5 Things Every New Investor Should Do Before Investing In Their First Real Estate Syndication
When you first begin to consider real estate syndication as an investment option, it can feel lonely, intimidating, or even like you’re going in blindfolded. I personally experienced fears around investing in a property I’d never seen, concern about how I’d get my money back, and doubt around the inability to log into an account and see my money.
These fears were addressed head-on through research.
Every article I read and every conversation I had built my certainty until I began to feel confident toward taking the plunge. My real estate syndication investing journey started with online crowdfunding websites such as: Realty Shares, CrowdStreet and Fundrise.
At one point, I felt educated enough to take the plunge and hit the invest button.
My returns through these platforms have been a mixed bag, in fact Realty Shares went out of business in 2018 and was later sold to another Asset Manager company.
Since then, I primarily deal with Operators and Syndicators that I have built relationships.
If you’re considering your first syndication and feeling hesitant, I recommend doing your research, connecting with other investors, reading through previous deals, and taking your time.
Do Your Research
The best way to build your investing confidence is through self-education and research. Listen to podcasts, read books, and find websites on real estate.
My Book recommendations:
Rich Dad, Poor Dad by Robert Kiyosaki
It’s a Whole New Business by Gene Trowbridge
Principles of Real Estate Syndication by Samuel Freshman
The Millionaire Real Estate Investor by Keller Williams
Real Estate Math Demysitified by Steven Mooney
Podcasts:
BiggerPockets Podcast
Best Real Estate Investing Advice Ever with Joe Fairless
The Real Wealth Show with Kathy Fettke
Ask Questions
Relevant Facebook groups and forums like BiggerPockets can help you learn what questions you should be asking. It’s likely that other people have asked about your same concerns and, just by reading through the forum’s questions and answers, you’ll gain clarity. Remember there are no dumb questions and you have the right to be diligent about gathering answers to your concerns.
Connect with Other Investors
A successful investor needs a supportive community, and considering that syndication is a group investment, you’ll want to get networking. Any new investors will share similar anxieties, questions, confusion, and excitement.
Experienced investors can provide invaluable firsthand accounts of their experience with various projects and sponsors. Find other investors through online forums like BiggerPockets, local networking events, or by asking sponsors if they’ll connect you to their current investors.
Review Previous Deals
Finding comfort with financial projections, summary data, and investment lingo may feel overwhelming. As you review more investment summaries, you’ll start to understand the flow of the deal packages, how each sponsor communicates, and exactly which investments interest you.
Take Your Time
Each new investment opportunity fills up quickly. This can make new investors panic and start to believe they are missing the best deals. Remember, there will always be another opportunity. Allow yourself time to complete the steps laid out here, so that when you make your syndication choice, you are confident about every step.
Considering Everything
If you take nothing else from this article, remember it’s completely normal to feel skeptical, anxious, and even timid when making your first syndication commitment. The ability to take action is what separates the successful from those who give up. Your first real estate syndication deal is a huge milestone in your investing journey, and, even though your head might be spinning now, this is a time to savor.
More about the author: Alex Kholodenko
Alex is a Managing Partner at Wealthy Mind Investments.
