Today I would like to address a topic that I have spent a lot of time thinking about, reading about, and talking about with other investors: investing other people's money(specifically for buy and hold properties, a.k.a rental properties).
If you have money to invest, are an investor looking for more funds for your future purchase, or just curious about what we think the best way to do this is, keep reading.
Syndicating is a term that you may have never heard before, but the concept is something you do know, or should (especially as it relates to real estate). Here is a simple definition of this term:
Syndication: The pooling of investor's money to buy bigger real estate investments than you would be able to purchase on your own.
So, I imagine that you might now wonder why this concept is so important. One would argue that syndicating to create real estate deals is the most effective way to become wealthy in this business, unless you have a lot of working capital to start with - not all of us are so lucky.
As we continue to thrive in this business, we continue to come across real estate deals that we may not be able to purchase ourselves. This leaves an opportunity to create partnerships, and relationships, where we can leverage large pools of capital in order to make a purchase of an investment property. Since we are purchasing cash flow properties primarily, this would translate to higher returns on investment, or cash-on-cash returns (COCR), than investing in the stock market, a CD, bond, or other financial vehicle. Even obtaining 5%-10% COCR would be double or triple some of the best dividend yields in the stock market.
To that end, let's look at the important parts of a syndication deal: The Offering, or Target Property, the Location/Demographics, the Financials, the Deal Structure, and the Management Team. We will breeze over each of these, and come back to them in the future, but for now, a brief highlight should lend valuable insight if you see our deals, or other investor's deals.
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