New Member.....advise on being apart of syndicated deals

[Mi’esha Watson]

Hello All I am new to the forum. After hearing one of the podcast in regards to syndication deals I became very interested and did a little research. Prior I was looking into just getting investment properties for rental. I have been in property management for over 15yrs and wanted a piece of the pie if you will. I became interested in the syndication deals because of the low risk it would have on me up front. Any advise on how to become apart of these kinds of deals? I am in the DC area but looking for opportunities outside the area as well.

[Brian Burke]

Welcome to BP, Mi’esha!

Investing passively in syndicated real estate offerings can be a great option for some people. But be careful about viewing them as a “low risk” option.  

An investment with an experienced sponsor can mitigate some risks because you are participating in a larger acquisition than you might be able or willing to do on your own (which gives economies of scale), and you get to leverage the sponsor’s experience, judgement, track record, network and deal flow.

But it also adds risks by adding an additional component not present in direct real estate investing:  the investment sponsor. Investing with the wrong one can be disasterous, and investing with an inexperienced one eliminates the risk-mitigation advantages that I just listed. 

So this all boils down to underscoring the importance of doing thorough due diligence on the sponsor. Choose wisely, and choose a group that has depth in their team, a track record, has survived market cycles and has experience in the product type and market.  Resist the temptation of simply picking the one projecting the highest return.  That projection might just be a reflection of their inexperience and it might not be achieved. 

Ask a lot of questions, do some research and ask for references. None of that will eliminate risk, that would be impossible, but it goes a long way toward making an informed decision.