How to Perform Effectively as a Syndicator?
I have written about the advantages of investing in multifamily properties. As we all know, apartment complexes can be costly, but the payoffs are great. If you execute the investment properly, you get to earn high volumes of passive income as a syndicator.
With that said, let’s discuss more on becoming a successful syndicator. When it comes to multifamily properties, investors would want to pool their resources and have someone take the reins. A syndicator’s job is, without a doubt, not easy. There’s always room for errors, and if you’re not careful enough, you will probably end up spending more than what you can gain from your share of the income.
To be a syndicator, you should have a full grasp of the processes in setting up a multifamily syndication. Keep in mind that it’s not enough to simply have these processes in place. You will need to go the right way in terms of application.
The points below should give you a good way to start down the path as a successful multifamily syndicator.
Build a list of investors
A syndication is typically referred to as a group with a common goal. No doubt, multifamily real estate investors in a syndication aim for one thing: obtaining a healthy cash flow. Still, this goal won’t materialize unless you, as a syndicator, take the first step.
The initial stage of a syndication is all about forging your networks. You would want to build connections that are valuable to the syndication you are forming. This would mean finding anyone within your own “circle of influence.” You should start by inviting your friends, family, former clients, and members of investors’ clubs. For this, you will need to deliver a compelling message that’s aimed towards forming valuable relationships. You can use monthly newsletters and emails offering great value in terms of the knowledge they bring.
As much as you want to grow your investors’ list, you also need to create strong relationships that help drive results. Moreover, constant education about emerging markets should be prioritized. An informed investor base, after all, is a factor for success.
Find a “golden opportunity” through underwriting
Finding the best opportunities in the real estate market shouldn’t be that hard. You only have to make sure that you are doing a good job on your end. With this, effective underwriting is crucial as it enables you to create more opportunities along the way.
With that said, you will need to get lots of operating memorandums from brokers’ offerings. Equally important is that you know a lot of the jargon, terms, and materials that are involved in the process.
Get qualified for a loan
For this, you will need to find a loan broker who’s easy to work with. This is so you can easily create an accurate financial statement that will help you secure the type of loan you need for your syndication. You would also want to discuss qualifying for a loan and get someone with a high net worth to act as sponsor. The loan amount needs to be lower than the total net worth of all sponsors signing on the loan.
During this process, you will also need to find the right legal expert to serve as your syndication attorney. That way, you will be able to prepare the documents you need to formally establish your syndication. You might also need extra help with keeping your documents in order so you can present them to a lender.
Organize your property management team
Ensuring the profitability of your multifamily properties shouldn’t be difficult. You only need to form a property management team you can trust. After all, this team is responsible for keeping your apartment complexes in tip-top shape.
You may also have the option of self-managing the properties by setting up your own property management company. This allows you a wide range of benefits since you are controlling the day-to-day operations of the property. Think of it as your own hands-on way of protecting the money that your investors have pumped into your syndication. This really appealed to us and we took that step 11 years back. By the time we have settled, we would go on to close 26 multifamily deals.
With these methods, you will find it easier to build a syndication that generates profits for your investors.