What Makes a Good Real Estate Syndicator?

When it comes to identifying a good real estate syndicator, there are characteristics to search for and characteristics to avoid.

Search For Experience and Reputation

Know the sponsor's track record. Don't jump into a deal on the blind recommendation of a friend. It's not that your friend would deceive you, it's that he may have a blind spot for the sponsor that, later on, would have kept you out of a deal that isn't performing. Have some real conversations with your sponsor and/or sponsor team. They are people with attributes and deficiencies just like you. They have a core ethic you should try to understand. Who's money does he care most about? We are all self-interested. A business only survives if it creates satisfied customers. A good business owner knows there is no future without a satisfied customer; that sometimes he must lose money in order to satisfy a good customer. Does your sponsor believe that? Her track record will reveal it. 

Avoid Extraordinary Expected Returns

There is a temptation to only consider opportunities with extraordinary expected returns. Experienced syndicators seldom, if ever, offer extraordinary returns. This may seem counterintuitive. After all, the more experienced a manager is, the more capable she is of meeting the objective, regardless of the plan. In 1926, Johnny Sylvester became the most famous little sick boy in America after Babe Ruth promised to smack a World Series homer for him - and hit three! Oh, how we are carried away by arrogant expressions of superiority! Home runs are great, but with the exception of the Babe, batters do not promise homers. Baseball games - and investment endeavors - are won with base hits. Keep playing, and you'll get your share of home runs. Remember, The Babe led in strikeouts, too.