What Are The Components of a investment syndicate
Posted by Foreclosure Prevention in FinanceAs the partner for EstateSyndicate.com, the largest real estate syndicate in the Midwest, I have seen many definitions of what syndicators are but none have tied it all together in a short succinct explanation. So here you go.
A investment syndicate is a association of people that have assembled their wealth and talents for a common purpose.
Next we have to talk about what it is they put together. There are both monetary and human capital assets. So let’s assemble a hypothetical syndicate as an example.
In order to get deals done on a more massive scale we need a number of types of human capital. Here’s a list:
* Real Estate Professional – this is the person who has expertise in deals. He or she understands how to make transactions work. This real estate professional should know about foreclosure deals, short sales, types of deeds and financing options, trusts, how to flip contracts, how to put together an LLC for real estate investing or set up a REIT, options and how to do rent to own transactions. This is more than a real estate salesperson because this agent should have on-the-ground experience in doing deals not just selling real estate.
* Money Supplier – This could be a mortgage broker or a hard money lender or a person that can put together a supply of money{/spin] to push forward a deal. This person should have knowledge of underwriting, putting together loan documents, lender application forms and processes,and have a ready supply of money that is available in two or three days to do cash deals. A bank is not a money supplier – they take way too long.
* Marketer – This person has not only unique skills in promotion but also has the pieces in place in order to generate lists of realtors don’t know how to market and that’s why they are not making much money. Realtors are notorious for “no marketing knowledge” and that’s why houses are sitting on the market so long. (the state of the economy matters very little.
* Lawyer – this person is very useful on an “as needed” basis. Occasionally your syndicate will need unique contracts, partnership documents and legal advice about setting up investment entities. Your real estate syndicate should have your own “boiler-plate” docs ready to go so a lawyer isn’t needed except on demand. You should have a prearranged relationship with this professional so they know they are your “go to” guy and treat you accordingly.
* Accountant, – The design of every enterprise is not the money coming in the door but rather how much of it you get to keep. Taxation and entity structure plays a big role in the final outcome so an accountant can be an invaluable asset in the group. Find somebody that is really competent in real estate taxation and entity structuring for tax advantages to maximize your profits.
* Closer – If you plan on doing regular closings a closer can be invaluable to get all the ‘i’s dotted and the ‘t’s crossed and knows the laws and requirements to complete title and lending documents and most importantly how to legally distribute the money.
In this mix of specialist the real estate professional is the person most likely to be the syndicator because he’s the one engaged in the whole affair most often.
There you have it – a full blown real estate syndicate.
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