Real Estate Syndication Questions and Answers

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As we prepare for our webinar program introducing the concepts of successful syndication on Tuesday February 19, 2008 at 5p Pacific Time, many participants are sending in questions that they have about the topic. We are organizing them into categories and I am answering them so that everyone who is interested in learning how to make money the same way that Wall Street makes money, can begin to understand how the business works.

For the next several weeks, I will answer the real estate questions that come in using our Wednesday column. Feel free to submit your own questions as well. To register for our upcoming webinar and/or submit a question, go to www.SyndicateFast.com/webinar.

Questions about Being the Promoter

1. Should a syndicator invest money in his or her own deal? Absolutely. It is imperative that the syndicator put some “skin in the game.” Some proponents indicate 10 percent is the right amount of the total capital; others go as high as 20 percent. I don't believe that the amount is nearly as important as the demonstration of your good faith and your belief in the deal. You have to put in enough that if something goes wrong, it will be painful to you just like it is to the investors.
2. Who is the best kind of partner for me? The best kind of partner is someone who has opposite or complementary types of skills. For example, if you are an expert in the real estate market and you don't have great capital raising skills, then you should absolutely find someone who has strengths where you have weakness. If you have great skills in real estate, find someone who can raise capital. If you have great skills in capital, find someone who can find the deals in the real estate market; find someone who is in that market, in the trenches every single day. You also might think about taking people as partners who can handle property management and other types of maintenance functions.
3. Have you always made money on your deals? No one has always made money on all of their deals. If you're in the marketplace and you're doing deals, sometimes things go wrong. Be up front about it and be candid. Everybody respects that things go wrong. As long as things go right more than they go wrong, people will like you and they'll follow you. Also and maybe most importantly, be a good communicator about problems – just like you are about communicating successes.
4. How is it that some people perform badly but their clients continue to invest with them? Unbelievably, in the stock market, during turbulent times where things are not going well, even when investors would take losses, the brokers would continue to get investment instructions from their clients, largely because they learn to be good communicators. If they called the client and they told them what was going on, the client would retain their confidence and continue moving forward. The issue of dealing with hardship is always one of communication. Be a good communicator, be honest, and people will respect the good effort that you make on their behalf.
5. In an LLC, does the manager have limited liability? Theoretically, the manager does have limited liability, but the best way to protect yourself is to always act in good faith. That means using the operating agreement to specify the duties of the manager and the members. Always use a “hold harmless” clause and indemnification clauses, which are good for all circumstances, except for fraud, crimes and activities that are against public policy. Additionally, it's not a bad idea to employ some insurance to protect yourself even further.

All this material and a lot more will be addressed at our live seminar in April called “How to Raise Money for Real Estate: Harnessing the Power of Syndication.” If you are a real estate professional or someone who is involved on the capital side either as an investor or facilitator, then this incredible two-day event is for you. For more information, go to: www.syndicatefast.com.

Real Estate Syndication Tele-Seminars!

Join Joel Block and his Expert Syndication Instructors www.syndicatefast.com

About Joel G. Block

Well known in the business community, Joel Block is a best selling author, speaker, and business strategist. Frequently a principal in his transactions, Joel has raised tens of millions of equity dollars for his ventures, which have included real estate syndications and privately held businesses.

Joel’s career is highlighted by the launch of a financial publishing company which he grew nationwide and later sold to the Los Angeles Times. More recently, Joel works with scientists, engineers, technologists and others to help them optimize their entrepreneurial opportunities. Would you like to get a private phone consultation with Joel? Visit www.joelblock.com/capital for details.

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