Beginning a real estate investment business is not an easy task, especially when you’re developing the business all by yourself. The process of starting small and building your way up like many others, applies to this business too. This growth process might take years before any significant growth is recorded on your real estate portfolio and this could be a problem. However, real estate investors can speed up this growth through a concept known as real estate syndication.
What Is Real Estate Syndication?
This can be defined as a process whereby investors come together to pool their resources to invest in major projects that would be too capital-intensive for them to afford on their own. In this way, syndications provide an opportunity for a much larger return on your investment.
Below are six steps to syndicating real estate deals:
1. Choose a housing market: A real estate syndication deal starts with the selection of a suitable market to invest. It is advisable to search for a location where investment properties are sold at affordable prices and where good returns are generated from investing.
2. Find and analyze investment properties: An analysis of the investment property is to be carried out after finding a good location. Having ample understanding of real estate deals analysis is essential for an effective real estate syndication. Your goal should be to find cash flow properties.
3. Conduct a home inspection: A property inspection is very important. It is wise to conduct a good amount of screening and projections upfront, before going to contract. This inspection would centre around, home foundation, roofing, electrical system and plumbing.
4. Get the deal under contract: Once the inspections are done and are satisfactory, it is important to get the deal under contract. When this is done, there is a binding agreement with the seller stopping him from signing another contract with another buyer.
5. Hire an attorney experienced in real estate syndication: There is a need to coordinate with an experienced attorney. Everything needs to be laid out to partners, especially risks involved with the investment. The mistake of syndicating a real estate deal without the assistance of an attorney should not be made. Your attorney will ensure that you fulfil all the regulations.
6. Close the deal: Once all funds are in place and due diligence is polished, it’s time for the closing. This can sometimes feel like more of a marathon than a sprint, but the results are well worth it.
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