Not everyone knows what a real estate syndicator does. I’ve learned this from some of the quizzical looks I get when people ask me what I do, and I respond, “I syndicate multifamily properties.” Fortunately, people who are passive investors do know what a real estate syndicator does, and those are some of the people I work with.
As a syndicator, I find multifamily properties (apartment complexes); vet them based on their merits, and then syndicate shares in those properties to people who want to invest in real estate. They’re called “passive investors” because they simply put up their money as an investment, and do not work on putting the deal together or have anything to do with managing the property.
I happen to live in California, but the properties that I invest in and syndicate are in Texas, Georgia, and Florida. Those states have high population growth, job growth, and rent growth, and are also called “landlord friendly states.” That simply means there aren’t rent controls in place, and you can legally evict a tenant who doesn’t pay their rent without spending a lot of time, effort, and money.
I’ve been fortunate, as I’ve been running a successful apartment syndication business over the years. My success wasn’t without making some mistakes along the way, but I’ve learned from those mistakes and haven’t made them since. During 2019, I learned some important lessons about investing in multifamily properties, and I’d like to share those lessons with you now.
Lesson # 1: Hire the best people you can and listen to them.
When first starting out in almost any business, you tend to wear a lot of different hats. You have to, as you’re very cost-conscious and concerned about every penny you spend. But as time goes on, you learn to hire the best people available, and you learn how to delegate responsibilities. As everyone in business will attest, you can’t do everything yourself.
However, what you can do after hiring these people is listen to what they have to tell you. If you learn how to let go of doing every job function, you’ll find you can focus your time on the big picture and let others take care of the other aspects of your business. You will grow your business if you do this, and that is the goal of every businessperson.
I began by building a team, working with people that I not only liked, but more importantly trusted. Once I learned to let go I began to see some amazing results. That’s when my business really took off.
I’ll share an example of how this has helped fuel my growth. One of my team members had advocated to utilize social media to share personal pictures and stories, and not only use it as a tool to share professional articles and thoughts about real estate investing. I was reluctant to do so at first, because I was a bit guarded over my personal life and didn’t want to be perceived as “unprofessional”. However, I was committed to listening to the people on my team.
My team member was a social media expert, and to her belief, social media is not just a marketing tool, but one that helps build relationships and authenticity, albeit virtual ones. Once she started sharing my personal pictures and stories on social media, we began to see consistent growth and engagement across all social media platforms. Turned out, people were looking to connect with me on a personal level, before they decided to invest with me. And sharing my personal life on professional social media channels helped them see who I was and what I stood for. That, in turn, increased the number of new investors reaching out to our company, and I also began mentoring applicants who contacted us. Sharing my personal life on professional social media helped improve our overall business growth while presenting new business opportunities.
I learned that while many syndicators focus on only professional content on social media, they miss a powerful portion of it - the part that truly connects you with people. I learned that it’s not enough to be professional and capable on social media, but to also be human and approachable. More importantly, I also learned to trust my team members, as they bring unique skillsets to the table that I don’t have.
Lesson #2: Learn to be Patient
2019 was another year where multifamily properties continued their unrelenting price increases and cap rates remained compressed. The multifamily price increases were due to a variety of factors. First, publicity about the appreciation of multifamily properties brought many new investors to the table who were willing to pay more than the asking price, just to say that they acquired the property. The volatility the stock market has experienced drove capital to seek a more stable investment, such as real estate.
The fact is, multifamily properties provide excellent investment opportunities for passive investors, including tax benefits like depreciation and passive investor status. They’re also a stable investment, and provide steady monthly income. However, getting into bidding wars to acquire a property is not a smart investment strategy.
These factors will help keep the rental market strong, but the prices for many of those multifamily properties simply didn’t make sense. And you know what they say? “The best deal you’ve done is the one you didn’t do.” I refused to overbid and waited patiently for the right deal to come along. Fortunately, I was in a unique position, as I didn’t have to rely on fees in order to survive. If I do my due diligence and the numbers don’t make sense, I walk away. There are always other deals available. 2019 taught me to be very patient, and not give in to the need to acquire more and more properties, just because the equity is already lined up. I learn that growing smart is not always growing fast.
My advice? Just be patient. Bidding wars are not a smart way to enter the multifamily market. Excellent deals will always be available.
Lesson #3: Strategize to Achieve Greatness
Everyone in business wants to not only succeed, but excel at what they do, and I’m no exception. I’ve learned that in order to achieve greatness, you have to strategize. I began using Objectives and Key Results (OKRs), and I’ve learned that it has helped me focus on the key avenues that can drive my business.
An Objective answers the question “WHAT are you trying to achieve?” and a Key Result answers “HOW will you achieve it?”. OKRs were designed to help create engagement and alignment around measurable goals, and by setting those goals not only for myself, but for my team as well, has helped to see how well we’re all executing our objectives. If I find that we’re not achieving the goals within the timeframe we defined, we’re able to strategize and rethink the way we’re working in order to reach peak performance for our company.
This has made a huge difference in how we operate, and has helped us achieve many successes in 2019. It keeps us all working together, going in a clear, unified direction, with everyone contributing to the business using his or her individual areas of expertise. OKRs help us focus on what is most important to the growth of our business by helping to prioritize the work that generates the largest business impact.
Another way that OKRs has helped is that it provided us with a broader look at our business. I’ve found that when you are too close to the business you tend to lose a wider perspective, which can have negative implications. Lastly, I’ve found by using OKRs that it helps to keep everyone on the team engaged by having a common purpose and to communicate our strategy in a way that is easy to understand.
2019 was a year of growth, and I learned some key lessons that helped me run my apartment syndication business. One of the lessons I learned was to hire the best people available, and learn to listen to what they have to say. If you’re open and you trust their input, you will be more successful. Another lesson I learned is to be patient. Don’t jump at any every deal that comes along. Instead, do your due diligence and make sure the numbers justify bidding on a property. If not, walk away. Finally, I learned that you have to strategize in order to achieve greatness. One of the ways I accomplished this is to use OKRs. They keep the team focused and provide a way to measure key results.
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About the Author
Ellie is the founder of Blue Lake Capital, a real estate company specialized in multifamily investing throughout the United States. At Blue Lake Capital, Ellie helps investors grow their wealth and achieve double-digit returns by investing alongside her in exclusive multifamily deals they usually don't have access to.
Ellie is the host of REady2Scale, a podcast that focuses on the "APS" of real estate: Asset, Process, and Strategy. Each episode discusses how investors can scale their real estate portfolio and/or businesses.
She started her career as a commercial real estate lawyer, leading real estate transactions for one of Israel’s leading development companies. Later, as a property manager for Israel’s largest energy company, she oversaw properties worth over $100MM. Additionally, Ellie is an experienced entrepreneur who helped build and scale companies by improving their business operations.
Ellie holds a Masters in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.