Questions to Ask a Real Estate Syndicator

There are benefits to passively investing in real estate syndications, but not every syndication is created equal. Passive investors should do due diligence on the deal itself, and perhaps more importantly, the sponsor of the deal.

An investor’s attention may first go towards the return on investment, but digging deeper is key. A sponsor – the individual putting the deal together and operating it – should be able to provide you with a clear business plan illustrating a pro forma return on investment and cash-on-cash return. Additionally, the sponsor should have a solid real estate track record. Here are some questions to consider asking a syndication sponsor:

1. 
   How long have you been in the real estate syndication business, and what is your track record?
   
   What is your investment strategy and philosophy, and how do you select the properties you syndicate?
   
   What is your target return for your investors, and how do you plan to achieve it?
   
   What is your fee structure, and how do you ensure alignment of interests with your investors?
   
   How do you communicate with your investors, and what kind of reporting can they expect?
2. 
   
3. What are the risks associated with this investment, and how do you mitigate them?
4. 
   
5. Can you provide examples of successful syndications you have completed in the past?
6. 
   
7. What are your goals with this syndication?
8. 
   
9. How do you handle investor exits or liquidity events, such as refinancing or selling the property?
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11. What is your investment horizon for this syndication, and what are your plans for the property after that?