Recently I saw an interesting post about a checklist for selecting the right #multifamily real estate #syndicator to invest with, and found it worthwhile to capture my original criteria when I started investing, along with lessons learned over time. Here is my:
1. Skin in the game? If your syndicators don’t invest their own money, what’s to stop them from focusing on leveraging their money for the next deal, instead of focusing on operating your deal? They would have no downside risk.
a. Good: Syndicators invest the minimum.
b. Better: Syndicators invest MORE than the minimum.
2. Experience? There are many experienced syndicators, but as in any profession, experience does not guarantee competence. What training and mentoring do the syndicators have, not just in acquiring properties, but in operations? Imagine discovering that your syndicators have no training or experience in operations, monitoring KPIs, holding teams accountable for targets and inspiring excellence, or identifying and correcting root causes of problems.
a. Good: Syndicators have the training, mentoring, and experience to succeed.
b. Better: Syndicators have the training, mentorship, and experience to succeed COMBINED WITH an extensive career record of training and experience running large complex projects and businesses.
3. Track record? These days all syndicators can tout their track record, but like the tide that lifts all ships, the current economy makes virtually every deal look good. Investors need to know their syndicators have a long track record of outperforming their peers. Imagine investing with syndicators with great track records, only to realize they are just riding the economic cycle and aren’t adding innovative economic value.
a. Good: Syndicators’ track record exceeds their peers.
b. Better: Syndicators’ track record exceeds their peers AND have an extensive career record of delivering innovative solutions and world-class results running large complex projects and businesses.
4. Experience through multiple economic cycles? Unless your syndicators operated multifamily properties since 2007, they don’t even have experience through one economic cycle. Imagine investing with experienced syndicators, only to discover during a downturn that your syndicators have never successfully led anything through bad times.
a. Good: Syndicators are mentored by a multifamily syndicator experienced through at least one economic cycle.
b. Better: Mentored by a multifamily investor experienced through at least one economic cycle AND experienced successfully leading large complex businesses through economic downturns.
5. Customer relationship skills? Even if your syndication team consistently outperforms the market, there will be occasions when investors need information from syndicators, such as tax documents, or keeping investors appraised and confident during a downturn. Imagine discovering your syndicators have no customer service experience and hide their deficiency by avoiding their investors and avoid tenant appreciation activities.
a. Good: Syndicators’ current investors praise their communications and responsiveness.
b. Better: Syndicators’ current investors praise their communications and responsiveness AND syndicators are trained and experienced delivering world-class customer experiences in both good times and bad times.
6. Co-sponsor partnership? Even if everything else looks good, your syndication team won’t be at their best with decisions and execution if they are out of alignment, or have little training and experience implementing best practices. Also, smart syndicators partner with others with complementary strengths in key areas such as: skills and experience, time availability, and financial resources and fund-raising.
a. Good: Co-syndicators are aligned, either through prior work together, similar backgrounds, or by being part of the same multifamily training and mentoring organization.
b. Better: Syndicators are aligned AND each offers complementary strengths that make the team stronger than the sum of individuals.
Jeff Bartlett is a multifamily real estate investor and syndicator based in Dallas Fort Worth, and a member of the Brad Sumrok Apartment Investor Mastery Mentorship Program. To learn more about the benefits of multifamily real estate investing, review Jeff’s LinkedIn profile and Connect at: https://www.linkedin.com/in/bartlettmultifamily
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