Since commercial real estate syndications are a more sophisticated best real estate syndication investment strategy for a smaller portion of the population (i.e., accredited investors), it is more difficult to find sponsors compared to other passive investment opportunities. For example, go to your local bank and they will ask you if you are interested in high-yield savings accounts or CDs. Go to any financial website or speak with a financial advisor and you’ll learn about stock, bond, and mutual fund opportunities. REITs are even more widely discussed than syndications.
In this blog post, I will outline some of the best strategies for finding commercial real estate syndicators to passively invest with. The six ways to find commercial real estate syndicators below are based on Ryan Gibson’s, CIO and co-founder of Spartan Investment Group, presentation at this year’s Best Ever Conference.
Did you know that there are websites dedicated to creating a database of syndicators who are raising money for commercial real estate opportunities? Two of the most popular best real estate syndication websites are 506 Investor Group and FormDs. Both resources are different but serve the same purpose: to help accredited investors find commercial real estate syndicators.
506 Investor Group is a private and confidential group of passive investors who discuss, evaluate, and share due diligence on alternative investments, including commercial property syndications. One resource you can access without a membership is the Rate Sponsors page. View a list of sponsors, which includes what they invest in and their ratings and reviews from other members in the 506 Investor Group.
FormDs, on the other hand, is a free database of all SEC filings (called “Form Ds”) of startups, growing businesses, hedge funds, and private equity firms, which includes commercial real estate investing advice and commercial real estate syndications. On FormDs, you can search by the sponsor or company name, or you can filter by type (i.e., commercial property syndications) and location.
A simple approach is to use FormDs real estate syndicators to find a group and 506 Investor Group to review the group before scheduling an introductory call.
Speaking with other high net worth individuals is another way to find commercial real estate syndicators. Someone in your circle of influence (friend, neighbor, work colleague, etc.) may be passively investing in commercial real estate without you even knowing.
Another way to find a commercial real estate syndicator is through a fund that invests with commercial real estate operators. Known as the “funds of fund” model, a group will pool together investments from accredited investors and invest in other types of funds, like a commercial real estate fund. So, rather than finding a commercial real estate syndicator yourself, you find a group that specializes in commercial property syndication investing with other apartment syndicators.
Meetup groups and conferences that focus on commercial real estate are great resources for finding commercial real estate syndicators. You will either meet commercial real estate syndicators directly, or you will meet people who passively invest with commercial real estate investors. Here’s a list of real estate investor meetups to get you started.
If you see a commercial real estate development or rehab project in your area, chances are it is a syndicated deal. You can find out commercial property syndication who syndicated the project by looking up the property parcel on the local county auditor/appraiser site and determining who owns the asset. Most likely, it is owned by an entity, but you can go to either the SEC website or the Secretary of State website to look up the owner of the entity.
Once you find one operator to passively invest with, they can be a great source for other syndicators. They likely know other operators who are syndicating projects, either in the same niche or different niche. After you are happy with their performance, reach out to them for a referral.
Referrals from other operators (or other passive investors) are the best way to find commercial real estate syndicators, because they are pre-qualified, in a sense. You still want to screen them (apartment syndication is a blog with the most important questions to ask when qualifying a syndicator); however, they come with more legitimacy since they were referred to you by a trusted source.
The best way to find pre-qualified commercial real estate syndicators is from referrals. In addition to referrals, use websites, like 506 Investment Group and FormDs, to find and review prospective syndicators. Network with other high net worth individuals in your network to learn who they are investing with. Work with funds who invest in commercial real estate funds. Attend commercial real estate meetup groups and conferences. Lastly, assume any new commercial real estate project in your area is an apartment syndication deal and locate the group that manages the project.
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action