The Wealth Elevator Syndication eCourse

Secrets of Syndications: Part 5

Video Notes

GP Deal Structuring

•  What do you first look at when forming the payout structure of the deal to the LP/GP?
• How do GPs choose whether it’s a pref + waterfall, waterfall only, refi the LP out, or refi and keep the LP in…
• Should the LP verify these numbers they’re being paid or the GP is being paid in comparison so the LP isn’t getting ripped off? How would they do this?
• Verifying the stress test: how should investors do this? Better to trust the Sponsor?

Vetting the Sponsor

• Should we conduct background checks, if so when appropriate?
• Red flags to look for?
• What tactics might sponsors use to target unsophisticated investors?

Deal Defaults

• What happens when a secured syndication project defaults?
• How long does it take to recoup some of your investment?
• What are the chances of an investor getting any of their money back?
• Is there a general amount the investor can expect to get back, or a way for them to figure out/calculate the amount they might recoup, or are there too many external factors?
• Is there anything an LP can do during a default or foreclosure?

Assembling a Team

• Who are all the key players in a syndication deal?
• How do you find each team member and vet them
• How do you each work together to put together and execute the project?
• Is there a system of checks and balances?
• How many people does the sponsor split the profit with on the team? Or does the sponsor make the profit alone and pay the other team members a salary?

Property Management

• Do sponsors ever have an in-house PM company or is it always outsourced?
• How do you vet the current PM company? When you go to replace the team, how do you find a replacement PM company in the area? Do you ever hire a major PM company to oversee that just places a team on-site?

Construction Teams

• How do you find and vet the construction team for your value-add?
• How do you find and vet technicians and porters for the property? If this is the PM’s job, do you entrust that they will hire labor with reasonable expenses and quality work?
• How do you check in to ensure that construction is being done on time and with quality?
• How often does the operator physically visit the property to inspect the project and PM?

PPM

• What are you looking for in the PPM: red flags, key terms, key areas
• Most important pages

Development/Heavy Value-Add

• Do we not care if the project is a shorter-term 3-year project, if a development like we care when it’s a cash flow deal, and looking for a longer 5-year timeline?
• Are there certain cycles when development projects are better to invest in than others?