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Let’s face it, every real estate investor just starting out dreams of landing the huge deals. The question remains though: how to make it to the institutional level?
The answer comes with syndication. Syndication expands the opportunity to make larger deals by leveraging capital from a group of investors.
For singlefamily and small, residential multifamily, the first syndication deal can seem like a large step. There are a lot of moving pieces to keep track of in a syndicated deal that may seem complex to investors used to self-financing.
Reed Goossens knows the power in syndication.
A native Australian, Reed moved to the U.S. after educating himself in real estate investing. As a foreign investor, Reed saw the potential for earning cash-flow in U.S. real estate markets and set about acquiring properties.
Initially investing in small duplexes in tertiary markets outside of New York City, Reed had been using his own capital to finance deals.
He realized the need to scale his real estate investment goals and set about transitioning from residential multifamily to commercial multifamily through syndication.
Reed founded RSN Property Group and has been investing in commercial multifamily properties through syndication since 2011.
In addition to expanding his asset portfolio and investor base, Reed also hosts a podcast to educate foreign investors in the U.S. real estate market
Syndicating Investment Deals
- SEC has strict rules for syndication under Regulation D
- Rule 506 (b) – allows for unlimited accredited investors (earn +$200k/yr. or personal worth of +$1 million); up to 35 unaccredited investors (earn under $200k/yr.)
- Surround yourself with credible investors; find a mentor
- Have pitch deck to educate potential investors on deal specifics
- Private Placement Memorandum (PPM) – after sourcing investors, a PPM is needed
- Drafted by syndication attorney
- Outlines how deal is being syndicated under a regulation (e.g. Rule 506)
- Tailored to individual investments
- Syndication Contracts
- Typically, 30 days for due diligence; 45 for larger properties
- 15 days for financing and 15 days for closing
- Preferred Returns
- Limited investors get “x” percent of 1st earnings, decided in contract
- Future returns split between limited partners and general partners (syndicators)
Resources
Reed and RSN Property Group are always on the lookout for value-add investment deals. If you think you have a potential deal, contact Reed at reed@rsnpropertygroup.com.
Reed also hosts a podcast that educates foreign investors on U.S. investment real estate markets- Investing in the U.S.: An Aussie’s Guide to U.S. Real Estate
Like many beginner investors, Reed learned about creating financial independence and the power of passive cash-flow through Robert Kiyosaki’s Rich Dad Poor Dad.