After going back from the Syndication event. I am confident enough to pull the 1st trigger on a mini syndication deal with close friend and family. After months of searching and negotiation we were able to secured 3 townhouses next to each other
The way i structure the deal is pretty simple. each of us would put in an email amount of money for the 25% down payment (yes, i put my own money into the deal as well) the the rest i financing it out through a Commercial bank that I has a relationship with. Because of the relationship that i have, he was able to finance the renovation amount as well which boost the leverage ratio and hence increase the return of the investment.
The mini syndication
what do i charge my passive investors? NOTHING! NOTHING so far. I am thinking of taking out the company 100$ a month and maybe some fee when we sell the property to pay for the time that i have to suffer. but other than this. I am not thinking of anything else at the moment of writing this article. I can almost guarantee you that no syndicator on earth will do this kind of deal – But i am the exeption.
What’s more important than money? It’s my reputation and the trust that people have in me. I put my investors return as the top priority.
As of right now everything is divided equally from expense to income. a dollar come in, we split it by 4, a dollar goes out, we split it by 4 (there are 4 of us in the deal)
There is surely better way to structure this deal. I’m open to all suggestion as i am working on finding the next deal to syndicate, and it won’t be a mini anymore
Renovation and managing the property
Anybody can go buy Â properties. But the key is to managing it successfully and this is where most people lose their shirt
Some pictures that i haven’t post before: I admit that i did a bad job on estimating the rehab on this deal and ended up asking for all the help i could get from family and my..passive investors. (Yes i made them come out, clean the kitchen, and replace the laminate)
The Result for far
It has been almost a year and where are able to charge market rent of 2 out of 3 of the property already. The tenants at the 3rd property do not give me any issue so far and the rent is close to market so i will let them stay for now. If thing is going well then i am expecting 17% ROI this year instead of 0% compared to last year. This is just pure ROI on rent btw. I have not even including any Appreciation and tax benefit. So far a pretty sweet deal.
|estimate Property Taxes||-4940|
Need to find a good backup contractor. My contractor was out of the country and then sick after he came back. This resulting in me looking for a contractor in a hurry and it ended up in a nightmare.
Do what you do best and delegate the thing you don’t want to do. Since the contractor I hired was bad. Â I attempted to do some of the remodeling by myself and…fell from the ladder with a bucket of paint on my head. As the result: 7 stitches under the chin and a whooping $2000 in medical bill. This is just plain stupid from my part and this is the lesson i will remember for the rest of my life
Estimating the rehab correctly: If you follow my blog you will notice that i am pretty much a big picture guy and lean toward mindset rather than actually technical detail and application. I have a vision. i can see myself wealthy in the future but i don’t know the detail of getting there. As the result. I estimate the rehab incorrectly and end up have to bufferÂ my own money into the company when it go negative.
If you are a detail guy or gal. Good for you. If not, then when you go estimate for the rehab, bring your contractor or a partner Â who look for stuff in detail to cover your weakness
What’s your story on the 1st syndication deal? Did it go smoothly or you are like me, dig myself a grave then eventually fight my way out of it. Are you a guy that must get all the duck in the row before you do something or are you a guy like me that just commit to do first then figure it out how to actually do it later?
I would love to hear your story