The first steps to syndication success include knowing how a syndicate works and how to leverage “you” to grow your syndication success.

How a Real Estate Syndicate Works

A syndicate can be any group of organizations or individuals combining efforts to carry out a specific duty such as transactions or negotiations (Dictionary.com). If you ever watched the Sopranos, their “family” business is an example of a syndicate.

So, syndicates can be a number of businesses, including real estate. A real estate syndicate really works in two ways – either you’re bringing a group of investors together to pool capital or bringing two parties together in a joint venture such as a land owner and a land developer.

In general, your typical REI syndicate has three phases – origination, operation and liquidation/completion. For example, you are a broker for a group of private money investors. You purchase a property to flip with the pooled capital. The three phases are as follows:

• Origination – This phase requires planning the purchase, allocating all of the funds, making the purchase and dealing with all of the legalities.
• Operation – In this phase, you (most likely) or someone that works for you would handle the repairs or manage the contractors in repairing the property.
• Liquidation/Completion – This phase is the actual sale of the property and disbursement of profits, fees, etc.

How Syndication Can Grow Your Success

The benefits to an REI syndicate can help you leverage what you’re good at and help you close more deals. That’s the bottom line. If you focus on your strengths and find a way to syndicate that, you’re going to make more money. Let’s look at a few examples of you can use “you” to fuel your success.

• Good at negotiations – You can broker lease options and set up a syndicate of master lease option properties.
• Good at networking – You can work with private money investors to pool capital for commercial property investments.
• Good at marketing – You can build a great investor’s list and act as a wholesaler/investor’s broker or serve as a specialized birddog.

The list of opportunities to leverage “you” in syndication is long. I could go on all day about how to specialize, but it’s a good idea to spend some time deciding what it is that you are good at. Then, leverage that. The best part of leveraging your expertise? You don’t have to have a lot of capital to get started, especially in the three previous scenarios.

Stay tuned to the Investor Insights this month for more on syndication success. If you’re interested in more in-depth training, I recommend you check out Syndication Success.

Did you know that 80 percent of America’s wealthy people are the first in their families to earn more than $1 million? Today’s millionaires started out with a vision – find a way to leverage money and talent to make a better life.

This notion is supported by the fact that over half of the country’s millionaires made their money through self-employment or owning a business. And most millionaires are regular folks. About 80 percent of them have a college degree and it’s not a master’s or PhD.

The evidence is here. If you’re entrepreneurial and ready to make some money – anyone can do it. You have to make smart decisions, avoid debt and work hard to get there, but it’s possible.

So, how can being a real estate investment career lead you to riches? It qualifies for the above millionaire criteria, but the secret is leverage. Leveraging other people’s money can earn you a real return and a long-term income. You can get to millionaire status by applying the principles of leverage.

However, there are a few practices you need to avoid:

1. Not having a clear vision. If you can’t see yourself making money at real estate, you won’t. You have to believe you can do it. And you need a vision for getting there. Write it down and review it often.

2. Overdoing it on improvements. This means you’re becoming emotionally invested in your properties. When you bring emotions into business, you’re going to make less money. Sure, you should make the right improvements and do the right thing, but you shouldn’t consider your properties a personal project. You’re in this to become rich.

3. Neglecting your rental properties. If you own any rental properties and only stop by them when there’s a problem, you’re setting yourself up to spend more money in the long run on repairs. If you care about your future, care for your properties and keep them in good shape.

4. Listening to negative Nancies and Neds. There’s a saying that you’re the average of the five people with whom you spend the most time. Negative family members and friends and self-proclaimed experts will give you their opinions, tips and every reason in the book you shouldn’t be in this business. Don’t listen to it. If you want this, separate yourself from this commentary.

5. Spending your time on the wrong tasks. I wrote about this last week, and it’s true – if you waste your time on minutia, you’re earnings will be minute. Become aware of how much your time is worth. This will help you prioritize your tasks and goals.

Getting rich at real estate is not impossible. It’s not easy either, but it’s a great way to be the first in your family to pass the $1 million mark. Get started today. See my blog on the importance of immediate action.

Stay tuned to The Investor Insights for more tips and tricks on becoming a real estate investor who makes money.

Retirement Account or IRA. You can convert a managed IRA to a self-directed IRA and decide the type of investments you want.

Step One: Fire Your Stock Broker

Instead of having a financial planner, broker or mutual fund company direct your money in stocks, bonds and funds, you can invest in your real estate deals. This is also a great way to purchase tax liens and certificates.

Step Two: Reach Out to Private Investors

Self-directed IRAs are a great sales tool for working with private investors. Regular folks with a little nest egg sacked away for a rainy day can accelerate their returns by investing these funds with you. And, the cool part is that it’s completely legal.

Here’s my recommended resource for self-directed IRA accounts – Guidant Financial.

A Few Rules from the IRS

The IRS does have a few rules on what you can’t invest in with a self-directed IRA – life insurance contracts, S corporations, art, jewelry, and other collectibles. That’s ok because you can use your returns on your real estate investments to buy collectibles, art and real estate.

Step 3: Learn the Ins and Outs of Self-Directed Deal Financing

This blog post just gives you the introduction to how a self-directed IRA can help you get started on your financial future as a real estate investor. Check out my Real Estate IRA Blueprint program here.

That’s just what I did. I began pooling what I call remnant money to close more deals and make more money for my investors and myself.

Here’s how remnant money makes you a more efficient investor using a hypothetical example.

Bob has loaned me $100K to invest in one deal. He has another $50K sitting there doing nothing but gaining a measly percentage in an IRA or money market account. He asks me to do something with that money to get the 8-10% return he’s getting from the other investment.

Georgette has invested $300K with me and has another $50K just sitting there like Bob’s $50K. She wants the same return as her other money. What do I do to make my investors happy?

I pool their money and invest it another deal, and they both have first lien holder status.

How do I do this? A fractionalized trust deed. These are legal and possible as long as you follow the security rules. Watch my free video training series to get all the investor insights on pooling and syndication.

As Brian Richards reported, the trusts with high-to-capital ratios need to keep a close watch on the trend in debt levels.

Aren’t you glad you don’t have to worry about following debt ratios and trends as a real estate investor who uses private money to fund their deals? Now, I know there’s a difference in investing in real estate investment trusts and brokering your investment deals, but they are similar beasts.

Working with private investors to syndicate your real estate investments is a much less complex strategy for getting rich than looking at all of these indexes, ratios and trends. I’d much rather work with someone’s cash to return 5.5 to 8% to mine and their pockets than watch tickers and guestimates by analysts.

You see, the power of syndication and pooling private money is that we are working with CASH. I think that’s a much prettier word than debt. Plus, it’s a much more powerful word when it comes to getting deals done.

Are you ready to learn more about syndication and pooling? As part of Private Money month on The Investor Insights, I’ve put together a video series that breaks down how to get deals done with private investors and that pretty word – CASH. Visit this link to get the simple facts on syndication and pooling private money.