5 Things Every New Investor Should Do Before Investing in Their First Real Estate Syndication

When you first consider real estate syndication as an investment option, it can feel lonely, intimidating, or even like you’re going in blindfolded. We get it because that was precisely how we felt when we first started. Like most of you, we imagined real estate investing as something we could see and touch and that it would be within a reasonable driving range. It was challenging to grasp the concept of investing with others we don’t know, in properties hundreds of miles away that we haven’t personally walked through. However, we were able to alleviate some of our fears. Every article we read, every podcast we listened to, and every conversation we had, made us more comfortable until we began to feel confident about taking the plunge.

Between the three of us, we all took different measures to get comfortable with the idea of syndicating. Jin and her husband traveled to various conferences to meet syndicators. Their first deal was with operators they met and had gotten to know and trust for more than a year. Maggie and her husband took a different approach. She shares their first syndication experience on the Fear Free Passive Investing Podcast with Lucas Miller. Please take a listen to Maggie’s audit like approach to vetting her first syndication. Lana also talked to numerous investors and syndicators before she invested in her first deal. Fortunately for her, it also happened to be a deal Maggie was a co-sponsor on.

There’s no right or wrong way to get that confidence you need to move forward. Some investors dive in after one conversation, others take several emails and meetings, and they’re still uncertain. If you’re considering your first syndication and feeling hesitant, we recommend doing your research, asking questions, connecting with other investors, reading through previous deals, and taking your time. Just know that you’re not alone. We’ve all been in your shoes before.

Do Your Research

The best way to build your investing confidence is through self-education and research. Listen to podcasts, read books, and find websites on real estate.

  • “Rich Dad, Poor Dad” by Robert Kiyosaki
  • “Investing for Good” by Annie Dickerson & Julie Lam
  • “Passive Investing in Commercial Real Estate” by James Kandasmy
  • “Principles of Real Estate Syndication” by Samuel Freshman
  • “Multi-family Millions” by David Lindahl
  • “Tax-Free Wealth, How to Build Massive Wealth by Permanently Lowering Your Taxes” by Tom Wheelwright, CPA
  • Invest for Good with Annie Dickerson and Julie Lam
  • Fear Free Passive Investing with Lucas Miller
  • Bigger Pockets Podcast with Brandon Turner and David Greene
  • The Best Ever Show with Joe Fairless and Theo Hicks

Ask Questions

Relevant Facebook groups and forums like BiggerPockets can help you learn what questions you should be asking. Other people have likely had your same concerns and, just by reading through the forum’s questions and answers, you’ll gain clarity.

Remember, there are no dumb questions and that you have the right to be diligent about getting answers to your concerns.

Connect with Other Investors

A successful investor needs a supportive community and considering that syndication is a group investment, you’ll want to get networking. Any new investors will share similar anxieties, questions, confusion, and excitement. Experienced investors can provide invaluable firsthand accounts of their experience with various projects and sponsors. Find other investors through online forums like BiggerPockets, local networking events, or by asking sponsors if they’ll connect you to their current investors. You may even come across investors you find very relatable and want to connect with on some of the recommended podcasts above.

Review Previous Deals

Finding comfort with financial projections, summary data, and investment lingo may feel overwhelming. As you review more investment summaries, you’ll start to understand how deal packages flow, how each sponsor communicates, and exactly which investments interest you.

Take Your Time

Investment opportunities often fill up quickly. The speed at which you need to make an investment decision can cause new investors to panic and start to believe they are missing the best deals.

Remember, there will always be another opportunity. Allow yourself time to complete the steps laid out here so that when you make your syndication choice, you are confident about every step.

Considering Everything

If you take nothing else from this article, remember it’s completely normal to feel skeptical, anxious, and even timid when making your first syndication commitment. Although it’s easier said than done, try not to get stuck in analysis paralysis. The ability to take action separates the successful from those who give up or stand on the sideline.

Your first real estate syndication deal is a massive milestone in your investing journey, and even though your head might be spinning now, it will get easier.