So you’re getting into real estate syndication to purchase rental properties.
If you’re serious, you already have a business model in place, as well as having other investors and a lending institution in mind. But financials are just part of the syndication equation. To be successful at real estate syndication, there are certain best practices you should keep in mind.
1. Identify and gain access to a good property.
Warren Buffett once said, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” The same is true for investment properties. If you’re paying top dollar for a property, it better be a high-caliber property, and not just one with potential. If you’re taking a risk on an underperforming property, it needs to be at the right price, and you need a well-crafted plan to make it reach its potential.
It’s important to weed out poor investment opportunities first. Jumping on a property purchase that many others have passed over in generally ill-advised – unless you have the inside scoop. By the time a property makes it to the public market, hundreds if not thousands of investors have had the chance to purchase it. If they’ve all passed on it, there’s probably a reason. If you believe you know something other investors don’t know about a particular property or market, you’ll need to prove that to your investors up front and in the long run.
However, it’s better to not be in that position at all. How do you do that?
By being one of the first investors brokers call when a property becomes available. That’s easier said than done, at least on your own. Let Lion Rock come alongside you on your investment journey to broaden your access to brokers and investment opportunities, and help you determine which of those opportunities are right for you.
2. Have a property management partner maintain it.
Once you identify and close on a property, the next step is to make sure it is maintained properly to bring the best return for you and your investors. What does that include?
- Researching current and projected market data for your investment property
- Right-pricing your units to be both competitive and profitable
- Funneling interest to maximize occupancy
- Keeping things running smoothly, both from a financial and maintenance standpoint
- Ensuring your residents are happy and thriving
The key is for your property management partner to know the market and have the resources to do all of the above efficiently and effectively. You’ll want your property to generate as much passive income as possible, and the best way to achieve that goal is with the help of an experienced team.
3. Set strategic goals for future returns on investment and an exit strategy.
You may think you’re doing everything right. You may have even landed an awesome property, and have investors on board to boot.
But maybe you’re also missing the third and final step to make yourself – not just your investors – money. Achieve this final component by making a clear plan to appreciate the property, as well as an exit strategy.
- Identifying the most impactful property refinements you can make
- Designing a plan to make property improvements, according to a workable timeline and budget
- Optimizing your investment
- Growing your equity
- Knowing how and when to move on from the property
It’s easy to get wrapped up in the here and now, but it’s important to have a plan for the future, including your end game. After building equity and growing your investment, what is the best way to capitalize on everything you’ve done to this point? Should you sell and walk away, offer seller financing, or utilize a 1031 exchange to invest in another property? It’s best to identify your best option before you even begin.
Real estate syndication is a true team effort.
With real estate syndication, you’re not alone. At Lion Rock, we’re not just experienced property managers; we also have the network to grant you access to opportunities before they are made available to the masses. Once we help you find the right fit, we’ll collaborate to strategize your goals, and, most importantly, achieve them.
Just as your investors help make the property purchase a reality, Lion Rock is here to help with what’s needed to make the right purchase, at the right time, at the right price—and to know exactly what comes next as you look ahead to build your portfolio.