Investing In A Commercial Real Estate Syndication Made Simple

Blog Highlights:

• Step #1 – Determine Your Investing Goals
• Step #2 – Find a Fitting Investment Opportunity
• Step #3 – Reserve Your Spot in the Deal
• Step #4 – Review the PPM
• Step #5 – Send in Your Funds
• How You Can Easily Invest In A Syndication Deal

Most people understand the process of buying a single-family home or rental property and becoming a landlord. You have to choose the correct market and neighborhood for you, determine what type of house you want (number of bedrooms/bathrooms), find the best lender and broker, look for and tour available properties, and make an offer to the seller. It can be a long tedious process from start to finish. 

However, if you want to be a little more bold, take a little more action, you may want to consider investing in real estate syndications, also known as group investments. The process may seem completely foreign to you, especially if this is your first time. But, stick with me through the learning curve, and the benefits you gain from owning property without needing to become a landlord will be totally worth it! 

You can’t just jump into real estate syndications blind, so let’s get you some help. Let’s explore the syndication process together, from start to finish, so you can invest confidently in your first real estate syndication.

Here are the basic steps of investing in a real estate syndication:

1. Determine your investing goals
2. Find an investment opportunity that fits
3. Reserve your spot in the deal
4. Review the PPM (private placement memorandum)
5. Send in your funds

Step #1 – Determine Your Investing Goals

Once you decide you want to invest in a real estate syndication, consider both your short-term and long-term investing goals so you can be sure to find investment opportunities that best fit your personal goals.

Think about the amount of capital you have to invest, the length of time you want that capital invested, tax advantages you’re looking for, and whether you are investing primarily for ongoing cash flow to help offset your income, long-term appreciation, or a hybrid of both.

Step #2 – Find a Fitting Investment Opportunity

Once you’ve determined your investing goals, aim to find a deal in alignment with your goals. 

There are countless real estate syndication opportunities and markets out there. If you’re looking for recession-resistant multifamily investments, we can help you surface the strongest and most viable opportunities.

We will typically provide an executive summary, full investment summary, and host a webinar for investors, which provides a full 360-degree view of the asset, the market, the deal sponsor team, the business plan, and the projected financials.

Be sure to take time to properly vet the track record of the operating team, ask them your questions, and read between the lines of any investment materials provided. Take a look at things like whether the business plan has multiple exit strategies, whether there are signs of conservative underwriting, and double-check whether the proposed business plan makes sense given the asset class, submarket, and current economic cycle. 

Research market trends in job and population growth. Review minimum investment requirements, projected hold time, and projected returns. Finally, attend or review the investor webinar and make sure you get your questions answered.

Basically, at this stage, look for any reason not to invest in the deal.

Step #3 – Reserve Your Spot in the Deal

Once you’ve found an opportunity you want to invest in, it’s time to reserve your spot in the deal. Usually, deals are filled on a first-come, first-served basis, so you’ll want to take the time to ask questions and do your research before a live deal opens up.

Often, investment opportunities can fill up within mere hours, which is why it’s important to have completed research, solidified your investment value, and have clear goals. That way, when the opportunity opens up, you can jump on it.

Typically, the first step is to make a soft reserve, which holds your spot while you take time to review the investment materials. The soft reserve does not lock you in the deal; it merely saves you a spot in the deal while giving you more time to review the fine details of the investment and conduct your own due diligence.

Step #4 – Review the PPM

Once you’ve decided to invest in a deal, the first official step is to review and sign the PPM (private placement memorandum).

This legal document provides in-depth details about the investment opportunity, the risks involved, and your role as an investor. Although reading legal jargon may be no fun, it’s very important you gain a full understanding of the risks, subscription agreement, and operating agreement pertaining to the investment.

As part of signing the PPM, you’ll also decide how you’ll hold your shares of the entity holding the asset and whether you want your distributions sent via check or direct deposit.

Once you’ve completed the PPM, the final step is to send in your funds. Typically, you’ll find wiring instructions in the PPM document.

Pro tip: Before wiring your funds, double-check the wiring information, and let the deal sponsor know to expect it so they can be on the lookout.

Step 5 missing

How You Can Easily Invest In A Syndication Deal

Now, all of the information above should have made the real estate syndication process a little more clear and hopefully a little less intimidating. 

Real estate syndications are a bold but simple investment where you have to be an active participant in the beginning during the time you are choosing the right deal, looking at and reviewing your investor materials, reserving your spot, reading and signing the PPM, and wiring your funds. But, after that, you get to sit back, collect distributions without worrying about the day-to-day occurrences on the property, and spend your time traveling, nurturing relationships, and working how and when you want.

Don’t worry if all of this seems a little confusing, or if you still feel unsure of how to proceed. I am here to help! It’s what I love to do. 

I will help you every step of the way, and work with you as you invest in your first real estate syndication. As you work with more deals, it will become easier!