7 Steps To Investing In Your First Real Estate Syndication
Introduction
Investing in real estate has long been known as a path to building long-term wealth and creating millionaires.
“Ninety percent of all millionaires become so through owning real estate.”
Real estate has many advantages as an investment asset. It can provide steady, passive income, appreciation in value, tax benefits, and diversification for your portfolio. Whether you are a seasoned investor or just starting out, real estate syndications are excellent, and the most risk-adjusted way (when invested with the right sponsor) to achieve your financial goals.
So let’s get into it and talk about our forte; real estate syndications. Groundswell Assets specialized in sponsoring these specific types of group investments. In a nutshell, it’s basically multiple investors who pool their money to invest in larger, higher-value properties. This approach allows investors to benefit from economies of scale, as well as the expertise and experience of professional real estate operators.
If you’re interested in investing in a real estate syndication, here are some steps to get started:
1. Decide whether to invest in real estate, from the outset
2. Determine your investment goals
3. Find a syndication opportunity
4. Reserve your spot in the deal
5. Review the PPM (private placement memorandum)
6. Send in your funds
7. Celebrate
I like to envision the process as a funnel - a gradual narrowing down of options that ultimately leads to finding the perfect deal. Each step you take helps you gain more clarity and brings you one step closer to achieving your investment goals. So, keep pouring your time and effort into each step of the process, and before you know it, you'll be at the bottom of the funnel, sipping on sweet syndication success.
Step #1: Decide Whether to Invest in Real Estate From the Outset!
The first step is to determine whether investing in real estate is the right choice for you. Consider your overall financial goals, your investment timeline, and your risk tolerance. Real estate investing is a long-term game, and it may not be suitable for those who need liquidity or quick returns. However, over time you will find that the returns compound into a powerful groundswell of wealth building
Step #2: Determine Your Investment Goals
Next, you should think about what you hope to achieve through real estate investing. Are you looking for a long-term, stable income stream? Are you hoping to generate quick returns through fix-and-flip deals? Do you want to invest in a specific type of property, such as multifamily apartments or commercial buildings? Having a clear idea of your investment goals will help you focus your search for the right syndication opportunity.
Learn about the best type of deal that fist your personal investment goals in our “Multifamily 101” guide to getting started investing in multifamily assets.
Step #3: Find a Syndication Opportunity
Once you’ve decided to invest in a real estate syndication, you’ll need to find an opportunity that aligns with your goals. Start by doing some research and reaching out to experienced real estate operators. You can also attend industry events, join online communities, or speak with other real estate investors to learn about potential syndication deals.
In order to educate investors about potential investment opportunities, deal sponsors often provide a variation of the following materials:
Executive summary
Full investment summary or Offering Memorandum (OM)
Investor webinar
These materials provide a comprehensive overview of the asset, market, deal sponsor team, business plan, and projected financials. Think of it as a 360-degree view of the potential investment, allowing you to make an informed decision about whether it's the right opportunity for you. So be sure to review each of these materials carefully and ask any questions that come to mind. Knowledge is power, especially in the world of real estate investing.
Look for any reason NOT to invest in the deal.
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Look for any reason NOT to invest in the deal. 〰️
When searching for real estate investment opportunities, it's important to seek out deal sponsors who have a proven track record of success or who are partnered with a lead sponsor that does. Additionally, look for sponsors that have a strong, vertically integrated team in place and a clearly defined execution plan.
It's also essential to pay close attention to the projected returns and the associated risk factors involved in the investment. Don't hesitate to ask questions to clarify any concerns or uncertainties you may have, as this will help ensure that you're making an informed decision before investing your hard-earned capital. By carefully evaluating all these factors, you can help mitigate potential risks and maximize your chances of a successful investment outcome.
Please feel free to drop us a line anytime to start a conversation or get your questions answered.
Step #4 – Reserve Your Spot in the Deal
Once you have found an investment opportunity that fits your investing goals and criteria, it's time to reserve your spot in the deal. As mentioned earlier, real estate syndications operate on a first-come, first-served basis. Therefore, it's crucial to act fast if you're interested in a particular investment opportunity.
I’ve seen multi-million-dollar investment opportunities fill up in a number of hours.
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I’ve seen multi-million-dollar investment opportunities fill up in a number of hours. 〰️
To reserve your spot in the deal, you'll need to complete a subscription agreement and submit it along with your funds. The subscription agreement outlines the terms of the investment, including the minimum investment amount, the projected hold time, and the expected returns.
Some syndication deals may also offer a soft commit option. This allows investment partners to reserve their spot in the deal for a short period, usually a few days or a week, while they review the offering materials and make a final decision. If you decide not to invest or reduce your investment amount during this time, there is usually no penalty.
Step #5 – Review the PPM
Once you have reserved your spot in the deal, the next step is to review the Private Placement Memorandum (PPM). The PPM is a legal document that provides detailed information about the investment opportunity, including the risks involved, the business plan, and the terms of the deal.
It's crucial to read the PPM thoroughly and ask questions if you're unsure about anything. The PPM also includes the subscription agreement, which outlines the terms of your investment, including the amount you're investing and the expected returns.
It's essential to review the PPM carefully to ensure that you fully understand the investment opportunity before committing your capital. If you're unsure about anything in the PPM, don't hesitate to contact the deal sponsor or consult with a legal or financial advisor.
Step #6 – Send in Your Funds
After you have reviewed and signed the PPM, the next step is to send in your funds. The deal sponsor will provide wiring instructions or a mailing address for you to send in your investment.
It's essential to ensure that you're sending your funds to the correct account!
PRO TIP: Before wiring in your funds, be sure to double-check the wiring information, and let the deal sponsor know to expect your funds so they can be on the lookout.
Step #7 – Celebrate
Congratulations! You've successfully invested in your first real estate syndication. You're now a passive owner of a multifamily real estate asset. If we’re using the syndication-as-an-airplane-ride analogy, that means you’ve picked your destination, bought your ticket, checked your bags, reviewed the safety information, buckled your seat belt, and now you’re ready for a cocktail and a movie.
While the investment is passive, it's still essential to stay informed about the project's progress and communicate with the deal sponsor. The sponsor will send out an announcement that the deal has closed! In the following communications, you'll receive monthly updates on the project, including financial statements, property updates, and cash flow distributions. Additionally, you'll receive an annual tax form (K-1) for reporting purposes.
Conclusion
Congratulations! You now have a solid understanding of the real estate syndication investment process. You're now officially one step closer to becoming a savvy real estate investor and securing your financial future.
With the set-it-and-forget-it nature of real estate syndications, you can sit back, relax, and watch your investment grow. It's like having your own personal money-making machine!
Don't let the fear of the unknown hold you back any longer. Take action now and start exploring the exciting world of real estate syndications. Remember, every successful investor started with their first investment, and yours could be just around the corner.
So what are you waiting for? Dive in, do your research, and let the power of real estate syndications help you achieve your financial goals. The time to invest in your future is now!
Join Us
At Groundswell Assets, our team is passionate about supporting our investment partners in achieving their financial goals through multifamily real estate investing. We recognize the significance of making informed decisions and identifying investment opportunities that provide exceptional returns. This is why we are dedicated to delivering unparalleled investment opportunities and expert guidance to our partners.
We strongly believe that multifamily real estate investing is an influential tool for those seeking to expand their wealth and establish financial stability for their future. With our access to exceptional deals, extensive industry expertise, and unwavering commitment to producing results, we are confident that we can help you accomplish your investment objectives.
If you're ready to take control of your financial future and join the ranks of successful syndication investment partners, drop us a line. We are standing by, ready to help you make the most of this exciting investment opportunity. Don't wait - secure your financial future by investing along with us now.
