How To Find Real Estate Syndication Deals For Investing

A wrist injury made me realize that, as a periodontist, I couldn’t provide for my family if I couldn’t use my hands. I needed to find an investment that would function like disability insurance, allowing me to receive cash flow still even if I couldn’t treat patients.

So I started educating myself about how the rich operate to achieve financial freedom.

After months of extensive research, I discovered two key facts about wealthy individuals:

• they invest in the real estate sector
• they have multiple income streams

This knowledge guided my decision to learn how to invest in real estate and generate non-dental income sources.

However, the real estate industry is HUGE, offering several ways to invest, which can be overwhelming for beginners. Unfortunately, this often leads people to leave their money in savings accounts, in which they lose tons of value due to inflation.

Fast forward seven years, and I can attribute over 90% of what I learned to books, blogs, podcasts, and YouTube videos, along with guidance from a few mentors.

I quickly learned that I did NOT want to be a landlord (active investor) and started investing passively in commercial real estate syndications.

This type of investing is “hands off,” allowing high-income earners to focus on what they’re best at…their jobs! Then they can take their extra active income and invest for passive income while gaining equity in a property that will appreciate over time.

But finding real estate syndication deals isn’t always easy.

I tell the story of how I graduated with about 60 dentists but would only let 4-5 of them work on me. The same goes with syndications. There are a lot of real estate syndicator sponsors out there, but only a few good ones to invest in.

This leads us to our next questions:

• How can you find trustworthy sponsors with a proven track record?
• How do you know if their real estate syndication investment is good?
• Where can you find good syndication deals?
• What are the risks?

In this blog post, we will look at how to find real estate syndication deals and discover the difference between various approaches to real estate syndication opportunities so you can find the best fit for your financial aspirations.

As a side note, I’m not a financial advisor or CPA. Please don’t take this information as financial advice but use it to build a foundation to educate yourself on a different investment opportunity available. 

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What Is a Real Estate Syndication?

Real estate syndication is the pooling of funds from a group of potential investors (limited partners) to buy a property with a more expensive purchase price than any of them could afford.

So instead of buying several smaller commercial properties individually, the group can come together and buy a larger asset (i.e., an apartment complex).

For instance, let’s say I have $50,000 to invest.

If I were active real estate investing, I’d have to do a few things first, such as:

• set aside time to find good deals
• put it under contract
• perform due diligence
• handle financial matters
• obtain the loan
• rent it out
• manage the property

Most busy professionals don’t have time to actively manage property. I initially chose real estate syndication investing, which allows me to invest money into more significant investment properties without having to find or manage the property.

So, I can invest the $50,000 passively as it’d be paired with someone that puts in $50,000 and another that invests $100,000 and so on.

By pooling our resources, we now have enough to obtain something larger such as a mobile home park.

Syndication Roles

There are two primary roles in real estate syndications:

• Sponsor (general partners)
• Passive Investors (limited partners)

Here’s a breakdown of each group’s responsibilities:

Sponsor

The sponsor or general partner is most critical in the investment process.

Here are a few of their responsibilities:

• Find and source properties
• Obtain financing
• Acquire the investment property
• plays the property manager role

Passive Investors

Investors are also known as Limited Partners (LPs). Remember, these are the passive investors who invest their own money in the deal with no active asset management responsibilities.

Their only job is to make sure their monthly or quarterly deposit hits their account on time.

Join the Passive Investors Circle

How To Find The Best Real Estate Syndication Deals

After the JOBS Act (Jumpstart Our Business Startups Act) was passed in 2012, it was much easier for small businesses to create jobs and raise capital.

And one of the main areas it affected was Regulation D. The Act amended Regulation D to make it easier for companies to use general solicitation to market offerings to accredited investors.

If you want to learn more about what an accredited investor is and why it’s important to be one, check out this video:

Before this was passed, you had to “know” somebody to learn about real estate syndicates. Since this Act has passed into law, investment opportunities are easily found on social media platforms, websites, etc.

But now that there are so many choices, how do we find and determine which is the best?

Here are 4 ways:

#1. Networking

Networking is one of the best ways to find real estate syndication opportunities. This is how I got started in 2018 at a Dallas conference. As someone on a mission to learn, it was comforting to be around others who’ve already made money with real estate.

I was able to meet other groups of like-minded investors and the real estate syndicators managing deals.

Conferences are one of many ways to begin to build your network. This can also be accomplished through various methods, such as:

• Connecting with local investors on LinkedIn: You can utilize this network to identify others who share an interest in syndication deals and may offer guidance or partnership opportunities.
• Participating in local real estate investing meetups: Attending these events is a great way to learn from seasoned investors, make new connections, and discover unadvertised opportunities within your local market. There wasn’t one in our area, so I got a few people together and we started our own, which has been fantastic.
• Online groups focused on real estate deals: Joining these virtual communities can get you quick access to information and connections to those who may help you find deals.
• Attending events hosted by real estate investment companies: These companies invite experienced investors to speak. This allows you to learn from their mistakes and wins plus make new connections.

All of these methods have their own benefits. Choose the ones that interest you the most to start building your own network.

#2. Online forums

If you’re unable to network in-person, then consider joining online forums. On these sites you’ll be able to meet other groups of investors to discuss potential opportunities, ask questions, learn about their investment strategy, and engage in group discussions.

These forums can be found by searching the internet or social media groups like Facebook. 

I’m a member of several private Facebook groups specifically for doctors with interest in real estate, so be sure to search for groups that cater specifically to your profession.

#3. Real estate crowdfunding sites

I originally started investing in syndications via crowdfunding sites. Some of the more popular sites are Fundrise and CrowdStreet.

Most crowdfunding sites have investment opportunities for both accredited and non-accredited investors. In the United States, the Securities and Exchange Commission (SEC) is responsible for creating the rules related to an accredited investor.

These are individuals with:

• An annual income of at least $200,000 in each of the two most recent years or married couples making $300,000 joint income. There must be a reasonable expectation of the same income level in the current year; or
• A net worth of at least $1 million which does NOT include a primary residence.

When I first began passively investing, these sites were the most appealing as they claimed to perform their own due diligence and vet opportunities before made available to outside investors. They presented deals with easy-to-read descriptions and nice pictures of both the exteriors and interiors.

As you can imagine, this was extremely appealing to someone like me who was too busy to deal with tenants and needed to learn more about how real estate works.

Unfortunately, I lost $50k as I didn’t know what I was doing at that point in my real estate investing career. If you want to read more about my situation, check out this article:

Related article: RealtyShares – What I Learned From Losing $50,00

I quickly learned that it’s extremely important to have some basic understanding of real estate investing to make informed decisions because if you’re not too sure what you’re doing, it’s tough to figure out whether you’re investing in a good deal or a bad one.

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#4. Passive Investors Circle

After losing $50k on the crowdfunding site, I could have taken the easy way out and quit. At the time, I was mainly investing in the stock market (Vanguard mutual funds) and considered continuing down that path.

But something in the back of my mind was pulling me towards real estate. I asked myself, “If all the wealthy people I knew could find success investing, then why couldn’t I do the same?

I spent the next year self-educating myself 20+ hours a week, which made me realize that I had no business investing in real estate on a crowdfunding site in the first place. During that process, I started this blog because I wanted to educate others in my position.

Those who wanted to stop relying on their time for money didn’t know where to start due to how busy they were. It’s, for this reason, I started the Passive Investors Circle. 

This is a group for accredited investors that allows them access to the deals I’m personally investing in that I vet and perform due diligence on.

FAQs

What is the minimum investment amount required for participating in a syndication?

The minimum investment amount can vary depending on the sponsor. Some groups allow a lower minimum, such as $25,000, whereas others may start at $100,000. From my personal experience, I’ve noticed that the average deal we’ve invested in has a $50,000 minimum.

What are the initial steps for investing with a real estate syndication company?

• The sponsor sends an “deal offering” email that an investment is open. 
• Review the offering memorandum (executive summary) and make an investment decision.
• Submit the amount you want to invest to the sponsor.
• The sponsor holds an investor webinar, where you can get more information, ask questions or schedule a phone call for more details.
• The sponsor confirms your spot in the limited partnership and sends you the legal documents or the PPM (private placement memorandum).
• Fund the deal via wire or check.
• The sponsor confirms that your funds have been received.
• You’ll receive a notification and what to expect next once the deal closes.

What is the typical return on investment for real estate syndications?

The typical return on investment (ROI) can vary depending on several factors such as:

• type of property
• market conditions
• investment strategy

My experience has been with deals paying a 6-10% preferred return with an internal rate of return (IRR) of 15-25+%. invest. 

What level of risk is associated with real estate syndications?

Like any type of investment, real estate syndications come with risks. The MOST important thing to remember about a deal is not the property itself but the deal sponsor you’ll be investing with. You’re relying on their experience to know what assets to invest in and those to avoid. 

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