OK, maybe we will lose some readers with this one but it is very important to us. In a syndicator, we take seriously that we are taking on a partner. Obviously it is not a life-partner or anything so serious as that, but we are likely to be together in a private real estate investment for 3, 5, 7, 10 years or more. Given this type of commitment, we seek a degree of values-alignment.
Some syndicators have their values in their name. Think about Goodegg Investments or Life Bridge Capital, for instance. Both have built their values into the way that they invest and how they give back. These are meaningful commitments; that is meaningful to us.
Sometimes you have to dig beyond a name, of course, but the branding of a firm can be a good starting point.
Our key point is not at all that everyone has to have the same values as we do, or that you should want to "give back" through your investments. There is nothing wrong with making money. And there is a range of values, for sure, that could be arguably in the greater good.
Why might this matter? Well, a couple of things could come up. One is how the General Partner in an apartment syndication treats tenants and community members. If the whole deal is just to jack up rents as high as possible, offer the least good service they can get away with, and cut-and-run as fast as they can... that's maybe for some people, but not for us.
What we look for in a syndication partner is someone who is hoping to invest in a community. There is a real need for affordable work-force housing that can meet the needs of ordinary people for a fair price. That's the kind of thing we are seeking to be a part of. We don't want to make a quick buck and we don't want to make people miserable. We are seeking sound, long-term returns as a result of treating people and their families well.
You can definitely get a sense of the syndicator you are dealing with from what they tell you in an interview, what they say on podcasts, how their past deals performed, and so forth. But really, values-alignment only becomes very clear over time. In our case, we have continued to invest with those with good values-alignment and dropped those who did not. Repeat-investment data from syndicators might give you a good sense of whether others found decent values-alignment over the long run.
OK, that rounds out our "top five" traits in a good syndicator. We'd be delighted to hear from you about your vetting criteria and the traits you seek!