Identifying commercial real estate syndications is a more involved investment strategy which usually only available to accredited investors. It can be much harder to find sponsors than it is with other passive investment opportunities.
For example, if you go to your local bank, they may ask you if you’re interested in high-yield savings accounts or CD’s. You can go to any financial advisor or even visit a financial website for more information about stocks, bonds, and mutual funds. Even REIT’s are more widely discussed than real estate syndications.
Therefore, here are some ways you can find commercial real estate syndications.
There are websites that are designed to provide a database of syndicators who are raising money for commercial real estate opportunities. Two of the most popular ones are 506 Investor Group and FormDs. While these sites are different from each other, both of them serve the same purpose (which is to help accredited investors find commercial real estate syndications).
506 Investor Group is a private and confidential group of passive investors who discuss, evaluate, and share due diligence on alternative investments (including commercial real estate syndications). One thing you can access without a membership is the Rate Sponsors page. From there, you can view a list of sponsors, what they invest in, as well as their ratings and reviews from other members in the community.
Form Ds is a free database of all SEC filings (which are called “Form Ds”) of startups, growing businesses, hedge funds, and private equity firms (which includes commercial real estate syndications). You can search by the sponsor or company name, and you can filter by type and location. You can use this site to find a group and go to 506 Investor Group to review it before scheduling an introductory call.
Talking to other high net worth people is another way to find commercial real estate syndications. Someone in your circle (whether it’s a friend, a neighbor, or a co-worker) may already be passively investing in commercial real estate without your knowledge. Make no mistake, this how most high net worth investors find competent and successful sponsors and high net worth investment opportunities in general.
Another way to find commercial real estate syndications is to go through a fund that invests with operators in commercial real estate. This is known as the “funds of fund” model, where a group will pool their investments from accredited investors so they can put that money into other types of funds (such as a commercial real estate fund). Instead of finding a commercial real estate syndication on your own, you can find a group that specializes in investing with other apartment syndicators.
Meetup groups and conferences that focus on commercial real estate are great places to find commercial real estate syndications. You will either meet them directly, or you will meet people who already passively invest with commercial real estate investors. Basically, this is an indirect form of point #2.
If you know about a commercial real estate development or rehab project in your area, there’s a good chance it’s a syndicated deal. You can find out who syndicated the project by looking up the property parcel on the local county auditor/appraiser site to find out who owns it. It’s most likely owned by an entity, but you can go to either the SEC website or the Secretary of State’s website to look up the owner.
Once you find one operator with which to passively invest, this person can be a great way to find other syndications. People like that will most likely know other operators who are syndicating projects – either in the same or a different niche. Once you’re satisfied with their performance, reach out to them to see if you can get a referral.
Referrals from other operators (or other passive investors) are great for finding commercial real estate syndications because they’re already pre-qualified, but you still want to screen them. They do, however, have a better chance of being legitimate because they were referred to you by a reliable source.
For more information on how you can get into real estate investing as a way to build wealth, be sure to reach out to Trevor Shakiba at Shakiba Capital.
In this webinar/podcast Trevor reflects on the past 12 months with Exit Advisors while also evaluating the present and near term outlook for the future. He also goes through his own personal investing strategy with a specific emphasis on diversification and why everyone should own real estate.
With the 2017 Tax Cuts and Jobs Act, the federal government was able to create a wealth-building vehicle for investors by giving them access to opportunity zone funds. Trevor explains the pros and cons.