Many physicians hear about real estate syndications from a colleague or a sponsor who called after a conference. The pitch sounds steady and the paperwork looks official. Before you wire money, the questions you ask matter more than the presentation.
Start with the sponsor’s track record. Ask how many deals the sponsor has completed, how many were sold or refinanced, and whether investor returns are audited or self-reported. A sponsor who answers directly gives you something you can check.
Read the economics. The offering documents show how the sponsor gets paid: acquisition fees, asset management fees, disposition fees, and how profits split between sponsor and investors. Add up the fees before you look at projected returns. Projections are estimates, not promises.
Ask what happens when the plan slips. Most deals are built around a hold period and an exit price. Ask what happens if the sale is delayed, rents fall, or the loan has to refinance at a higher rate. Clear sponsors give specific answers.
Understand the debt. Ask whether the loan is fixed or floating, when it matures, and whether a rate change could force a sale.
Know your liquidity. Syndication interests are usually illiquid for years. Read the lockup period, the transfer restrictions, and what distributions look like before the exit.
Check the reporting. Ask how often you will receive statements, what they include, and how the sponsor communicates bad news.
A sponsor who answers these questions in writing gives you something concrete to evaluate. Vague answers tell you something too. Take the offering documents to a CPA and an attorney who works with private placements before you commit.
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Ask how many deals the sponsor has completed, how many were sold or refinanced, and whether investor returns are audited or self-reported.
The offering documents show acquisition fees, asset management fees, disposition fees, and how profits split between sponsor and investors. Add up the fees before you look at projected returns.
Ask what happens if the sale is delayed, rents fall, or the loan has to refinance at a higher rate.
Syndication interests are usually illiquid for years. Read the lockup period and transfer restrictions before you invest.