Are you itching to get into the world of apartment investing and multifamily syndication? Perhaps you’ve invested passively as a limited partner (LP) and can’t wait to help your friends and family get into these great opportunities as well.
Perhaps you’ve been involved in fix-and-flips, rental properties, wholesaling, land, or any number of other real estate ventures and are looking for a way to build sustainable long-term passive income and wealth while reaping significant tax benefits.
Investing in multifamily apartment communities can be a fantastic way to build your own wealth, diversify your portfolio, and help others access these opportunities and build passive income for their families.
In this article, we’ll share with you why you might want to get into multifamily apartment investing and/or real estate syndications, critical questions you must ask yourself to set yourself up for success, finding the right coach or mentor, and more.
Why Get Into Multifamily Apartment Investing
If you’ve been a limited partner (LP) investor in a real estate syndication before, you’ve had a front row seat to how incredible multifamily apartment investments can be.
As a passive investor, you get to pool your money together with capital from dozens or hundreds of other investors to purchase an apartment community together. If it’s a value-add investment, you also get to improve the community while building significant equity – not to mention the immense tax benefits!
Help Your Friends, Family, And Others Build Wealth
It’s not uncommon for passive real estate investors to build a natural following of potential investors. That’s because many passive investors have such a great experience that they can’t help but rave about the “hidden gem” of investing they’ve discovered.
That’s exactly what happened to me. When I saw the benefits of apartment syndications, I spoke about my passions with anyone who would listen. As a result, I started to build a natural following of friends and family who wanted to invest alongside me.
In helping them to invest into multifamily apartment syndications, I was able to help them solve a huge problem for them in their lives. Many wanted to invest in something independent of the stock market – something they believed in and understood. While real estate was something they wanted to invest in, many didn’t have the time or interest to get started.
Through passive investments, you can help your friends, family, and others to gain access to solid investment opportunities to help them build wealth.
More Control And A Bigger Piece Of The Pie
If you’ve been investing passively in real estate syndications, you know that they’re typically structured in favor of the passive investors.
In many of the syndications we offer our investors, for example, there’s a preferred return, followed by a 70/30 split – 70% to passive LP (limited partner) investors and 30% to the general partners – up to a certain threshold.
However, joining the active GP (general partnership) team of an apartment syndication means you gain more control over the investment and also get a piece of the GP fees (acquisition and asset management fees, for example) and backend equity.
This can be a significant addition to your own portfolio and can help you accelerate your own path to wealth – all while helping others do the same.
Getting Started In Multifamily Apartment Investing
When most people get started in apartment syndications, they jump right to the technical aspects (underwriting and acquisitions) because those often seem the most daunting and are also touted by many apartment gurus as the best place to start.
However, before you dive into all those spreadsheets, there’s actually something more important you should do first – 3 things, in fact:
- Define Your Goals
- Choose Your Path
- Find The Right Apartment Mentors For You
Step #1 – Define Your Goals
Before you invest a single cent into a multifamily mentorship program and real estate coaching package, the first thing you should do is to define your own goals and vision.
Why are you getting into the multifamily syndication space in the first place? Is your goal to eventually replace your income and quit your job? Help your friends and family? Take more control over the investments?
Where do you see your multifamily business in the next year? How about the next 5 years? What markets would you be invested in? How many investors would you have? What types of deals would you be investing in? How much capital would you be able to raise?
What type of business do you want to build? Do you want to invest in as many properties as possible while having a minimal role in each? Or do you want to roll up your sleeves and really dig in to just one to two properties a year?
Which part(s) of the process do you already excel at? Which do you want to focus on first in your business?
Step #2 – Choose Your Path: Acquisitions Or Capital Raising?
Once you’ve got a clear vision and well-defined goals, it’s important to reflect on the path you want to take to get started in the multifamily syndication arena.
Because the world of real estate syndications can be so complex (particularly when you get on the general partnership side), there are many different areas of the business you could focus on, based on your strengths and interests.
It’s important to take time early on to reflect on your current strengths and weaknesses, as well as your interests and passions, to determine the area of multifamily syndications you might want to focus on, at least to start.
The two main paths are as follows…
- Acquisitions / Underwriting / Asset Management
- Raising Capital / Investor Relations
Acquisitions / Underwriting / Asset Management
This is the area of multifamily syndications most people first discover, and it’s the area most apartment mentors focus on, because it’s the most structured and step-by-step part of the process.
If you have a financial background, love networking, and/or have a savvy business sense, this might be a good path for you. In this role, your main goal is to find great deals and execute on the business plan to hit projected returns.
You would spend a good amount of time networking with brokers in your target market(s), hunt down off-market deals, underwrite the deals, and perform due diligence on deals under contract.
Once you close on a property, you might also take over asset management – working directly with the property management team to oversee ongoing maintenance, renovations, and operations in order to maximize efficiencies and execute on the business plan.
Often, if you focus on acquisitions and underwriting first, without having built up a solid base of ready investors, you might get a deal under contract but might not be able to raise the capital. This is where partnerships come in. You can partner with someone who might be focusing on the second path – raising capital and investor relations.
Raising Capital / Investor Relations
The second area of real estate syndications is raising capital and finding investors. This is just as important as acquisitions and underwriting, if not more so.
This is also the area that can take the most time because you’ll have to build trust with investors and educate them on the process. Raising capital can also be intimidating and difficult to master, as it can be tough to talk to people about money and learn how to think like a marketer.
That being said, if you love talking with people and teaching them about real estate investing, raising capital, building a brand, and finding investors might be a natural fit for you.
If this is the path you want to focus on, you would start by identifying your target audience (i.e., your ideal investor) – figure out who they are, where they hang out, what they know about real estate investing, what their pain points are, and what they might need to know in order to be comfortable investing with you.
Then, you would spend a good amount of time attracting those investors through creating informative value-add educational content to help them – through blog posts, articles, videos, podcasts, meetups, online courses, and more.
In doing so, you help them to learn about the process and find a path to solve their problems, and a certain number of them might choose to invest with you.
Over time, as you build your investor base and increase your raise capacity, you will be able to bring more and more capital to the table and thus take a bigger and bigger part of the general partnership – eventually enabling you to sponsor your own syndication if you so choose.
Choose One Path To Start
If you’re considering getting into multifamily apartment syndication as a general partner / sponsor, it’s important to know that the two paths outlined above (acquisitions/underwriting and raising capital) are complementary and not mutually exclusive.
In other words, you should pick the one you’re more interested in to START, and then the other will naturally follow. If you start with acquisitions and get a strong track record under your belt, investors will naturally start to build trust with you.
And if you start with raising capital and build a solid investor base, you’ll eventually have the purchase power and the experience (through partnering with and learning from other sponsors) to sponsor your own deal.
Step #3 – Find The Right Apartment Mentors For You
Once you decide on the right path for you, it’s time to find the right mentorship program. Multifamily syndications are a team sport, and it’s a tough nut to crack on your own.
Books and seminars will definitely give you a great head start in understanding how everything works, but when the rubber meets the road and you’re underwriting a property so you can put in an LOI (letter of intent) by noon tomorrow, or you have a deal on the table but need to raise $1 million within 60 days, you need experienced apartment mentors in your corner who have been there and can guide you through.
To find the right apartment mentors, you need to first assess your own strengths, weaknesses, experience, and goals. Determine where your blindspots are so you can find the right mentor and the right program for you.
- If you’ve decided to focus on acquisitions but have never underwritten a commercial property, make sure that the mentor and program you choose can lead you through that.
- If you’ve decided to raise capital but have little to no marketing experience, consider a program like the one we offer – the Real Estate Accelerator – which helps you build a brand and platform to reach more investors.
A Quick Note On Paid Vs. Unpaid Mentorship Programs
If you’re serious about creating a successful business, we highly recommend you find a paid mentorship program, whether through us or otherwise.
That’s because a paid mentor is incentivized to help you succeed. An unpaid mentor might save you money in the short run, but since they’re not being paid for their time, they might not prioritize their time with you, thus slowing your growth.
We’ve had multiple coaches and mentors over the years, and they are the #1 reason we’ve been able to achieve such astronomical success so quickly. If you’re serious about this business, finding the right mentor is the best investment you can make in your future success.
How To Get Started
If you’ve reflected on your goals and have decided on a path to start your journey into the active general partnership side of multifamily apartment syndications, start by looking into the various apartment mentorship programs. Below are a few to get you started on your research.
Mentors Focused On Acquisitions & Underwriting
- Joe Fairless
- Michael Blank
- Mark & Tamiel Kenney – Think Multifamily
- Brad Sumrok – Apartment Investor Mastery
- Rod Khleif
- Vinney Chopra
- Neal Bawa
Mentors Focused on Raising Capital & Investor Relations
- Julie Lam & Annie Dickerson (yours truly) – The Real Estate Accelerator
- Hunter Thompson – Cash Flow Connections
- Michael Blank – Platform Builders
Whether you choose to work with us through our Real Estate Accelerator Mentorship Program or with another multifamily mentor, please know that we’re here for you.
If we can help provide our perspectives on these programs (we’ve joined a number of them over the years!), make connections / introductions, or otherwise help you on your journey, please don’t hesitate to reach out!