Updated: Jan 9
No matter what type of business you plan on creating, a business plan is the foundation of your new entity. A business plan is critical because it helps you outline your goals, pro-forma and projections for the coming years. It gives structure and focus to your new company, and you can always refer back to it to make sure that you’re meeting your stated goals.
There are many free templates and guides available on the Internet that can walk you through the process of creating your business plan. Hopefully you’re aware of how syndications work, and can easily plug in your projections where they are required. Developing your business plan will provide you with a “guestimate” of your expenses during the first few years. When it comes to income – syndication works differently than other businesses and is harder to predict. One of the reasons for that is the fact that some of the fees you can get are dependent on the performance of the property, which is partially dependent on the general state of the economy.
Tapping into the Freelance Market
Making a business plan is what separates syndicators from successful ones. Here’s something else to consider: if you don’t have the expertise or time to develop a business plan, you can always hire a freelance talent to create one for you. There are several online sources where you can find the appropriate talent, including www.upwork.com and www.guru.com. Both of these online resources have hundreds of individuals who specialize in just about everything you’ll need, from accounting and business plan development to marketing and writing. The goal is to use your knowledge, time and talent to foster investor relationships and find appropriate multifamily property deals to propose, while leaving the areas where you lack knowledge or inclination to those who can provide it to you at a very reasonable cost.
In addition to freelance talent, you can offer to trade your knowledge in your area of expertise, like syndication, to someone who can provide specific knowledge to you in another area, like marketing, for example. It’s a “quid-pro-quo” trade with no money exchanging hands. Finally, you can hire inexpensive interns to do certain aspects of the work for you.
The business plan should include, besides expenses and income, a detailed plan of growth, meaning what is your 1, 5 and 10 year goal and the steps you need to take to get there.
Putting Together Your First Syndication
As the lead investor (also called “sponsor”), you’re the one who will be syndicating the deal to other investors. You should be well versed in real estate terminology, particularly as it relates to multifamily properties and investments. However, when you’re just starting out, how do you showcase your knowledge and expertise to potential investors even though you don’t have a track record of successful deals, or a budget to produce materials?
One way is to create a sample “demo” investor package, which would include all the pertinent documents you would normally send to potential investors. This is crucial as it will give you an opportunity to begin honing your skills on developing materials that you’ll be creating over and over again to generate interest in your deals for investors.
Another way to demonstrate expertise on a budget is to create a thought leade