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Working in Apartment Syndication, One Year After!

I started working in apartment syndication exactly one year ago wherein I started helping an apartment syndicator raise capital to close on a 320-unit apartment. Prior to that, I spent about 3-4 months learning from an experienced multifamily coach who had a program that was meant to teach me how to find, purchase and syndicate my own 100-unit apartment over what we decided would be about a 12 to 18-month goal. After 3 months into his program, it dawned on me that this end to end syndication business was a bit overwhelming and that it was definitely going to be a team sport. The landscape was competitive and I starting feeling that brokers, lenders and investors would be asking what my experience was before I would be able to get any business from them.

Working with Experts

Since I didn’t have any commercial real estate experience beyond some single family and small multi-family properties that I managed; I thought there must be a better, faster and more successful way to get into this business. I left the full-time corporate world about 6 months earlier to fully dedicate myself to this area.  So, I had the time and thought why not just work with the experts for a while and gain that experience?

One day, I simply asked my coach how I could help him as he was doing a lot of large apartment deals in the background. He suggested that I raise capital for him.  I would learn and leverage the expertise and credibility of his partners while learning how to discuss apartment investing and deals with prospective investors.  The investors I brought in would be my investors not his and that per the SEC rules, I had to be part of the general partnership (GP) and help him with other activities to be able to market the deals legally. I believe that being part of the GP had an attractive potential income component to it that further enhanced this proposition. I would be compensated for how much I raised and paid a bit of the acquisition fee at close. I would get part of the GP quarterly distributions thereby creating a passive income stream and a potential for a much larger payout when we refinanced and / or sold the property in 2-5 years.

One Year Later

Fast forward one year and I’ve raised close to $9m to help acquire over 5 large apartment communities.  I’m part of the GP team and own a part of over 1200 units.  I’ve grown an investor base to over 80 accredited investors.  On this last deal that I’m finishing up, almost half of the investors are return investors from prior deals which makes the capital raise process easier.  I am starting to get a lot of referrals and folks are coming to my website asking how they can learn about what we do and what opportunities are out there. My exposure has increased dramatically in a rather short period of time.

I’ve been interviewed a handful of times on real estate investing podcasts with one interview covering a Bigger Pockets (BP) post I did on the top ten things I’ve learned raising $1m in two weeks on my first deal.  I’ve spoken at a REI conference this past February on capital raising and handling international investors.  I am part of the BP apartment forums and regularly share ideas on what I’ve learned about raising capital, the syndication business, vetting sponsors, apartment investing, and markets.  As my knowledge expands, I’ve increased my connections with others, giving back when I can and helping those either interested in learning more about investing in this area or simply wanting more direction in how to accelerate their growth.

Diversifying my Investment Portfolio

My business model has morphed into other attractive niche areas like self-storage as I have a growing investor base who have done several apartment deals and are looking to further diversify their portfolio. I’ve met other mentors who have helped introduce me to other top-notch sponsors in these niches as they all seem to need capital to continue their acquisitions. I’ve come to learn that if you can raise significant capital, you can be a big player in this business.  I’m now discussing potential partnerships with other folks that do what I do, looking to create unique funds targeting certain niches, and leveraging a larger pool of capital to negotiate better terms w/the operators to ensure my investor base is getting exposed to solid opportunities with attractive returns. 

I’ve met with some of the top sponsors in the self-storage industry to see if we’d make a good match.  I’ll be writing a blog on why I find this niche attractive to start getting my investor base warm to the idea. I’ll also be attending a 3-day self-storage workshop as part of my professional development plan, and I’ve started diving into Scott Meyer’s home study program.  My goal is to ensure I’m well educated in any niche area first, then vet and partner with the top sponsors and provide my investor base with solid opportunities to diversify both by niche, geography and by sponsor.

Personal Goals

My personal financial goal is to be part of the general partnership in several of these niches with long term partners that are experts in their field, believe in win/win philosophies and have goals to continue to grow with solid deals.  When I left the corporate world over 18 months ago, it’s amazing how busy but exciting my new life has become.  This passion and success I’m seeing did not come without a ton of hard work, but I found that because I thoroughly enjoyed the process, meeting new people, sharing and educating them in opportunities they never had even heard about, was a natural thing for me.  I never ever felt I was in a sales or marketing role and I still don’t. I simply educate and if the right person is ready, they and you will know, I then simply lead them to the next step in the process.

Getting the Right Mentor

My coach is an expert at not only MF apartment investing but his background is marketing and advertising.  I had no clue when I started other than an investment summary deck to talk to accredited investors about.  Since then, he’s helped me immensely understand the power of reach, credibility and presence.  I have a website, I blog monthly, I’m in the BP apartment forums almost daily sharing thoughts, I’ve spoken at his conference, I developed a monthly newsletter for my clients and prospects, I attend regular local MF meetups, but unsatisfied with that, I’m going to create my own monthly meetup group over the summer that will be a club membership for accredited, passive investors only to review educational and deal flow opportunities.

Sharing Best Practices

I have had so much fun with this that I approached my coach on doing a capital raising workshop next spring to share our best ideas on taking this niche within a niche to building an incredible business.  Wow, I can’t wait to see what happens, who I’ll meet and what roads and doors will open up over the next few years at this pace.  It’s been an incredible year. I share this with you not for me, but to give you an idea what’s possible when you put your heart, passion and energy into something and give it your time.  It won’t seem like work, it’s all fun to me. My wife told me the other day she could not believe how hard I work at it and I tell her it does not feel like work, put more time in, surround yourself with experts to get the right coaching, create a solid home support system to enable you to be your best and you will surprise yourself.

At LWS Investments, we target investments that are expected to deliver attractive risk-adjusted returns over the life of the project. Share this post with others so that they can get the inside scoop on investing in apartments.

Have questions or comments about investments in the Denver area? Leave them below or Contact me for more information.  Have a topic you’d like me to share insight on?  Leave a reply below and let me know! I’d love to hear from you!

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