5 ways to get your start as an Active Syndicator
You’ve read all the books, listened to all the podcast and you’re ready to start syndicating apartment communities. Or maybe you’re you’ve just arrived at the party and wondering, what is the quickest path to becoming a multi-family syndicator? Here are 5 different ways to get your start as an active multifamily apartment syndicator.
Partner with an active syndicator
One of the most efficient ways to become an active syndicator is to partner with someone who is already an active syndicator. You can meet syndicators in an investment club. This should be someone who is experienced enough to have an established network within the multifamily industry and is still actively syndicating apartment communities. This is not a mentorship style relationship where you are paying to be educated but rather one where you are equal partners on the general partnership side of a syndication.
This is successful because this person will help to source deals or capital while you take on another responsibility such as asset management. How do you get someone to work with you as a newbie investor? You have to prove you are dedicated, and find a way to provide some value this person is missing from his or her team.
If you have net worth or liquidity you can act as a loan guarantor or provide risk capital for an acquisition. You can research a market and create a mailing campaign to get off market deals. If you have a built-in network of high net-worth individuals you can raise capital. You can help the syndicator grow his or her business by helping with advertising or branding. Doing these or other strategies and taking a smaller percentage of profit up front can win over an active syndicator to partner with you.
Work in a relative capacity
Syndication requires understanding of financial markets, debt, financial modeling, construction, investor relationships, marketing and management skills just to name a few. Working in a field or position that is easier to break into can give you the experience or track record that can be transferred over to start your syndication career.
You can consider working as a commercial broker, lender, construction manager, property manager, or private equity consultant. The skills you learn and relationships you build may almost directly translate into skills needed to be a successful syndicator.
Use your own funds
Bootstrapping is the story of many real estate investors. However due to the complexities of multifamily it can be challenging to do it all on your own. If you did however have the financial strength and free time you could purchase a multifamily apartment community small enough for you to independently self-manage.
This would help you to learn the skills and gain the track record to become a syndicator. This can be a joint venture or sole proprietorship depending on how much capital you have available to invest and how high your risk tolerance is.
Proceed with caution as this method can produce some costly lessons. It may be a better investment (literally) to take one of the following paths to becoming an active syndicator.
Investing passively is a great way to learn about syndications because you benefit in multiple ways. First you are building a relationship with active syndicators. This may make it easier to partner with them in the future as you have worked together before. You also get to see first hand if they are meeting projections and are truly competent syndicators.
You are also learning how passive investors feel when they work with syndicators. You learn best practices of the industry for communicating with passive investors as well as mistakes you should avoid. This will help you to communicate with your future passive investors better and provide them with a higher level of service.
“ ...this may be the most cost-efficient way to get your start as an active syndicator.”
The funds you invest are also generating a return. This means the education you are receiving is paying for itself. Considering how much profit you make, this may be the most cost-efficient way to get your start as an active syndicator. Not to mention all the future profits this experience will help you to make when you are working on your own.
Join a mastermind group/mentorship program
If you are someone who needs structure, a mastermind group or mentorship program would be ideal. This involves an active syndicator teaching you all the skills and best practices of how to syndicate apartment communities.
Be prepared to spend thousands on tuition as these programs can be expensive. But making a mistake on a multi-million-dollar investment may be more costly than any price you’ll pay. These mentors can streamline your deal flow and relationships within the multi-family industry. Saving you time and money.
An ideal mentor may partner with you on a deal or act as a consultant when you encounter obstacles. This improves your chances of success because you are not only given the knowledge but also build your confidence with hands on experience.
You should have a mentor that is active in the industry you want to be apart of. If you want to syndicate apartment communities you should work with someone that is actively doing so rather than someone doing mobile home parks or retail. There are nuances to each that will be the difference between success and failure. They should also be active so that their advice is relevant and current.
These are just 5 ways to get started investing as an active syndicator of multi-family apartment communities.
· Partner with an active syndicator
· Work in a relative capacity
· Use your own funds
· Invest passively
· Join a mastermind group/mentorship program
Now what are you waiting for? Whatever you think is holding you back may just be a misconception. The sooner you start the sooner you’ll find this out and the more time you will have to grow. Now get out and get active!