How to vet a Multifamily Syndicator
If you are planning to invest in multifamily syndications, you will need to find a syndicator, or a deal sponsor. There are thousands of syndicators in the US. Many of them specialize in different niches and different geographical areas. Since you are going to turn in your hard earned money, it’s important to spend some time vetting the syndicator.
Here are some steps you will need to follow to vet the syndicator or the deal sponsor:
Interview the Person
Make sure that you know the person you are investing with. If he or she is not one of your friends and family, make an effort to find out more about him or her. Interview the person. Talking to a person on the phone can tell you a lot. If possible do a Zoom call with the person. A Zoom call with video on is much better than a phone call as you can see the person’s face and reactions and whether the person’s full attention is with you or not.
Ask for References
Ask for at least a couple of references from this person. They should be preferably the investors in this person’s previous deals. You can ask them various questions such as does this person give you the Schedule K1 on time? Did this person give the returns as promised? Did this person give you updates about the property often? If yes, what was the frequency?
Search on Google
Nowadays a simple Google search can reveal a lot. Find out if there is anything negative about his person online. Find out this person is involved in a lawsuit by googling the name of the person with the keyword ‘lawsuit’ or ‘bankruptcy’. The intent here is to find out if the person is not a fraudster or haven’t gotten into any financial trouble earlier.
Find Their Social Media Presence
Another way to vet a person online is to look for their social media presence. Go to LinkedIn, Twitter, Facebook and Instagram and find out their interactions with other people. See whether those interactions are professional and warm. On LinkedIn find out if they are connected to other people in your network. You should be able to judge the reputation of the person easily this way.
Read Their Articles or Listen to Their Podcasts
If this person is also a content generator, then look at the content generated by them. Read the articles written by them or listen to their podcast if they have one. Look at their youtube videos. This will give you an idea about this person’s investment philosophy and the choices they have made in the past.
Check the Person’s (or the Team’s) Experience
You can check the person’s experience by looking at their website or LinkedIn. Usually syndicator’s websites mention their past deals and their performance. Usually Syndicators have a team. They have a property manager, attorney, broker, general partners, key principles in their team. Each of them might have a different kind of experience. A team with diverse solid experience will deliver a solid value.
Please note that this article doesn’t delve into how to vet the deal. The steps mentioned above must be done before the syndicator gets a deal in front of you. In many cases, SEC regulations require you to have a ‘pre-existing’ relationship with the syndicator. This means not only you have vetted the person, but have also established a relationship with the person.