Syndications how to find them, Vett them and tiing

[Brandon Riahi]

Hello All,

We are trying to branch out from SFRs and dealing with tenant and tenant issues with passive investments. We have been looking at investing in to syndications but are having trouble getting to a point where we can pull the trigger. Wonder if folks in the "know" could help with their knowledge:

1. With such a run up in the markets, and the longer time frame of syndication deals, is this exactly the wrong time to look at syndications ?

2. Where do you find "good" syndicators? there are a ton online but its hard to choose one and feel safe.

3. Any other advice on what to expect, look for, type of returns vs risk

Thanks,

Brandon

[Trevor Ewen]

@Brandon Riahi

I wrote a response to this question on an extremely huge thread from almost a year ago. Here is a link to the original thread, and here was my response:

I'll give you some general ideas on my approach to syndication. I am not in the business of selling these deals, so hopefully you can take my feedback as just from genuine experience.

1) Meet everyone, meet references: Phone is good, and works for some people, but I always go in person and share a meal. The advantage to this is getting a chance to see the operation, walk some properties, talk casually, and get an idea of the overall value statement of the deal. You are essentially investing in people, the properties are just a side effect.

2) Too good to be true is what it is: If someone is guaranteeing a 25% return, I suggest taking your money elsewhere. You don't want someone to throw outlandish unattainable numbers at you. A conservative estimate is much better, a chance for dividends or extra money on the side is always nice, but the word guarantee is dangerous

3) Track record: Unless it's a close friend/family whom your trust, don't be the first person to ever write them a check. Usually syndicators will get their feet wet w/ friends and family, I think this is a good thing. The folks we invested with had run several successful (and still producing) funds in the past. Their first investors were close friends.

In a way, you are buying yourself into a good company of real estate investors. Everyone has something to offer, and even though we don't talk about it like that, money is what busy professionals have to offer.

There is a tendency in the REI community to want to be DIY about everything, and I think it's also an American ideal of self-made entrepreneurs. Sometimes you have to divorce yourself from that pride and just hand a check to someone with the time. You are still (arguably the most) crucial to the operation. Your input is the fact that you work hard at being a physician.

We should be investing with what we have. Time: swing a hammer, Knowledge: write a book, Money: fund a deal.

For me, it was worth the risk (and will continue to be). All our money that has gone into real estate has actually passed first through the stock market. We've made a killing since 2009 and I am not waiting around for the market to fall back down. We have a percentage of our total portfolio we want in real estate. We maintain that ratio as we go. We only sell investments to re-invest.

The best part of a syndicated deal is the fact that it exposes me to a market I can barely self fund. I can be a part of a larger real estate play that seems obvious to me and others, but is hard to attain given the cost of the market. I think this is how a lot of commercial investors approach the problem, and it's ultimately the company I would like to keep.

As for finding them: You still have to get out there, shake hands, and kiss a few frogs. I had a deal shown to me the other night by an investor with whom I had become friendly. It usually happens more organically, but sometimes an opportunity will come out and slap you in the face. Ideally, you want to work with people who know that their track record and relationships will get them investment, and not a huge marketing budget (red flag).