Why You Probably Shouldn’t Get into Syndication

The following is adapted from Syndicating Is a B*tch

I don’t want to take you down that road, because I’d be misleading you. Syndication is no get-rich-quick scheme. It’s a way to pool your resources and the resources of other interested parties, to further your investment reach and increase your returns. 

Over time, it can be very lucrative, but it absolutely requires a lot of effort from you if you’re going to make it work. Putting together a deal is risky and uncertain. There are lots of moving parts and many ways in which it can go wrong. Even if you choose to be a silent investor, you’re still putting your money in the hands of someone else and trusting that they’ll bring you returns.

The good news is that syndication does offer incredible returns. And I’m not just talking about financial returns. I’m talking about massive improvements in your quality of life. The bad news is that, unless you’re willing to put in lots of work and shoulder lots of risks, it probably isn’t for you.

A Price Not Everyone Is Willing to Pay

Here’s the real skinny. There are no rainbows and lollipops in the world of syndication. There’s a way to scale your income and your impact. There are plenty of reasons to find a way to get involved. But the cost of entry is high, and it’s a price not everyone is willing to pay.

It used to be the norm that syndicators did it because they loved it and were good at it and had gained a ton of experience over time. Now, the scene has changed. Word has gotten out about the potential of syndication and everyone wants to give it a shot. Many people want to become syndicators because they like the idea of being a syndicator, not because they want to do the work.

This dynamic has changed the game considerably. There are a ton of people who call themselves syndicators but only have one or two deals under their belts. There aren’t many of us, percentage-wise, who have stuck around long enough to get those ten thousand hours in.

Everyone is enticed by the money and opportunity, and I get it. Those are real. They’re just not as easy to get as the brochures claim. If you walk into syndication blind, thinking that it’ll pay out like a slot machine hitting a jackpot, you’ll likely lose money.

That’s why I want you to be clear about the challenges in front of you. I don’t want you to get taken by surprise. Even having an idea of the process doesn’t really prepare you for the fast-paced challenge that comes with responding to every weird thing that pops up.

Still Reading? Here Are Your Next Steps

Most people have probably stopped reading by now. If that means they’ve backed off an industry they’re not prepared to enter, it’s for the best. I don’t want to be responsible for anyone losing their shirt. If you’re still with me, even after I’ve told you this game isn’t as simple as the candy-coated version you see advertised, you might have what it takes to succeed.

Are you prepared for a hundred unexpected hiccups as you put deals together? Are you comfortable with the prospect of endless networking to build your team? Do you think you can handle a random lawsuit from a disgruntled investor? Great. In that case, it’s time to get to work.

There are real estate events all over the country; sometimes it seems like there’s one every week. You no doubt have local meetups happening around you all the time. Start to tap into those networks if you haven’t already, and look for other syndicators and investors. Get to know what’s happening in your area. Go to as many regional and national real estate conferences and events as you can.

You don’t have to invest in anything that doesn’t make sense to you, but you do have to connect with as many people as possible. Just keep your bullshit radar turned on. Vet everyone who steps on stage, and meet as many people in attendance as you can. Networking is key here, so get out there right away. Most people in this industry are great but, like any space, you will encounter many that may not have the best of intentions and are just trying to make a buck off of you.

Best case scenario, you’ll meet someone who can mentor you in syndication. Check them out the same way you would if you were investing with them, but this time make sure they also have a ton of experience. There’s no way I could have helped mentor someone after one or two deals. Hell, I’m still learning things years later. If you find someone you click with who has a strong track record, stick by them and learn all you can. Your first deal will be much easier with someone you can turn to along the way.

Only if You’re Ready

As you get involved in syndication, take a step at a time, keep your eyes open, and seek out genuine, experienced mentors who can offer you solid guidance in rough times. If you do all of that, you have a better than average chance of making it work for you.

I love syndication, stress and all. I love what it can do for the world, and I’d love to see more people on board. But only if you’re ready. I’m sick of seeing sugarcoated introductions to syndication that get people in over their heads, lose money, stress everyone out, and give what we’re doing a bad name. If you want in after reading this article, great. If you realize syndication is a terrible fit for you, even better.

Find the spot that works for you, your family, and your future, and go after it. There’s a place for you at the table, and when you find the right one, nothing will ever be the same again.

For more advice on why syndication probably isn’t for you, you can find Syndicating Is a B*tch on Amazon.

Known in the real estate world as the Apt-Guy℠, Bruce Petersen is a serial syndicator who started with a 48-unit building and has now syndicated over 1,100 units. As the founder and CEO of Bluebonnet Asset Manager LLC and Bluebonnet Commercial Management, Bruce has received local and national recognition for his syndication efforts. He was the recipient of the Austin Apartment Association’s Independent Rental Owner of the Year for 2016 and the National Apartment Association’s Independent Rental Owner of the Year for 2017. In addition to being a TV personality and public speaker, Bruce also mentors people on how to invest in apartment complexes.

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