The Key Team Players of Real Estate Syndication
by Christopher Levarek
“The strength of the team is each individual member. The strength of each member is the team.”
- Phil Jackson
If you’ve been seen some of our posts by now, you can most likely see that we are into teamwork. Whether working with family, friend or partners, we have found great success in the power of a team moving together towards an objective or goal.
This becomes quickly visible when investing into real estate as there are many roles and parts to play. Ultimately, many start investing in real estate to acquire more freedoms and to do this best actually requires allowing others to play key roles so you do not have to. This becomes apparent in any project.
Much like smaller real estate projects, a real estate syndication is no different. It requires lenders, brokers, property managers, investors, operators and more. All are working towards a similar vision on a real estate deal, however each play significant role in the success of the deal.
In this article, we will discuss the various roles in a real estate syndication and what part they play in the overall project.
The Roles of Real Estate Syndication
Although many parts are available, the key main roles to be played include:
General Partners
Lender
Property Manager
Real Estate Broker
Passive Investors
Key Principals
Valkere Investment Group
General Partners
The general partners are often termed the “operators” or “sponsors” of multifamily syndication. Typically, these individuals are working with the real estate broker and lender to secure the loan and acquire the property. They handle the discovery and acquisition of the property.
The general partner will often be the one signing on the loan and the closing documents on closing day of the property.
These “Operators” will then ensure that the execution of the business plan is put into place by overseeing daily operations or working with the property managers. Renovations schedules are managed to ensure deadlines are reached and budgets are not exceeded.
Many roles can be found within the General Partners but in essence they are the main coordinators of the project.
Lender
Just like buying a home, the lender or bank is supplying the main portion of the capital for the real estate acquisition. The lender supplies the loan for the property. They will perform due diligence, underwriting and order an appraisal to assess the property value.
They are interested in the property’s success as they have a vested interest and will help ensure the business plan is one of worth and attainable.
Property Manager
Upon acquisition of the property, the property manager is essentially the role that ensures the day-to-day operations of the business or the apartment complex are working. Rents are collected, tenants are placed, leases are renewed, new/existing renovations are overseen and daily/weekly calls with the operator are in place to ensure the business plan is executed.
The property manager is the “boots on the ground” role and a necessary one to having a pulse on the project for the overall team. They will address any unexpected surprises and keep the machine running while the project plan is under weigh.
Real Estate Broker
Similar to a real estate agent for a home purchase, this person on the team ensures the acquisition is smooth between buyer and seller. Often they are involved from the start and even perhaps found the deal for the general partners.
They work to ensure requests of the general partners are expressed and the purchase of the property is conducted in an timely manner following local/federal guidelines. Having a strong real estate broker is key to a successful acquisition.
Passive Investors
In multifamily syndication, passive investors do not have an active role in the project yet they play a key role to the success of the project. These members of the team invest capital in exchange for a share of the returns and other real estate investment benefits. This capital funds the renovations, down payment and other costs.
Investing passively allows these investors to follow the project success and enjoy the benefits along the way with little needed work. This also can be a great way to learn or get started in real estate while reaping the rewards of a real estate investment.
Valkere Investment Group
In a real estate syndication, Valkere Investment Group is an active member of the general partnership. However, we really focus on investor relations and raising the equity needed for the project.
Our main purpose is to server as the guide and safeguard for investors. We verify that the sponsor’s projections are conservative to our requirements and the project is worthy of investment. We ensure the exit strategies are well understood, the invested capital will be preserved and ultimately grow.
After the closing of the property, we work hand-in-hand with the sponsor and operators to monitor the business plan and ensure our investors receive updates, financial reports and, of course, distributions.
Our goal is to provide a enjoyable experience in passive real estate investing and ensure investors are well-informed and comfortable throughout the life of the investment.
In Final
Real estate syndication is a team sport. It requires multiple team members all contributing and playing a role to have a successful outcome.
There are even more team players in syndication then the key roles listed above to include appraisers, CPA’s, cost segregation engineers, legal attorneys, insurance agents, construction teams and more.
In closing, we will leave you with an African proverb we feel summarizes this entire article and syndication in general, “If you want to go fast, go alone. If you to go far, go together.”
Invest Smart!