Investor Resources

So, what disadvantages do syndications have for investors and sponsors? One reason we pivot away from single syndication and more towards a fund approach is, all your eggs are in that one deal, right? So that deal could go great, could be a home run, or the deal could go the other direction. 

So, we always found that if we were running three or four of these at the same time, we were always concentrating on the one that needed more attention. We let the other ones, the successful ones, just kind of go on, it wasn't fair as a whole. So that's where we adopted the fund approach. 

Another huge disadvantage for real estate syndications is there are a lot of sponsor groups that are scams. You hear all the time in the news, a new one pops up and it's a Ponzi scheme. That hurts our industry, but it goes back to finding a good operator, with a good track record. Talk to their investors, and see if they've paid out, and if so, on what schedule. 

We fight that every day. Joey has touched on transparency and trust, that's what we hang our hat on. It's frustrating to see those groups out there with these huge followings of people, and we know that they're not doing the right things such as diluting investments and taking giant acquisition fees to keep the lights on. Keep that in mind when you are getting into a syndication. 

The other thing for me is syndications are generally illiquid. It's locked up for periods of time. It could be three years, it could be five, it could be ten, it could be fifteen, and that syndication or that deal is at the mercy of the market. So, when you put your money in, it may be at one valuation, and when you take your money out and the property is sold, it may be at a completely different valuation. 

Over the last decade or so, valuations have gone up, however, it could go the other direction as well. So, that's another reason we also took the fund approach we're at now.