Syndication
What is Real Estate Syndication? It is a partnership or group investing: where two or more persons pool their money, their effort, and expertise to invest in a property or properties. Depending on the partnership agreement, all the partners could be active or one or more will be active while others will be passive.
Get to know your investors and potential investors: Each property that you syndicate is not for everyone. You must meet with each investor or potential investor and find out what their financial objectives are. Where do they see themselves 5-7 years from now? Can they afford the investment? Are they able to wait 5-7 years? What if the property does not perform as planned? How much will that affect them? How much can they afford to lose? What is their tolerance for risk? What are their expectations? Please do not accept any investor in any project if it does not meet their investment criteria.
Sometimes you might feel the need to accept the investor in order to be able to close escrow. Don’t do it. If you accept with the wrong investor, this is an invitation to a catastrophe. Did I do it -of course I did it a couple of times and each time I ended regretting it. Would I do it again? Definitely not! I would rather lose the deal than put someone in the wrong deal or have someone hurt.
Strive to under promise and over deliver; if you think you can deliver a 15% return, promise the investors 13%. If you deliver 13½% they will be happy, invest with you again and tell their friends. But if you say 15% and deliver 14 ½, they will be disillusioned with you even if they know your intentions are good and you did your best.
If I can give you advice it would be this:
Whether a private investor or private equity company, most people will invest not just for the deal, the property location, purchase price or even its potential. First and foremost they will invest in YOU.
Success in syndication requires two things:
1) Integrity and values. In caring for results for the investor first, your reputation, like a virus, will spread very fast in delivering what you promise or even delivering more than you promise
2) Skills. Know where and how to find a good buy, how to structure winning partnerships and effective management.
We cannot help you with your integrity and values but we can help you with your skills and that is why we are holding regular Syndication Workshops in Los Angeles and sometimes in Orange County.
You want to buy an investment property, but do not have money for a down payment or closing costs? Do you just forget it? That’s probably what you have been told by people who think they know what they are talking about, but simply do not.
Obviously they have not thought of OPM, other people’s money syndications, partnerships or group investing.
For example, Mark, one of my students, was a real estate investment broker; he was good at finding properties but did not have nor could he raise the money. I helped him find an investor, Jerry, who happens to also be a good manager.
I coached both of them to start syndicating apartment buildings. They both started part-time about 5 years ago. Now Mark and Jerry have built a fortune, quit their jobs, and they are doing real estate investment full-time. They are making 5 times more money than when they had jobs.
Syndication is perhaps one of the greatest secrets of the richest people in the world. So the most successful real estate investors tend to use group investing.
As a matter of fact, the best source of cash for your real estate deals is OPM or syndication. And the more you use other people’s money, the faster you make your millions. The higher the return on the investment, the faster it grows. Syndication, like a snow ball rolling down a steep hill, grows amazingly fast. So I encourage you to start investing and using syndication now, because the sooner you let that ball roll, the quicker you make your millions.
Karim has founded and operated 19 successful companies, and made his first million by age 26, by buying and fixing distressed properties and businesses. For 45 years Karim has developed, invested in, financed, brokered, and managed properties in 8 countries. Karim is the author of “The Smart Real Estate Investors Guide: Your Road Map to Wealth in Any Economy”. Karim hosts monthly real estate seminars in Los Angeles and Orange County. He mentors, writes, teaches, and speaks about real estate frequently and has been published in 115 business and real estate publications nationwide. Contact info: 310-471-0650, karim@dynamicscapital.com, www.dynamicscapital.com
