Smart real estate investors know that the best way to make money in the real estate investment market is to use other people’s money and trade their own expertise and negotiating skills for a slice of the profits.
As a real estate investor of many year’s experience and with a certain reputation for closing lucrative deals I am constantly being approached by groups of investors who want to break into the real estate market without risking huge chunks of their money and without having to go through the painful learning curve that’s often associated with investing in a market you know little about.
I am in the advantageous position of being able to wait until a good deal comes along and then choosing the group of investors I will work with. This, in essence, is what a syndicate real estate deal is. Rather than put up all the money, investors put in a percentage which will reflect their percentage of the profits, thus minimizing their exposure in each single real estate deal.
The question is what do you do if you have not yet got a reputation but can still pull off a profitable real estate deal and do not want to risk your money? Well, this is where you need to be creative. The moment you have a deal you think you can close at a profit you need to move fast to get your syndicate together.
Potential real estate investors willing to put their money up can come from almost anywhere: friends, family, colleagues, people you work with, acquaintances, business angels and professional investors who earn their money by investing through syndicate deals. The list is almost endless and putting a syndicate together will depend on two things, first the kind of deal you think you can close, which will also determine the profit margin and the maximum number of people you will want to come in and second on how convincing you are in getting people to trust you with their money and give you a free hand so you can make it work for them.
If, right now, you are thinking that there is simply no way you can say anything to anyone to get them to trust you with a few hundred thousand dollars you can think again. Putting together a syndicate and fronting it is very much a case of cool judgment, steady nerves and the ability to negotiate carefully, pay attention to detail and find new ways to squeeze profit out of a real estate investment.
Good news travels fast and it usually takes no more than one successful deal to get you a reputation in which case you will find that then people trust you enough to want to come to you rather than you having to hunt for them and that is the hallmark of success.