Real estate syndication is one of the most effective ways to raise capital for your real estate investment. This is a simple transaction between the sponsor and an investor or group of investors. On the other hand, just like any business deals, many investors fail because they don’t have enough information and strategy.
Today, I am going to discuss the 5 common mistakes I have seen and have made myself. I’m giving you this information in order to prevent the pitfalls or making mistakes when raising money for your real estate business. I am not perfect or not bragging by any means, but I am here to share my knowledge and experience that can bring you great value.
1. Not Being Compliant Legally
When doing deals for real estate investment, one of the most important things to keep in mind is the legal matter. Make sure that you have the knowledge of how the regulations work and should have the right documents. You should be careful, or else you might be sued for fraud because you don’t have all the necessary legal paperwork.
To avoid this from happening, it is best to consult a lawyer who specializes in real estate syndication. He or she will be there to let you know what necessary specific strategies and papers that you have to prepare to raise money.
2. Not Having Enough Deals
This is something that my partner and I actually experience over the past year. Though we have normal deals that are coming in the tightness of the market constraint us on being able to provide more opportunities to our network. Following up is also an ideal method to get deals in the pipeline. It is essential if you can create a plan that can help you get more deals such as cold calling or direct mail. When you do this, it will allow you to convert one from non-interested to interested.
3. Not Raising Enough Money
Capital is very important in every real estate investment. Without a good source of money, it can be difficult for you to take care of any improvements or legal costs of handling a real estate property. You don’t want to go back and forth to your investor asking for additional capital right? It’s rather important to raise more capital than just having enough capital on hand. What we did is we ensure to raise enough capital upfront or if we don’t we just take care of it ourselves.
4. Poor Marketing
Poor marketing is also one of the major reasons real estate syndicators fail. Since most of the deals are done online which means competition is also very tough. If you want to be noticed right away, it is very important to have effective marketing for sponsors to see several good reasons why they need to trust and stick to you.
5. Poor Communication
You need to have good communication with your investors. You have to be transparent, whether it is good, bad or ugly. Through this way, it helps in building trust and rapport as well. As for me, I make sure that I always keeping them informed through webinars for them to have a better understanding of how I operate. Also doing Q & A and face-to-face meetings sessions with the investor to ensure that everything is clear and they get the information they need.
In conclusion, with the above-discussed real estate syndication mistakes, hopefully, I was able to give you the information that you need for you to succeed in this industry. With this information, I think it can help you understand why you need to avoid them from happening and use this to improve.
P.S.
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