It's a fairly well acknowledged fact that when the going is good just about
anyone can make money. This is as true of real estate as any other market and
when the going is good there everyone tends to think the same way: they think of
the rewards more than the risks and want to get in there and make as much money
as possible.
In a tough market however everyone wants to hedge their bets and spread the risk
while limiting their exposure and it is here that syndicating deals are born. As
a real estate expert active in real estate for a long time and with a reputation
for delivering value and closing deals I get asked all the time to front
different syndications.
I am in the envied position of being able to pick and choose who I do business
with and which deals I decide to take on which means that I am also in the
position of picking those which give me the best return for my time and my
expertise. But that has not always been the case and I had to work my way to
this position through sheer hard work and application of what I call my 'rules
of picking a good syndicated deal'.
In brief, a syndicated deal is when you close real estate deals using other
people's money. This means you are acting as a front man using your skills and
knowledge to work real estate investments while behind you there is a syndicate
of people who have put in money to a varying degree and who will get a
proportionate percentage of the profits. You will also benefit from the deal by
taking an agreed slice of the profits as you will be instrumental in making the
deal happen in the first place.
As you realize the moment a market gets tough real estate investors and those
who want to invest in real estate without being real estate investors try to
limit their exposure by spreading their money in as many deals as possible. This
means they tend to go for syndicated deals which spread their money and increase
their chances of making a profit while reducing the risk of losing everything in
just one deal going bad.
From a real estate investor's point of view a syndicated deal in tough times
makes perfect sense as you tend to use zero of your money and simply invest your
time, reputation and expertise. This means that you can continue to make money
even when the real estate market is going through the doldrums which is what
being a professional real estate investor is all about.