The number one trait in a syndicator: trustworthiness

There is one most essential element in a syndicator: trust. You can't do without it given the nature and size of syndication investments and the structure of the LP/GP relationship.

It's much easier said than done. But it is worth the effort. Hands-down the most important trait we seek to find in a syndicator: trustworthiness.

Why trustworthiness? Well the act of investing in a private syndication is by its nature a massive act of trust. Think about it: are you comfortable with wiring $50,000, $100,000, or more of your hard-earned cash to someone? In many cases you may have not yet had a chance to meet them in person. You may be investing in a property you have never seen--maybe even in a state or city you have never visited. For the entire term of the transaction, you may never set eyes on the syndicator or the property that you will co-own.

What are you, crazy???

You may not have to be crazy to invest in real estate syndications (do you really know the CEOs of the companies whose stocks you hold in your brokerage account?), but you do have to be trusting of the general partner or partners. You need to trust the syndicator to look out for your interests. You need to trust the syndicator to communicate with you, to carry out the business plan, to manage a successful repayment of your capital and return on capital, and ultimately a successful exit of the investment--all without taking on the kind of excessive risk that might lead to a loss of some or all of your investment.

So how can you come up with this kind of trust?

  • their jazzy Tik Toks?
  • their persuasive YouTube videos?
  • their persistent podcasting?
  • their gauzy promotional videos and shiny pro formas?

No, not for us. We seek to develop a trusting relationship with syndicators over time--including both online and in person. Yes, you can learn from their social media presence but you have to take it with a grain of salt. For instance, the syndicator whose investment we currently have on the top of our watchlist said this in a podcast we listened to before investing: "I am very conservative in my underwriting." Guess what? Turns out to be false--and we are at risk of losing some or all of an investment as a result. This particular syndicator has abused our trust and surely won't see another investment from us. We are guessing that the many Applesway investors who have sued the firm do not feel that they had a trustworthy partner in that syndicator today.

You need a mechanism to sort of trustworthy from non-trustworthy partners in syndication. It's probably mostly done over time and with experience. It's our goal with this site to create content, collect data, and establish community where limited partners can share their experiences safely and reliably before leaping into a new syndication.

Whatever your approach, here's what we believe: the job is to find someone you feel you can trust, lean into the relationship, and ideally develop a long-term partnership with one or more syndicators over time.