The choice is yours. You can go with a syndication management team with a proven track record or one with little or no experience and a pretty website. Real estate syndications are a complex investment vehicle, lasting 3 to 5 years. Sometimes longer. This means either you get it right or you don’t. Conducting due diligence early and making the right choice, the chances are you’ll make money. Skip the due diligence, and you may find yourself disappointed and possibly minus your investment.
To start, the savvy investor will want to know as much as possible about the syndicate’s management team. The experienced syndication sponsor will have several deals that have been successfully executed to completion or are at least well along their life cycle and performing as projected. While historical performance is never a guarantee of future success, going with a syndication team with a solid history of prior successes can be viewed as a step in the right direction.
Conducting proper due diligence includes finding out all there is about the management teams’ background and experience. The degree of such knowledge learned is dependent on several factors and forces one to ask:
What is the professional background of the leadership team? Does it align with real estate syndications in areas of real estate acquisition and finance, legal, tax and securities regulations, and construction management, property management, etc.?
How many deals has the sponsor executed?
How many deals of this particular type has the sponsor executed? Success in multifamily residential does not necessarily equate to expertise in commercial office space.
How many deals has the sponsor done in the target real estate market, and how familiar are they (or an underlying team player) with the market?
If a team involves multiple players for acquisition, construction and maintenance, property management, and other services, have they worked together as a team in the past?
Ipsen Due Diligence is available for background checks and due diligence prior to your investment. However, should suspicions of wrongdoing such as embezzlement or the misappropriation of funds arise following your commitment, contact us so we can discuss your options. Ipsen Due Diligence is experienced and available for financial investigation and litigation support.
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