It’s no doubt about it that when people hear the word “syndication” they run the other way. It’s a complicated word and it’s not commonly used. To be honest, the majority of the time I try explaining it people ask me if it’s a pyramid scheme. I mean, I get it. When complicated strategies involving money come up, I would assume multi level marketing too.

But the truth is, this isn’t even close to a pyramid scheme. Put simply, syndication is a strategy for combining people’s money and resources together to buy large assets that we wouldn’t be able to buy individually. This is pretty powerful because it makes investing in these large apartments possible. So how does this work? Let me break down the steps involved.

Education

The first step in this world of syndication is you must get educated. Now, if you’re reading this blog then you’re already on this first step and that’s a great start. I would encourage you to take your time with this step. There is no time constraint and it’s all based on your comfort level. You don’t necessarily have to become an expert (because your lead sponsor should be) but you should be able to understand the lingo and know how to evaluate a deal. 

It is important to do thorough research so that you know what to look for when moving on to the next steps in the process - networking for sponsors and finding deals. 

Networking for Sponsors

This industry is very much all about networking. Whether you’re a General Partner or a Limited Partner, you must network for opportunities. So to no surprise, your next step in this process is networking for Sponsors who you might want to work with. The best way to do this will be to attend local real estate syndication networking events in your area. Most of the time it’s as simple as googling these events but you may also be able to find them on social media or a meetup app. 

When you go to these events and as you’re having conversations with General Partners, you’ll want to ask if they have a mailing list you can be added to. This way you will start obtaining deal flow from General Partners you’re interested in working with. You can start to learn what these offerings look like and you can start to gain more familiarity with the Sponsors. It’s also good to have a few more meetings with Sponsors you’re highly considering investing with. Be diligent in your screening process and make sure you’re on board with their business plans and strategies. This will make you feel more confident in investing with them.

Finding and Investing in a Deal

By this point you can speak the language of syndication, you have a strong deal flow coming in your inbox, and you can easily screen deals based on your investment goals. Now really what it comes down to is finding deals that work for you and moving forward with the process of actually investing. 

When you have an offering come through your inbox that seems interesting, attend the scheduled webinar. During that webinar, there will be a Sponsor presentation on the deal, where passive investors can ask questions and vet the deal. After this, the deal opens up for funding and you can decide to invest or you can decide not to. Either way, you are one step closer to earning passive income through the world of real estate syndication!