Potential Syndication Opportunity

[Kyle Handy]

Hey BP!

I'll try to summarize so this post doesn't get too lengthy.

I'm an agent and have been for 8 years. I've bought 8 homes in 8 years. Live in flipped 4 of them, flipped 2 of them, and rehabbed/rented 2 of them. (1 flip and 1 rehab/rent is going on currently). Things started slowly but have picked up in the last 6 months for me. 4 of the 8 homes I've purchased have been in the last 6 months. They have all been SFR between $100-200k ARV homes ranging from complete foundation repair to cosmetic.

My investments have done very well and now I'm being approached to start a syndication with a small group of individuals.  A good friend of mine, and two of his co-workers that are higher ups at a major investment bank here in San Antonio.  We've met and talked #'s and all hit it off.  The 3 partners all work in the investment world (stocks/bonds).  

We talked about structuring the deal so that I would be the "sponsor" and take a 3% acquisition fee and 33% of the equity after a preferred 10% annualized return was given to the equity partners.  We also talked about raising part of the funds as debt which would earn an 8% annualized return.  We mentioned doing 75% of the deal as debt and 25% as equity.  We talked about starting by pooling $500k together, of which $50k would be my own, $50k would be my friend, $100k to the 3rd partner, and the 4th would put the remaining $300k. I'd be investing my own money for two reasons.  1. So I could earn extra return and 2. so I'd have additional skin in the game).  

The $500k could increase quickly as the partners have more money to invest and other friends that would be happy to invest if the track record is gained.  I asked their motivation since I know they have other options being in the field they are in.  The partner with the most capital to invest said he's wanted to be a part of starting a business and with his position in the company he wouldn't be able to start a hedge fund as it would be a conflict of interest but real estate is fair game.  Additionally, he doesn't have to good a feeling on the stock/bond market and wants to be more in on real estate.  The other partners shared this feeling.

One of the partners has a wife that is a CPA at EY that could keep our books clean and everyone is pretty well networked (myself included). We would be looking to start an LLC, and would formulate a general agreement.

My mindset is this, if just doing $100k-200k flips a few a year, I'd be better off doing on my own and making 100% of the profits or potential losses.  Where this becomes exciting to me is the ability to scale up and do more deals quickly and/or work my way into larger deals down the road as I become familiar with that market. 

My question is basically to anyone who has done something similar to this, what advice they have and things I'm not considering that I should be. I'd love the ability to have someone who's done this before and are a step ahead that I could bounce ideas/challenges off of.

Thanks!