Reflecting on My Weekend with the Real Estate Guys at the Secrets of Successful Syndication
The Secrets of Successful Syndication
This past weekend I spent a couple of days in Dallas attending a conference on real estate syndication. It was an excellent opportunity to power down Zoom, finally connect in person, and get in a room with 250 other like-minded and motivated real estate investors.
I wasn’t sure what to expect. We’ve all been cooped up for a year. The presenters were sure to be rusty. And did I really want to spend the weekend in a classroom?
The information was great. But the power of these conferences isn’t in their slide deck – rather the interactions with other attendees during the breaks and cocktail hours. And you can’t replicate those chance connections via video chat.
This blog is not only an opportunity to share a couple of highlights - but a chance for me to put some thoughts on paper and reflect on what I learned:
Lesson 1: The marketplace doesn’t care what you need
You just got a deal under contract, and now you need to raise the cash. So, the answer is to find anyone willing to buy into your deal, right?
Too often, real estate syndicators frantically solicit anybody they can find with idle capital, even if the investor’s profile doesn’t fit the deal. No one cares that you only have 15 days to raise $3 million for an acquisition. An investor is rightfully concerned with what’s in it for them.
Successful syndicators position themselves as advisors – because someone who puts other people's interests first creates a greater sphere of influence. And a problem solver with influence can deliver more value to the marketplace.
If you provide value to the marketplace first, the cash will come.
Lesson 2: I’m not the only one concerned about inflation
I mentioned how refreshing it was to get back into a room with like-minded people – but I wasn’t stuck in a weekend-long echo chamber, either.
Sure, we were all bullish on real estate as an asset class. But there wasn’t a lack of spirited debate on the nuances of real estate tax theory or a portfolio’s ideal mixture of debt vs. equity. Sounds thrilling, right?
When I began warning about inflation (specifically stagflation) in June of last year, it felt like I was on an island. The bottom had just fallen out of the economy. People were consumed with the daily virus ticker count, and small businesses focused on navigating a bureaucratic laden PPP process. The last thing someone wanted to talk about was an inevitably weakening dollar and the erosion of their purchasing power.
This weekend I found a group of people who are similarly concerned about inflation. So worried that they aren't just buying real estate to hedge against inflation in their own portfolios. They are shouting about inflation from the rooftops – hoping that enough people see the writing on the wall and reallocate from paper assets and traditional funds to real estate.
Lesson 3: A quality team is a syndicator's greatest asset
Quite simply, a syndicator’s job is to source product and raise capital. Time spent on other activities may be more efficiently allocated, especially if they aren’t advancing those two objectives.
We have to look at our time through the lens of opportunity cost.
Why actively manage a property if that can be outsourced for a fraction of the cost with the time you're spending? By leveraging other people’s time and expertise, a syndicator can better scale their business and deliver more value to a greater population of investors.
Lesson 4: You can syndicate anything
Have you ever heard of syndicating oil production? How about ATMs? I hadn't until this weekend.
But the power of syndicated financing isn't unique to real estate acquisitions. Because syndication is nothing more than an association of individuals pursuing a mutual interest.
It also means that there isn’t “one” way to deliver value through syndicated real estate acquisition. Investment in real assets may be the solution to many of the world's financial problems, but an individual's motivations are often much simpler than that.
They're concerned with short-term tax deferral strategies. Or looking for ways to achieve long-term equity growth. The point is, different assets offer unique advantages and a syndicator needs to bridge the gap.
And a value-driven "connector" can serve as the conduit between the needs of the marketplace and the assets that fit those needs.
Lesson 5: There are $10’s of trillions stuck in “retirement account prison”
There is a lot of literature out there about “the path” to achieving financial freedom. Some snake oil salesman claiming he has the secret to breaking the shackles of financial bondage. Can you tell I am leery when I hear these promises?
But this weekend, I heard from Damion Lupo about the ability to roll over a 401K or IRA into an eQRP – unlocking the retirement dollars I’ve been told my whole life weren’t accessible until I turned 60.
I was hooked.
I bet you’ve never heard about an eQRP before, though, because a Wall Street investment manager's commissions rely on you being ignorant.
Think about the opportunities. Trillions of dollars stuck in retirement accounts that could be better invested in real assets. The ultimate flexibility to reallocate my dollars, without penalty, into assets that better align with my investment philosophy.
Where do I go from here?
After being fired up all weekend - it’s easy to hop on the plane, get smacked upside the head by the realities of Monday morning, and lose momentum.
An inbox full of emails. A ‘honey do’ list of deferred jobs around the house you didn’t get done over the weekend. Or the daily obsession with trying to earn enough to pay the bills.
The truth is these are all distractions.
Now, that isn’t to discount the importance of providing for a family or managing your expectations, but procrastination is the enemy of progress. And by focusing too much on the short-range target, you sacrifice the ability to spread your message.
I heard this weekend that it’s selfish to be timid. But it’s also selfish to shield the world from your passion - because the world deserves to partake in the value you have to offer. And through education, effective action, and a vivid vision, I too hope the world will see that real estate investment has the power to change their lives.
The best time to invest in a piece of real estate may have been 20 years ago. But the next best time is today.