Becoming a deal sponsor for a real estate syndication can be an incredibly lucrative and rewarding endeavor. It’s also a way to make your mark in the industry and grow your portfolio. But it’s not as simple as just jumping into it. There are many steps that you need to take in order to become a deal sponsor, and this blog will outline the nine of them. 

Step 1 – Get Educated

Before you launch into syndication, however, it is imperative to make sure you are educated about the process.  Get familiar with the local market trends, understand the financial structures involved, and research the basics of syndicated investing.  This knowledge will give you confidence prior to joining a syndication team and will help to ensure your success as a deal partner or sponsor. Taking the time to become educated on real estate syndication will definitely pay off in the end.

Step 2 – Build Your Network

Once you have a good foundation of knowledge, start building relationships with others in the industry who could potentially become partners or investors. This includes brokers, attorneys, accountants, lenders, title companies, general contractors, property managers, civil engineers, architect, etc. Networking is key to becoming successful in any field but especially in real estate syndication where relationships are everything.

Step 3 – Find Deals

While there is no one-size-fits-all approach to finding lucrative commercial deals, this list will provide you with 7 different strategies that have proven successful for many syndicators.

  • Network with local professionals in the real estate industry to get tips on where to invest. 
  • Connect with brokers, who often know listings before they hit the market. 
  • Join professional organizations like CCIM, REIA, ICSC, BOMA, SIOR, NMHC and NAIOP. 
  • Utilize online platforms such as LoopNet, CoStar, Crexi and Ten-X Commercial Marketplace.
  • Attend conferences and trade shows to meet potential buyers/sellers and learn about trends. 
  • Use social media to connect with potential partners/customers. 
  • Establish relationships with other investors to stay up-to-date on market activity and possibly hear about exclusive deals.

Step 4 – Analyze Deals

After you’ve identified potential deals that fit your criteria, analyze them deeply to ensure they meet your goals and objectives (e.g., cash flow projections). If there are any issues with the deal that cannot be addressed through negotiation with the seller then it’s best to move on unless you have plans for mitigating those risks down the line.

Step 5 – Negotiate Terms

It’s important to negotiate terms up front so that all parties involved are clear on what their responsibilities are throughout the process (e.g., due diligence period). You should also look at other deals similar to yours so that you can use them as bargaining chips when negotiating with sellers or investors (e.g., asking for better terms than another investor has received). This could help you get more favorable terms than if you were just relying on negotiations alone without any leverage points.

Step 6 – Assemble Team

Once you’ve negotiated terms with sellers and investors alike, assemble an experienced team of professionals who can help make sure everything runs smoothly throughout the process (e.g., attorneys). Having a great team not only ensures that all legalities are taken care of but also helps build trust between all parties involved which is essential for success in real estate syndication deals. 

Step 7 – Due Diligence Period

During this time frame (usually one to several months), conduct extensive due diligence on potential investments such as running background checks on tenants and inspecting properties for damages or code violations etc… Make sure all inspections are completed before closing so there aren’t any surprises once ownership changes hands! 

Step 8 – Raise Capital

Once due diligence is complete and all parties agree on terms, it’s time to raise capital from your network of investors (limited partners) so that you can acquire the property(ies) being offered up by sellers/sponsors etc… Use this opportunity not only to raise capital but also build relationships with potential partners/investors for future projects down the line!

Step 9 – Closing/Funding Processes

Be prepared for closing/funding processes which usually involves signing documents such as loan agreements or partnership agreements between all parties involved as well as transferring funds from limited partners into escrow accounts etc… Ensure all paperwork is properly filed before proceeding with closing date set by seller/sponsor(s).  Becoming a deal sponsor in real estate syndication deals requires taking several steps along the way; from getting educated on local market trends and understanding how financial deals work to finding potential investments worth analyzing further and assembling an experienced team of professionals who can help make sure everything runs smoothly during due diligence period until the final closing date set by seller/sponsor(s). By following these steps closely while building relationships along the way, anyone interested in becoming a successful real estate syndication deal sponsor will be able to achieve their goals!