10 Steps to Invest in a Real Estate Syndication (Step 3: Evaluate Potential Opportunities)

[𝐍𝐄𝐖 𝐃𝐄𝐀𝐋 𝐀𝐋𝐄𝐑𝐓]

After you sign up for an investor club list, when a deal is under contract and open to limited partners, you will likely get an email titled [NEW DEAL ALERT].

Most operators will schedule a follow up webinar or Q&A session so this is your first opportunity to review a general overview of the deal.

Here are some factors to consider:

𝙇𝙤𝙤𝙠 𝙖𝙩 𝙩𝙝𝙚 𝙡𝙤𝙘𝙖𝙩𝙞𝙤𝙣

– Is it an area that has great population growth and job/economic diversity?

– What kind of neighborhood is it in?

– Is it close to any employers?

– Is it convenient to shopping, grocery, restaurants, entertainment, etc?

𝙒𝙝𝙖𝙩 𝙞𝙨 𝙩𝙝𝙚 𝙘𝙤𝙣𝙙𝙞𝙩𝙞𝙤𝙣 𝙤𝙛 𝙩𝙝𝙚 𝙥𝙧𝙤𝙥𝙚𝙧𝙩𝙮?

– Is it a light value add?

– Is it a heavy lift?

– What’s the business plan?

– Are we looking to increase rents? If so, by how much and can the market support the increase?

𝙒𝙝𝙤 𝙖𝙧𝙚 𝙩𝙝𝙚 𝙡𝙚𝙖𝙙 𝙨𝙥𝙤𝙣𝙨𝙤𝙧𝙨 𝙖𝙣𝙙 𝙬𝙝𝙖𝙩 𝙙𝙤 𝙩𝙝𝙚𝙮 𝙡𝙞𝙠𝙚 𝙖𝙗𝙤𝙪𝙩 𝙩𝙝𝙚 𝙙𝙚𝙖𝙡?

– What is the track record of the general partners?

– How many of their previous deals have gone full cycle & did they hit their projections?

– Why made them pursue this particular deal?

𝙒𝙝𝙖𝙩 𝙖𝙧𝙚 𝙩𝙝𝙚 𝙧𝙚𝙩𝙪𝙧𝙣𝙨? 𝙃𝙤𝙬 𝙡𝙤𝙣𝙜 𝙞𝙨 𝙩𝙝𝙚 𝙝𝙤𝙡𝙙 𝙩𝙞𝙢𝙚?

– Is there a preferred return?

– When will distributions start & how often will they be received?

– What is the hold time for the project?

𝙒𝙝𝙖𝙩 𝙖𝙧𝙚 𝙩𝙝𝙚 𝙞𝙣𝙫𝙚𝙨𝙩𝙞𝙣𝙜 𝙧𝙚𝙦𝙪𝙞𝙧𝙚𝙢𝙚𝙣𝙩𝙨?

– Is this deal open for both accredited and non-accredited investors?

– What are the minimum/maximum investment amounts?

– Are there different classes of investors with different return structures?

𝙒𝙝𝙖𝙩 𝙞𝙨 𝙩𝙝𝙚 𝙩𝙞𝙢𝙚𝙡𝙞𝙣𝙚?

– Is there an investor webinar?  

– When to sign the PPM?

– Where and when to wire funds?

– When is the closing?

𝙄𝙨 𝙩𝙝𝙚𝙧𝙚 𝙖𝙣 𝙞𝙣𝙫𝙚𝙨𝙩𝙢𝙚𝙣𝙩 𝙨𝙪𝙢𝙢𝙖𝙧𝙮 𝙙𝙚𝙘𝙠 𝙖𝙣𝙙 𝙋𝙋𝙈 𝙖𝙫𝙖𝙞𝙡𝙖𝙗𝙡𝙚 𝙩𝙤 𝙧𝙚𝙫𝙞𝙚𝙬?

If not at that moment, when will it be issued?

These are some of the key things you’ll see on a new deal alert. It’s basically the first communication that goes out that there’s a deal on the horizon. Sometimes in the first email, you will get the opportunity to “soft reserve”. You aren’t committed to the deal at this point, but you are just saving your spot since some deals can fill up in just a few hours.

Be sure to check out the additional blogs in this series to see all 10 Steps to Invest in a Real Estate Syndication.