If you find yourself in a situation where you can’t seem to make any progress yet you have put in the time and effort to educate yourself, find your target market and locate potential properties in your ideal niche, you're more than likely struggling because multifamily real estate is a team sport. It’s close to impossible to be successful completely on your own. When my husband and I realized that it was time to find a good team to partner with is the moment our syndication success became a reality.
Once you make the decision that you need a partner, you must figure out what type of partner you are looking for. Do you want an alliance with another syndicator, do you want a Joint Venture partner, or do you want to become a partner in an existing company? To determine the best route, you need to understand your personal goals, strengths, and weaknesses and find someone that needs what you have to offer.
Partnering with the right team is a great growth hack and the best way to compress time and space between your capabilities and your goals. As long as you know the investment strategy and the asset class you want to be in, finding a partner with complementary skills will help to exponentially grow your portfolio. What you are probably missing is the time, money, resources, and complementary skills to get you where you want to go in the quickest and most efficient way possible.
There is a team out there that needs you as much as you need them. It’s important to make your desire for a partner be known within the industry. Some good ways to do this is using social media, networking events, and word of mouth to spread your message to others. Hang out where potential partners hangout. One of the most effective places to post is in multifamily Facebook groups. Be clear in your post as to what you are looking for, the goals that you have for your portfolio, and make sure to share the value that you offer a partner. Don’t forget to include how they can find you and if you prefer email or direct message. Ask those that see the post to share with those that might need a partner like yourself.
When you start having conversations with potential partners, remember that it should be a two-way interview. You need to make sure that they are a good fit for you as much as they need to know if you are a good fit for them. Listen closely to their needs and ask lots of questions. When you meet in person, suggest a restaurant. You can tell a lot from a person not only by how they treat the waitress but also by how they communicate with them and if they tip well. Very few partnerships work out so make sure that you are taking this step very seriously. Make sure that you are aligned in all of the ways listed below.
To ensure that you will be a good fit for them you can ask yourself the following questions.
Are you qualified for the need they have?
Do you have the skills or are you willing and able to learn the skills?
Is the team patient enough to train you?
Are you willing to put in the work to prove yourself?
Do you really want to work that hard?
Are they looking for an employee or a partner in the company?
What will you be responsible for paying?
How much travel will be necessary?
I highly recommend that you take the partnership on a trial run prior to negotiating a percentage of ownership. This will give you a chance to prove yourself then negotiate your worth as a percentage of the GP/company based on the value that you bring to the team. You will also be able to see first-hand the needs that present themselves and then seal the deal by providing the solution to those needs that the team didn’t know that you could solve.
Here are a few miscellaneous tips I can offer on choosing the right team to partner with.
There are many other essential partnerships that you must have to complete your multifamily syndication team. You will need a Syndication Attorney to draw up all the necessary documents for the syndication as well as advise you on the legal structure of each deal. You will want an insurance agent that specializes in multifamily. Another important team member is a cost segregation specialist, this team member will save every investor lots of tax dollars. Speaking of tax savings, you will want a CPA that specializes in real estate and can also offer tax strategy. To help your investors increase the return on their retirement funds and avoid capital gains tax, you will want to have a self-directed retirement fund and/or a deferred sales trust/1031 specialist to refer them to. You will definitely need a knowledgeable real estate broker and a real estate friendly title company to use to get more leads and get those deals closed in a timely manner. Finally, a conservation specialist can add value to your team by offering CapEx suggestions that will save you lots of money over time in terms of a conservation strategy.
Joining a team that has complementary skills to mine and creating great relationships with the essential secondary partners has been a game-changer for us. Our portfolio has grown exponentially while making the multifamily syndication model not only achievable but also enjoyable for everyone on the team. Pick your team members and partners carefully, but our advice when it comes to strategic partners is don’t wait...Elevate!