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  • Writer's pictureRick Martin

The Steps to investing in your first Real Estate syndication

Investing in a syndication just takes a few easy steps.
Investing in a syndication just takes a few easy steps.

Life is becoming expensive. If you are raising a family, you are feeling it. You have to pay for diapers, daycare, swim lessons, soccer clubs, piano lessons, and college, all while trying to prepare for retirement. It's daunting. Even if we aren't raising a family, as the cost of living continues to climb, so does our need to create multiple income streams. Hence, we never have to worry about our nest egg running out.

If you are here, you probably know what real estate syndication means. If you need a quick summary, This video succinctly explains it all in a minute.

Most real estate investors learn to invest through buying a single-family home or rental property. While it takes researching markets and understanding competitive rents, it may not feel as daunting as investing in commercial real estate or something as significant as an apartment building.

While a real estate syndication (a group investment) sounds complex, the good news for passive investors is that all of the hard work is taken out of their hands. Still, for those that have never invested in syndications, there are steps to be followed, and that is what this article will attempt to make clear.

We'll cover all the steps of the real estate syndication process so that you can be ready to invest in your first real estate syndication.

The basic steps of investing in a real estate syndication:

1. What are your investing goals?

2. Find an investment opportunity that fits

3. Reserve your spot in the deal

4. Review the P.P.M. (private placement memorandum)

5. Send in your funds

Step #1 - What are your investing goals?

Your financial goals really can be broken down into two strategies - cash flow, appreciation, or maybe a combination of the two. It doesn't take a financial advisor to tell you where you are in life, and it is also not necessarily age-dependent. Some may assume that cash flow in the form of rental income only applies to those that are cresting upon our golden years. The whole F.I.R.E. (financial independence through real estate) movement relies on cash-flowing assets. You need to earn enough passive income to replace your earned income. Once you accomplish this, you can quit your job if you so choose. In the rearview mirror, those in the traditional retirement years who have a job/career will need more cash flow since they no longer have the salary coming in.

Maybe you are pretty happy in your career and have no intention of quitting that job. Additional income streams supporting your salary are always a sound strategy. However, you may be primarily concerned with growing your wealth and gaining some tax benefits. One of the best ways to can accomplish this is through capital appreciation via real estate. There is a saying: Don't wait to buy real estate, buy real estate and wait. Over time you will see your net worth significantly increase if you can begin welcoming real estate into your portfolio and watch it appreciate over time.

Does it have to be one or the other - cash flow or appreciation? I am happy to report no, and you can get the best of both worlds through value add apartment investing. These buildings cash flow from day one but still have plenty of room to increase the property's value through operational improvements and renovations.

Suppose you don't like the sound of becoming a property manager. In that case, apartment syndications can be a great way to grow your real estate portfolio. All without all the headaches of being a landlord. Doesn't this sound like a great deal?

Consider both your short-term and long-term investing goals once you decide to invest in a real estate syndication. You want to be sure to find investment opportunities that best fit your personal goals.

Think about the amount of capital you have to invest and the length of time you want that money invested. What tax advantages you're looking for, and are you investing primarily for ongoing cash flow to help offset your income, long-term appreciation, or a hybrid of both.

Step #2 – Find a Fitting Investment Opportunity

Once you've decided between cash flow, appreciation, or some combination of the two, aim to find a deal in alignment with these goals. Real estate syndication projects are available, ranging from ground-up construction to value-add assets and even turnkey syndications. Now you may be wondering, how could you have access to these opportunities? Isn't this only available to an inner circle of the very rich?

Fortunately, over the last decade, private placements have become more accessible to more investors. For instance, our company, Fortress Federation Investments, presents apartment investment opportunities through the Fortress Federation Investment Club. The investment club is a cost-free list that allows investors to view our upcoming opportunities.

Once on a list, the investor will receive a "Deal Alert" in their email announcing the new opportunity. The syndication team will typically provide an executive summary, full investment summary, and an investor webinar within this deal alert. This combination of information provides a full 360-degree view of the asset, market, deal sponsor team, business plan, and the projected financials.

Take time to vet the sponsor team properly, ask them your questions, and read between the lines of any investment materials they provide. Take a look at things like whether the business plan has multiple exit strategies. Is the deal underwritten conservatively? Finally, double-check whether the proposed business plan makes sense given the asset class, submarket, and current economic cycle.

You can do your research on market trends in job and population growth. Review minimum investment requirements projected hold time, and projected returns. Finally, attend the investor webinar and ask tough questions.

Basically, at this stage, look for any reason not to invest in the deal.

Step #3 – Reserve Your Spot in the Deal

Once you have decided that this looks like a good deal, you will want to reserve your spot.

One thing to note about real estate syndications is that the opportunity to invest in the deal is first-come, first-served. Multi-million-dollar investment opportunities can fill up in 48 hours - hot markets with strong deal sponsors. That's why it's essential to do your research ahead of time, know how much money you want to invest and what you're looking for in an investment opportunity.

When the opportunity opens up, you will be ready to jump on it.

Often, there will be an opportunity to put in a soft reserve amount to hold a spot for you in the deal. You can then take some time to review the investment materials. If you decide to back out or reduce your investment amount later, you can do so without penalty.

The flip side is that if you don't hold a place but then decide to invest, there may no longer be room for you in the deal, and you'll have to join the backup list.

Step #4 - Review the P.P.M.

These legal documents are often quite lengthy, and detail the investment opportunity, the risks involved, and your role as an investor in the project. When I say risks, I mean it gets spelled out. It is likened to when you get a medical prescription, and it lists all the potential side effects. When you buy a stock or invest in a mutual fund, all these risks are in the fine print - or should I say tiny print. However, most of us don't even tend to notice it. The Private Placement Memorandum is a complete document, in full size; There is no tiny print. In that regard, it is a more transparent process.

The P.P.M. is undoubtedly not the most fun document to review. Still, you must read through it to fully understand all aspects of the investment opportunity, including the risks, subscription agreement, and operating agreement. As you become more familiar with them, you will begin to move more quickly through them.

As part of signing the P.P.M., you'll also need to decide how to hold your shares of the entity holding the asset. You can often specify whether you want your cash flow distributions sent via check or direct deposit.

Step #5 – Send in Your Funds

Once you've completed the P.P.M., the final step is to send in your funds. Typically, you'll find wiring instructions in the P.P.M. document.

Before wiring your funds, double-check the wiring information, and let the deal sponsor know to expect it so they can be on the lookout.


So raising a family requires much time, love, and, yes, money. Heck, even if you are not raising a family, the cost of living has increased dramatically. In my opinion (and many others), working for a living and putting that money into a 401k does not work. You have to think a little outside the box but have no fear. You need to get started, follow the steps above, and it will all become routine. And once it does, you will find that you have multiple income streams to cover life's challenges and take the weight (maybe of your children) off your back.

I hope the steps above all make sense, and if something still isn't clear, I am always available for a chat.

If you’re interested in investing in apartment communities on your path to early retirement a great place to start is by joining the Fortress Federation Investor Club.

Sign up for our Quickstart guide to real estate syndications below.


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