estate Syndication Community where you can ask questions about syndications. Hope this helps.
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Mario Mila
Member since 2023 · 4 posts · 0 votes
3y
From what I have heard, syndicating money from friends/family/inner network is pretty simple and relatively cheap for lawyers to put together. I'd just shop around and talk to multiple attorneys.
https://blog.investmentfundsecrets.com/what-is-a-syndication... This page has some info on it and also has great content around growing from the syndication model to the fund model. Would definitely recommend going down the rabbit hole here
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Brock Mogensen
Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes
3y
Prior to starting to talk with attorneys I would recommend familiarizing yourself with the syndication process/structure first.
A great book to check out is Best Ever Apartment Syndication by Joe Fairless.
Understanding GP/LP structures, syndication underwriting, deal buy box, capital raising strategy is key before you start paying legal fees for doc set up.
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Josh Haney
Member since 2023 · 54 posts · 14 votes
3y
Quote from @Dwayne Jordan:

Good morning! I am interested on understanding how to develop and structure a syndication. I'm seeing several people pull funds together to invest in real estate and I'd lime to know the pros, cons, how a contract with investors should be structured, the kind of deals this model works best for etc.. what ever there is to learn about starting out this way. Any insight would be appreciated. Thank you!
Did you get any insightful information about these syndication deals/structures? I'm starting to learn myself and am curious about these same topics.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y
Just to add some color to this
1. Raising money is very hard, and a lot harder today than 3 years ago. If you have no track record odds are you will not be able to raise money for the deal unless you have pre existing relationships
2. Syndication documents are not cheap, expect to spend $10-$20k creating them.
3. Garbage in = garbage out. If you do not understand how to structure the terms of the offering, it could be the greatest deal and no one will touch it
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Josh Haney
Member since 2023 · 54 posts · 14 votes
3y
Quote from @Chris Seveney:

Just to add some color to this
1. Raising money is very hard, and a lot harder today than 3 years ago. If you have no track record odds are you will not be able to raise money for the deal unless you have pre existing relationships
2. Syndication documents are not cheap, expect to spend $10-$20k creating them.
3. Garbage in = garbage out. If you do not understand how to structure the terms of the offering, it could be the greatest deal and no one will touch it

Hey Chris thanks for the feedback on this, I've never heard about some of those startup costs. It's good hearing the reality of these type of deals rather than the best case scenario that make it seem like simpler than it is. Thanks again!
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Rick A.
Boston · Member since 2015 · 27 posts · 4 votes
2y
Quote from @Brock Mogensen:

Prior to starting to talk with attorneys I would recommend familiarizing yourself with the syndication process/structure first.
A great book to check out is Best Ever Apartment Syndication by Joe Fairless.
Understanding GP/LP structures, syndication underwriting, deal buy box, capital raising strategy is key before you start paying legal fees for doc set up.
I strongly agree with Brock on this one. There are alot of important details to be aware of when considering a syndication, many of which have significant legal ramifications. The research is time well-spent. Great content on Youtube, and Mauricio's content is a good suggestions. Depending on what you're really looking to set up (passing investment vehicle for investors VS a pooled investment group), you may be able to save yourself time and money.
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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Dwayne Jordan:

Good morning! I am interested on understanding how to develop and structure a syndication. I'm seeing several people pull funds together to invest in real estate and I'd lime to know the pros, cons, how a contract with investors should be structured, the kind of deals this model works best for etc.. what ever there is to learn about starting out this way. Any insight would be appreciated. Thank you!

There is a lot to learn about this. My recommendation is to begin researching 506c and 506b from regulation d. That will give you a lot of background on where to begin and what is going to be needed. Start with that and that will probably lead you to 100 more questions, which once you get there people here on BP can provide more specific responses to those questions.
Hope that helps.
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Kevin Kohler
Real Estate Broker | Investor | Property Manager · Plantation, FL · Member since 2015 · 228 posts · 69 votes
2y
There are a lot of things to consider with this question. Don't spend a dime on masterminds, coaching, lawyers, etc. until you do a good amount of research online. There is a LOT of great and free resources available to learn the steps. Sometimes, one of the best options to see if its interesting to you is to passively invest as an LP to see how operators work. Talk to other passive investors to hear of their experiences and perspectives. Listen to podcasts, there are THOUSANDS of podcast episodes on the topic. Happy to chat further.
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Benjamin AakerPro Member
Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes
2y
Additionally, you should be experienced in the owner's side of real estate before starting to syndicate. Any smart investor will want to know your track record.
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Kevin Kohler
Real Estate Broker | Investor | Property Manager · Plantation, FL · Member since 2015 · 228 posts · 69 votes
2y
Quote from @Benjamin Aaker:
Additionally, you should be experienced in the owner's side of real estate before starting to syndicate. Any smart investor will want to know your track record.

yes! There are no investors (except friends and family) that are willing to go with someone that has no real estate resume to display for review.
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