October 27, 2020

Getting Started With Real Estate Syndication

21 minutes

How should you fundraise? What are the best practices? Ben Kogut, partner at HJH Investments will share his extensive experience with fundraising for syndications.

You can read this entire interview here: https://montecarlorei.com/getting-started-with-real-estate-syndication/

Walk us through your first syndication raise. What did you do? How long did it take for you to raise the funds? What were the results? Lessons learned?

It all starts with the deal, making sure that the deal itself is solid. And for me, a good deal looks like predictable cash flow. Generally speaking, that means that we have a high credit tenant with a long term lease, or multiple long term leases, something to that extent. And so making sure that all the numbers, the debt, that we structure our deals where we have a high net worth individual sign on the debt, and that the assets are in an area that we think are going to appreciate.

On my first deal that started with my relationships. People that I've known throughout my involvement in real estate for the past 15 plus years, plus people that I know throughout my involvement in the community, I basically just started there by talking to people, Hey, here's the deal. Here's what I like about the deal. Here's what I don't like about the deal. And here's what you may expect by potentially investing in a deal like this.

But the best advice I could say if anybody's thinking, Okay, I want to raise money or I'm thinking about one day raising money. Then now is the time to start telling people within your sphere of influence. The people that already know that you're a smart, capable individual, and that you're working on a deal, or you have a deal, Hey, would you be somebody that would be interested in investing with me once I get a deal, and I think a deal will look like this, whatever that is. If you're in triple net properties the way I am, or if you're in multifamily, or all the other different asset classes, which there are many.

Now that you're raising all of your funds in less than a month, what are some of the best practices for fundraising for a syndication?

1. Putting together a clear and concise investment deck, to make sure that people understand what it is that that we're trying to accomplish.

2. This is a new addition to my practice, I've been putting together a short video where I just stand in front of the property, and I talk about it. What are we seeing here. Some people really care about what the property looks like. Some people could care less. They don't care where it is. They want to know what are the leases, who are the tenants, what are the terms? What kind of debt do we have? If I am going to put this much money in, how much am I going to get out and when. I'm trying to provide that type of data to a broad range of people.

3. Communicating with with your investors. Right now we have upwards of 180, or close to 200 existing investors amongst our portfolio, that's always the best place to start.

4. Another piece of advice I could give people, that I struggled with at the beginning, but is really good advice that someone gave to me is to be indifferent. To be indifferent to whether or not somebody invests in that deal or on you. Completely indifferent. I really do not care if you invest in this deal or not. It really set me free, it really takes the pressure off. I don't want anybody feel pressured to come into a deal.

Ben Kogut

www.linkedin.com/in/benkogut

www.hjhinvestments.com

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