All Forum Posts by: Jonathan Twombly

Further to what @Dave Foster said, TICs usually require unanimity of the owners to sell. (Horror story: someone once came to me for advice about what to do when she was in a TIC with 37 of her cousins in property originally owned be her grandfather. 35 wanted to sell and 2 did not, so they were unable to sell.)

Your partnership agreement may speak to this, allowing them to drag you along in a sale.  But if it's silent, then they cannot bind you to the sale. At best, they can sell their interests in the property, but I'm not even entirely sure about that. Best consult with your attorney.

So the first thing not to do is get sideways with the SEC.  If you are doing a syndication, you are selling a security, and in that case only you as the issuer and licensed broker-dealers may legally sell the securities (i.e., the shares in your deal).

Now, there are some exceptions to this default rule. Any person who is a member of the partnership (the issuer) may sell the securities. However, to be compensated, every person must have some role in the partnership that extends beyond simply raising money, like some operational responsibility, putting earnest money at risk in the deal, signing on the debt, etc.  If their role is simply raising money, and they are not a licensed broker-dealer, they are illegally selling a security without a license.

It's really critical that you do this right, so be sure that you have hired a securities lawyer to structure this for you, and not a regular partnership lawyer.  Your lawyer must know how to legally structure a syndication deal so that you do not run afoul of the SEC.  The penalties include things like having to return your investors' money (which you might not be able to do without selling the property) and being barred from doing syndications in the future.

You need to start connecting with the commercial brokers, as they are the ones who handle 20-unit deals, rather than residential brokers.  Your residential broker contacts may have contacts in the commercial space, so I would ask them for referrals, as personal introductions are always the quickest and best way to get instant credibility with brokers.

If that route does not work, then I would look on Crexi for brokers in your market, keeping in mind that if you are looking in a small market the area is probably covered by brokers in a larger nearby city. The nice thing about Crexi is that it tells you who the brokers are, so you can make a list to start contacting them.  Even better, Crexi shows the brokers who is looking at their deals and I have been contacted several times by brokers who saw me looking at their listings on Crexi.  I have formed some good relationships with brokers in this way.

If you are trying to break in with brokers, nothing can possibly substitute for a warm introduction.  See if you can figure out a way to get one.  Perhaps that means using LinkedIn to see if you have a connection - you might be surprised to find a personal one, which is even better than a professional one.  Or, if you are already networking with other professionals in the market, like property managers, lawyers, etc., they often have connections with the brokers in the area.  Or you can ask other investors.

It is very difficult for someone to turn you down when you come through a warm introduction, which is why they are great.  But your job does not stop there.  First, make sure that the introducer does a "double opt-in" intro, where they give the broker the chance to say no to the intro.  Usually, they say yes, and once they have committed to this, they will generally engage with you.  This is far better than the person simply introducing you as a surprise to the broker.  Worst of all is the "use my name" non-intro, also called a "referral."  Better than nothing, but not very effective.  So make sure you ask for the right kind of intro, the double opt-in.

Next, you had better make sure that you look good if the broker decides to google you to see who you are.  It's best if they can find something that shows you are an investor and not just some guy.

Finally, if you get the opt-in, you had better follow up.  You risk not only your own credibility but that of the person who introduced you if you don't follow up.

The financing doesn't change depending on how you source the deal (i.e., on-market or off-market).  You will have the same options available to you or not available to you regardless of whether the deal was marketed by a broker or not.

You can easily identify the brokers by searching on Crexi for those asset types in those markets.  They sound small, so it's likely that there aren't brokers focused only on them, but rather will be covered by brokers in nearby larger cities, especially since you are talking about commercial properties like hotels and multifamily, and these tend not to be handled by your local residential brokers.  Once you identify the brokers, you can either try reaching out to them directly through Crexi or figuring out how to get warm introductions.

You're turning over the wrong rocks.  1-4 units is considered residential (i.e., owner-occupied), while 5+ units are commercial (i.e., investment, or non-owner occupied).  The professionals that deal with these properties, whether they are lenders or brokers, are usually different. So, if you are searching in the residential pool for commercial brokers, you won't have much luck.

I suggest that you look on a site like Crexi or Loopnet in the market you are looking for, and search for deals with the criteria you want.  Not to find deals, but to find the brokers who deal in these deals.  On Crexi, you may even find that brokers will reach out to you when you click on their deals, assuming that your profile makes you look legitimate.  But at the very least you will find out who these people are and start the process of figuring out whether you can get a warm introduction (always the best strategy) and, if not, if you can get their attention via email, phone call, etc.  

I think this is really good advice.  Of course, you may not want to do things yourself forever.  But the more you learn and can bring to a partnership, the better the partnership will be.  And the better partners you will attract as well.

I always think it's good to partner with people on a deal-by-deal basis at first, to see if you get along, have aligned values, and like working together.  There is no reason to get married without dating first.

You can try searching online through places like Loopnet or Crexi, etc., but there really is no substitute for meeting brokers in person and talking through what you are looking for.  Of course, you need to be somewhat educated about the realities of the market before you do this, to make sure you put your best foot forward.

Meeting in person can be one of the best ways to overcome the broker's gatekeeping function, by which they try to avoid newbie investors who probably can't close and are just going to waste their time.  One of the best ways to get a meeting in person is to make sure that when someone looks you up, you look like a real estate investor online.  And, then, when you reach out to them, let them know that you are flying or driving in from far away, will be in town for a limited period of time, and would like to stop by an introduce yourself while you are there.  People have a hard time resisting this kind of invitation from someone who appears legitimate.

You can of course use sites like Crexi or Loopnet or broker websites to find out who the brokers in town are, but you will have much better luck seeing good deals from them if you meet them in person, as I described.

Another fantastic way is to get a personal introduction.  Put the broker into Linkedin and see if you know anyone in person.  Warm introductions are are also hard to resist.  Combined with the prospect of you traveling from out of town (which shows you are serious and willing to invest time and money into this), it's pretty hard for a broker to say no to you.

This post I wrote years ago is still valid on the point of LLCs.  https://www.biggerpockets.com/...