How to Build a Multifamily Syndication Business: A Step-by-Step Guide
Ever wondered how to tap into the growing world of syndication? With interest rates at rock bottom, investors are hungry for alternative investments, making syndication a powerful tool. But where do you even begin? This article, inspired by Gino Barbaro’s YouTube video, cuts through the confusion and provides a clear roadmap to building a thriving syndication business.
The Rise of Syndication
Barbaro highlights the surge of syndication due to low interest rates and increased investor demand for alternative investments. He emphasizes that before the 2017 JOBS Act, raising capital for syndications was challenging.
Separate Syndication from Your Core Business
Barbaro advises treating syndication as a separate business entity from your core business. This distinction helps with focus and establishing a separate revenue stream.
3 Step Framework for Success
- Buy Right: Mastering property selection through a defined criteria ensures you invest in assets with high potential.
- Manage Right: Effective property management is crucial for delivering on investor promises.
- Finance Right: Understanding the financial aspects of deals is essential for securing funding and maximizing returns.
Building a Strong Foundation
- Educate Yourself: Gain in-depth knowledge about the asset class you’ll be syndicating in.
- Develop a Business Plan: Outline your strategy for building and running your syndication business.
- Legal Structure and Compliance: Partner with a syndication attorney to ensure you adhere to legal regulations.
Building Your Team
- Property Management Company
- CPA (Certified Public Accountant)
- Syndication Attorney
- Cost Segregation Specialist
- Insurance Broker
Finding Deals
- Establish Buy Criteria: Determine the specific characteristics you seek in investment properties.
- Network: Connect with brokers and other professionals to find suitable deals.
Pre-Fundraising Steps
- Offering Documents: Collaborate with your attorney to create offering documents for potential investors.
Fundraising
- Preparation is Key: Ensure all documentation is complete before launching your fundraising efforts.
Delivering for Investors
- Manage the Asset Effectively: Prioritize managing the property to generate the promised returns for investors.
- Communication is Key: Maintain regular communication with investors through reports and updates.
Expanding and Diversifying
- Partnering with Other Syndicators: Collaborate with syndication partners who share your goals and investment philosophies.
Building Your Brand
- Social Media Presence: Utilize platforms like LinkedIn and YouTube to establish credibility and connect with potential investors.
Learning is Paramount
Barbaro emphasizes the importance of thorough education before venturing into syndication. This includes understanding the specific asset class you’ll be dealing with.
Conclusion
Building a successful syndication business requires a well-defined plan, a strong team, and a commitment to investor satisfaction. By following these steps and prioritizing education, you can navigate the syndication landscape and achieve your business goals.