7 Steps To Investing In Your First Apartment Syndication

7 Steps To Investing In Your First Apartment Syndication - F

7 Steps To Investing In Your First Apartment Syndication

If you’re anything like I used to be, the only real estate transaction you’re familiar with was purchasing a home.

Do you remember the process you went through when you bought your first home?

It probably went something like this….

Initially you decided you wanted to buy one (maybe you’d been renting for years and were tired of hearing the neighbors yelling through the walls!).

Next, you selected a neighborhood you were interested in. After that, you had to create your must-have versus nice-to-have list, get pre-approved for your loan (possibly a doctor mortgage), then get with a realtor to hopefully find what you’re looking for.

Now a few of you maybe familiar with some of the more traditional types of real estate investing that involve buying a house and making some sort of profit on it, also know as fix and flips.

Another strategy similar to this would be the BRRRR strategy (Buy, Rehab, Rent, Refinance, and Repeat).

Now anything beyond these is where you begin to lose most people. Myself included…. before I learned what it took to become a passive real estate investor in an apartment syndication.

Before we go any further, let’s define what a syndication is.

What Is An Apartment Syndication?

An apartment or real estate syndication is simply the pooling of funds from a group of investors in order to purchase a property that’s more expensive than any of them could have afforded on their own. (Unless you’re Warren Buffett.)

Here’s a couple of different scenarios where this would be beneficial:

a) If you didn’t have the funds to afford a down payment on a good deal, you could syndicate it by finding others to help fund it.

b) On the other hand, if you had the down payment, but not much real estate experience, you could use a real estate syndication to get partners to help.

In this article, I’d like to walk you through that process from start to finish, so you have a clear understanding of all the steps involved in  passively investing in your first real estate syndication.

7 Steps To Investing In Syndications

1) Make a decision

You know what’s best for you more than anyone else. Quite frankly, making the decision of whether or not you want to invest in real estate is perhaps the MOST important step on our list.

As you know, there are many other types of investments that you can invest in such as stocks, bonds, precious metals and mutual funds.

Related article: 401k vs Real Estate: Which Is Best?

Again, that’s a decision that I won’t be able to help you with. Most financial coaches recommend that their clients:

  • View their portfolio with their spouse if married
  • Review or develop goals
  • Decide if real estate investing will help you reach those goals

I got into real estate investing because I was bored and complacent. If you’ve ready My Story, then you know that we were in close to $300,000 in student loan debt along with other debt such as an interest-only mortgage.

When I started practicing, I set some fairly LARGE financial goals for us to reach by the time I turned 40. Gratefully we were able to meet those goals but, like most things in life, it didn’t last too long. A couple of weeks to be exact.

That’s the part when the complacency began to creep in which pushed me to set new goals. At the time, the ONLY income I had coming in was from the practice. This was the active or earned income.

I’m in practice by myself so taking a month off to enjoy the kids was not an option. It wasn’t so much the cost of the vacation as it would be to have shut the practice down for a month.

That’s when I decided I had to do something else.

Long story short, I relentlessly decided to become a student of real estate investing. Passive investing that is. I didn’t want to become a landlord as I had a practice to run and family to spend time with.

I began investing in multifamily syndications and now to this day, is becoming a bigger and bigger part of our portfolio.

Each new investment I make is another passive income stream I add to the mix which gets me one step closer to financial freedom.

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2) Develop investment goals

Once you decide to start investing in real estate, the first question you must answer is this:

Do you want to be a passive or active investor?

I had to answer this one as well. And after talking to several local real estate investors, I knew that active investing wasn’t for me.

If I’d chosen that route, I would still have been trading time for money.

Again, I don’t have the time (nor patience) to deal with tenants, fix toilets or other management issues that goes along with having rental property.

If that’s what you want to do then great. Again, you must develop your own goals.

Other questions to ask are:

  • What do you plan to get out of real estate investing?
  • Are you looking for a long-term or short-term investment?
  • Are you hoping for a lump sum fairly quickly, or a steady stream of passive income over time?
  • How much do you have to invest, both in terms of time and money?

On the other hand, if you’re more like me and find the “set it and forget it” type of investing to be of more interest, then a real estate syndication might be a better fit.

You can invest your money alongside other investors, then have the general partner/operator (people that put the deals together and manage them) take over and carry out the business plan.

3) Find the right investment opportunity

If you’ve decided to take the passive real estate route via syndications, then the next step is to find one that works for you.

There are a variety of different assets that you can invest in such as:

To help investors learn about investment opportunities, Deal sponsors typically provide help for investors to learn about their investment opportunities via:

These are the core materials that will give you a full 360-degree view of the:

  • asset
  • market
  • deal sponsor team
  • business plan
  • projected financials

Personally, when I review these materials, I’m looking first and foremost at the team who’s running the project. I want to make sure they have a solid track record and that they’re good people.

One of the reasons that I initially lost my butt on one of my first deals was that I didn’t do my part to seek out sponsors that I could trust.

I now only work with a handful that I also recommend to others too in The Passive Investors Circle.

After I perform due diligence on the team, it’s time to evaluate whether or not the business plan makes sense, given the asset class, submarket, and where we are in the economic cycle.

I personally do my own research on the market, looking at job growth, population growth, and other trends.

Most of the deals I invest in have a minimum investment of $50,000 with a five year projected hold time and projected returns of 15-18%.

I look to make sure that the team has multiple exit strategies in place, in case their Plan A doesn’t pan out.

I also attend or review the investor webinar and ask tough questions.

If, after all my research and analysis pans out, I consider investing in the deal.

But again, this is my personal philosophy and methodology. As you review different investment summaries, you’ll come up with your own criteria of what you’re looking for.

The more you review, the better you’ll know exactly what you’re looking for.

4) Reserve a spot

Most of the opportunities to invest in an apartment syndication (or any other type) is on a first-come, first-served basis.

This can be especially important for deals in hot markets with strong deal sponsors.

It’s not uncommon for these types of opportunities to fill up in a matter of hours. If you snooze you lose!

If you perform your research ahead of time, have money saved to invest and know the type of investment opportunity you’re looking for, then when one comes out that meets your criteria, you can jump on it right away.

Often, there will be an opportunity to put in a soft reserve amount. This is kind of like you raising your hand that shows you’re interested.

By doing this, you’re able to hold down a spot while you take time to review the investment materials.

If you decide to back out or reduce your investment amount later, you can do so with no penalty.

On the flip side, if you don’t hold a place, but then later decide you want to invest, there may no longer be room for you in the deal, and you’ll have to join the backup list.

5) Review the PPM

After you’ve identified a deal that you’d like to invest in then the first step is the signing of the PPM (private placement memorandum).

This is a legal document that goes into detail about:

  • the investment opportunity
  • risks involved
  • your role as an investor in the project

I find that most investors don’t take the time to fully review this document but it’s important that you do so.

As a side note, for those that sign up for the Passive Investors Circle, I give a review of the PPM of every project I recommend to the group.

I typically do this via a short video that gives my thoughts and suggestions about the deal. This is emailed to the group once the deal is released and after the operator’s webinar and/or conference call is completed.

The PPM allows you to fully understand all of the aspects of the investment opportunity, including the:

  • risks
  • subscription agreement
  • operating agreement
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6) Fund the deal

Once you’ve completed the PPM, the next step will be to send in your funds.

Most of the syndications are for accredited investors only and start with a minimum of $50,000 to invest.

Typically, you’ll have the option to either wire in your funds or send a check.

I’ve used both methods before and have had no issues with either one.

7) Sit back, relax, & enjoy the ride


If you’ve completed the above six steps, then here’s where you stand:

  • performed your due diligence on the investment
  • reserved your spot in the deal
  • reviewed all the legal documents
  • funded the deal

In a nutshell, you’ve figured out where you want to go, purchased your seat on the plane, reviewed the safety information, buckled your seat belt, and now you’re ready for a cocktail and a movie.

After the property closes, the general partner will send you a note to update you on your investment. 🙂

After that, you can expect to receive the following from them:

  • monthly updates on the project
  • detailed quarterly reports on the financials
  • monthly/quarterly cashflow distribution
  • an annual K-1 for your tax returns


When I’d first heard the term apartment syndication, I didn’t have a clue what it involved.

After not only learning but investing in several, I wanted to make the process of investing in them clearer for the readers of the Debt Free Dr site.

It even challenged me to create a group, the Passive Investors Circle, for high-income professionals wanting to learn more and invest in an apartment syndication.

As you now know, an apartment syndication is a type of set it and forget it investment as most of your active participation is performed up front.

After you make the decision to invest, you review the investor materials (executive summary, full investment summary, and investor webinar), reserve your spot in the deal, review and sign the PPM, and fund the deal.

The more of these deals you invest in, the more comfortable you’ll become with the process.

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