Why do so many real estate deal sponsors fail — while others seem to effortlessly raise and close deals?
In my experience, these are some of the catalysts that have caused sponsors, real estate syndications, and crowdfunding campaigns to fail (or at least not meet projected expectations).
1. Not Structuring Deals Correctly
There are many ways to structure syndicated or crowdfunded real estate deals and partnerships. There’s donation based, debt, and equity crowdfunding opportunities. There are Regulation A, D and A+ filings and other variations. Sponsors can make their money in a variety of ways and choose to offer a variety of different returns. Just make sure it is structured well, competitively, and in an appealing way that your target investors will understand. If not, the market will let you know. I encountered this on my second syndication, in which I had to restructure the deal to complete the raise.
2. Real Estate Syndication Software
Today sponsors can choose to try to raise money manually offline, leverage existing third party real estate crowdfunding portals (if you qualify and can stomach their fees), or launch their own portals online with white label syndication software.
The more efficient you can make the process for your prospective investors and your in-house team, the better things will run. You’ll be able to attract more money from the right investors, put it to work effectively, and deliver on your promises.
3. The Legal Stuff
This is a really dangerous game to be in if you don’t…