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Starting a syndication business isn’t as complicated as it seems. Real estate syndication is an excellent way to pool resources together and gain high returns on a property. However, there are many things to consider when starting a syndication business to avoid starting on the wrong foot.
You need not just have the right professionals in place but also be very organized. Jacob Blackett runs SyndicationPro, a syndication business that is fast becoming a leading one in the industry.
Here are some of the factors he put in place to make it this successful.
With his first company, Jacob purchased real estate, did syndications, and made profits from real estate through solid partnerships. After the Jobs Act passed around 2014, most real estate services started going online. And this is where SyndicationPro came in.
With licenses given to people all around the world, colleagues, friends, and family were able to manage their syndication business online seamlessly. This highlights one of the important aspects of starting your syndication business, which is to make it flow easily even without being present physically. We’re at a time when people prefer to handle their business online rather than go into a physical office.
A big part of managing a syndication business is making sure that you’re streamlining your back office and providing services to your investors. So, this means you have to build in a lot of automation and tools to streamline this process as much as possible.
Like in SyndicationPro, an investment portal is built into this software to ensure investors have all they need to work smoothly on the platform.
This involves essential features like capturing the details of potential investors and convincing them to become leads. You should take on a holistic approach that facilitates relationships between your business and potential investors.
For example, SyndicationPro built into the software the means to register and capture leads straight from the user’s website. Therefore, they are able to bridge gaps and track communication at all times.
The front end of your syndication business should embrace automation before moving to other aspects like underwriting and asset management. You will bring more value to your company and users when you integrate essential tools and functions into your syndication business.
For any business, you need to go in equipped with as much information as possible. One way to acquire that is by becoming an unpaid intern at an already-established company.
Make yourself as indispensable as possible by learning all there is to know about sourcing properties, analyzing properties, talking to investors and lenders about projects, managing independent contractors, and the financial aspects of your business.
It’s not about becoming an expert in every department, but you must have sufficient knowledge to handle basic tasks that come up. However, it would be best if you plan to leave this company after a year when you’re ready to start your syndication business.
To raise capital for your syndications, it’s better to focus on accredited investors than sophisticated investors. With sophisticated investors, you have limits to how much they can help you raise. Also, this investment could be in the form of debt and not equity.
This class of investors requires a lot of hand-holding, so they are considered high maintenance as they all want to be at the forefront. There is also a plus side to raising capital through sophisticated investors. They won’t scrutinize your project much, as yours may be relatively small compared to other projects they are familiar with.
Yet, in the case of accredited investors, they will only invest in your project when they want to invest in you. They want to see that you have the talent, drive to succeed, and experience.
Another financing option to check out is from family and friends. Still, no one is keen on putting their personal relationships at risk if the project fails. However, it’s okay to start small.
With these tips, you should be able to get your syndication business up and running in no time.