The Top Steps to Getting OPM for your Syndication

If you are a multifamily syndicator, getting people to invest in your syndication is looked upon as the most crucial challenge in financing your property investments. I use the term Other People’s Money or OPM for funds coming from investors. When I started investing in multifamily properties, I didn’t know where to get the funds for purchasing my first apartment complexes. I was lucky enough to have secured a small loan from a relative, but I know that this doesn’t happen quite often to many syndicators.

While you can always get funds from people you already know, you might want to go beyond your inner circle and access OPM. One thing’s for sure, you can find sources for funds just about anywhere. You only need to approach potential investors the right way.

Building a syndication with a very strong foundation involves knowing how to talk to investors and how to convince them into taking action.

Let me show you the steps that will definitely result in getting the funds you need for acquiring multifamily properties for your syndication.

Step 1: Empathize

The first thing you will need to do is to show empathy towards potential investors. In other words, you will need to put yourself in their shoes. This enables you to analyze your own pitch from their perspective and determine how you can improve its effectiveness.

You can start by pretending you’re an investor and asking yourself these questions:

• Why would I invest my money in the deal?
• What are the returns and the risks?
• Is this syndicator (or team) as good as they say?
• What is my risk tolerance?

Money is a sensitive subject after all, so it’s best to know how your investors would react after you present a business model to them. You also need to understand that investors are very much willing to research about you as a means to protect their hard-earned money.

Step 2: Build trust

I always make it a point to build trust. After all, investors will require a compelling reason before joining your syndication. A good way to start building is to simply invest your own money in the deal. This sets the assurance that you’re also taking risks and that you’re being transparent.

Aside from that, you will also need to build your reputation in the real estate investing arena. A good track record is a good indicator of how trustworthy you are. For this, you will need to provide investors with a list of references. Choose people within your circle of influence who can definitely vouch for you. Moreover, you will also need to prepare queries and opinions about anything that’s related to your business. It will be best to anticipate possible questions so you can respond the right way.

Step 3: Search for emerging markets

To further reinforce your pitch, you will need to show investors where the money is. In other words, you need to search for high performing communities with healthy housing markets. Cities with high growth and rising wages are the places you would want to focus on. This would give investors the confidence to finance your property acquisitions. Also, make sure that your deals are properly underwritten and that the property has been inspected from top to bottom.

These steps will help you secure OPM for your syndication. Just remember to understand your investors through and through so you won’t have a problem trying to come up with a compelling presentation.