10 Steps to Invest in a Real Estate Syndication (Step 2: Research Investment Options)

There are a lot of operators out there and everyone does things differently.  It’s important to do your research to get a clear picture of each operator as well as their communication style.

Here are some steps you can take to get to know a potential partner:

  • Sign up for their newsletters and investor lists – This will get you on their mailing lists and you will receive access to their company updates and educational materials.
  • Check out their content –  Many syndicators have their own podcast or are frequent guests on other podcasts. They may also produce regularly scheduled webinars or post educational content via a Youtube channel.  
  • Social media presence – Which platforms are they active on and how do they present themselves?
  • What are their goals and do they align with yours? – Get to know their WHY.  Why are they in this business and what do they hope to accomplish?  Make sure their values align with yours.
  • Ask for references from past or current clients – Talk with others who have passively invested with them to understand their experiences. Did they receive regular updates on their investment? And what was the operators’ communication style.
  • What is their investor retention rate? – Do their investors participate in multiple deals or are most of their relationships one-and-done investors?. It might seem awkward to ask, but it’s important. If they are legitimate and have experience in the business, you better bet this is a metric they are tracking. Typically, anything over 70% is pretty good.
  • Check out their track record – Get their resume and portfolio. Have they gone full cycle? What have their returns looked like?  Did they meet or surpass their financial projections?
  • Where do they focus and how do they execute?  Where do they invest? Do they focus on one area or do they operate all over the country?  Do they have boots on the ground? Are they vertically integrated? Who is on their team?

Lastly, one key question I ask is for them to tell me about a deal that went wrong.  You can learn a lot about someone by how they handle the unexpected.  When a past deal went sideways, what did they do?  Were they able to find creative solutions?  Did they put their own money in to protect their limited partners’ capital?  And most importantly, how and when did they communicate these challenges to their investors?

Taking the time to properly vet syndicators prior to investing with them will ensure that you have the partner that is most aligned with you and your goals and will save you a lot of angst in the long run.

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