Real estate syndication is when a group of investors pool their money together to invest in a large deal led by an experienced sponsor. Finding good syndication deals as a sponsor can be challenging but rewarding if done properly. In this article, let us explore proven strategies for finding profitable real estate syndication deals.
Do Your Market Research
Conducting thorough market research is the foundation for finding good syndication deals. You want to identify markets with strong jobs and population growth that are business-friendly. Analyze market data like demographics, employment rates, infrastructure projects, and market cycles. Look for signs of gentrification and redevelopment opportunities. Study recent comparable sales to estimate property values. Drive the neighborhoods to observe vacancy rates and area improvements. Real estate syndication deals work best in markets with predictable growth and value-added potential. The market research will guide you on the best areas and property types to focus your deal-sourcing efforts.
Build A Network Of Referral Sources
Leveraging your network is crucial for sourcing off-market real estate deals before they are widely marketed. Cultivate relationships with brokers, lenders, attorneys, accountants, contractors, listing agents, and other real estate professionals. Let them know you are looking for multifamily, retail, office, or industrial deals over a certain size in your target markets. Consider partnering with an experienced broker who specializes in larger commercial real estate deals. Referral sources can provide market knowledge and put you in touch with motivated sellers. Having strong relationships with key players expands your deal pipeline.
Identify Motivated Sellers
The key to finding syndication deals is connecting with owners who have a need or motivation to sell. Look for properties with mismanaged operations, deferred maintenance, high vacancies, expiring leases, maturing loans, or other challenges. Search public records to find underperforming properties. Drive for dollars around target neighborhoods and look for signs of distress like bad upkeep or marketing spaces for lease. Owners inheriting commercial properties or facing life changes like divorce or illness may be motivated to sell. Distressed properties can represent huge opportunities if operational improvements and renovations are made. Building relationships and asking questions helps uncover motivated sellers.
Utilize Online Listing Platforms
While many syndication deals happen off-market, online listing services can also uncover potential opportunities. LoopNet, Crexi, and RealCap are platforms that focus on larger commercial real estate deals. Set up saved searches for your criteria in desired markets. Browsing new listings daily and acting quickly is key when utilizing online platforms since quality listings get bid up rapidly. Reaching out to brokers of newly listed properties matching your parameters can lead to potential deals. Though it requires active monitoring, the internet expands your ability to find deals.
Make Direct Mail And Email Outreach
Marketing directly to property owners in your farm areas is an effective way to find off-market deals. Comb through public records to identify the top owners of multifamily, retail, industrial, or office properties in your target markets. Send them letters expressing interest in purchasing properties meeting your criteria. Follow up with emails and calls to discuss options and try setting up meetings. Mass outreach to owners lets them know you are ready to make a deal when they are ready to sell. While most will not currently be interested in selling, some will consider it, which can lead to profitable syndication acquisitions.
Attend Industry Networking Events
Joining real estate networking groups and attending industry events puts you face-to-face with potential deal partners. Find multifamily, office, retail, and industrial-focused meetups in your market. Introduce yourself and let group members know you are looking for large property deals. Conferences, like Meet the Money events, are also great for meeting brokers, lenders, and high net-worth investors. The real estate community in each market is small, so getting connected leads to deal flow. Shake hands, exchange cards, and build relationships at events to expand your opportunities.
Partner With Private Lenders
Partnering with private lenders who focus on larger commercial loans can lead to exclusive opportunities. Develop win-win relationships by sending them deals that meet their lending criteria. In turn, private lenders may present you with discounts on their books before they hit the open market. Since they want to fund sales and earn interest, they are incentivized to connect you with credit-worthy borrowers in need of takeout financing. Well-capitalized private lenders are uniquely positioned to source profitable syndication opportunities.
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