Syndicating Is a B*tch: And Other Truths You Haven't Been Told

By Bruce Petersen

If you're in real estate, you've heard of syndication. It's the new industry gold rush, and much like the dotcom bubble in the late 1990s, investors are wondering if they should get in on the action or wait for the market to correct. Award-winning syndicator Bruce Petersen says it all depends. If you do it right, syndication is an amazing way to grow your business exponentially and achieve a life of freedom you never thought possible.

And you don't need to wait for a market correction—Bruce will show you how to develop a track record of success with syndication right now that will have you well positioned and ready for the next correction.

However, syndication isn't for everyone. In Syndicating Is a B*tch, Bruce shares the stories other syndicators won't, like finding a dead body on a property and having Homeland Security take $5.2 million of your money. Along with the unvarnished truth, Bruce gives you the step-by-step guide you need to close your first syndication deal.

• Language: English
• Publisher: BookBaby
• Release date: May 5, 2020
• ISBN: 9781544506050

Book preview

]>

]>

Copyright © 2020 Bruce Petersen

All rights reserved.

ISBN: 978-1-5445-0605-0

]>

Disclaimer: I am not a CPA or an attorney. To do any of the things in this book, you need to consult your own legal and financial experts. This is just my personal experience having done this sort of work for years.

]>

Contents

Introduction

1. A Way Out (and Up)

2. What Is Syndication?

3. Start with a Plan

4. Assemble Your Team

5. Never Stop Networking

6. Find a Deal That Works

7. Put Your Team into Action

Conclusion

About the Author

]>

Introduction

Right off the bat, I have to tell you: this isn’t going to be all rainbows and lollipops.

I tried to be as honest as possible in the title of this book, but since you picked it up anyway, I’d guess you’re one of two people. Either you’ve been burned before, or you’ve got stars in your eyes. Somewhere, someone told you how syndication is the way you can make your millions, and you’re sold.

I’m not trying to scare you out of syndicating. The problem is that I’ve talked to hundreds, maybe thousands of people who are interested in the syndication model, and only 20 or 30 percent are truly equipped for it. If I can shed some light on the difficulty and stress that comes along with it before you decide to jump in, then I will consider this book a success.

You might think that there’s some magic key that I and I alone can offer to unlock your pathway to easy money. But there are no sparkling unicorns to guide you through your first deal. There’s no checklist that will guarantee a smooth or even successful syndication for you.

I know that’s not what I’m supposed to say. I’m supposed to be this guru person who gives you a secret formula and makes promises with a vague this isn’t necessarily indicative of what will happen for you attached just to stay on the right side of the law. I’m supposed to tell you about the yachts and the ponies and the $20 million homes.

Except you’ve heard all that bullshit before.

How many times have you gone through this with someone, usually in real estate, making all these promises…just to find out the successes are really just their best-case scenario? How much money have you spent only to find out that they glossed over reality and are just making money off of you and thousands of others who have taken their course? That’s not to say all of those people are bad or dishonest; in fact, most are good—but many of them don’t have your best interest in mind. That’s not their objective.

That’s not what this book is about anyway.

This book is about what it’s really like to bring investors together in a syndicated purchase, and the kind of person you have to be to make that work. Yeah, there’s incredible earning potential on the other side, but without knowing what you’re actually getting into, you’re almost guaranteed to lose. Big.

Shit Will Hit the Fan

You don’t really have a way of knowing whether I’m going to be real with you or not, so I’ll start with a story. One about how $5.2 million completely disappeared, right at the end of a syndication deal when everything was supposed to be set.

Let’s go back to August of 2016. Everything about the apartment complex that we were buying in San Antonio had checked out. Our investors were lined up. We had completed our due diligence inspections and made it to closing day. Austin, where my wife and I live, is about an hour and a half from San Antonio, so we wired our $5.2 million for the purchase at about nine in the morning on a Friday, then made the drive down there to hang out in town until we received notice that the wire had been received. It typically only takes a couple of hours for a wire to go through, so the timing was going to be perfect.

By eleven, we were at the property and ready to meet with our newly inherited staff. The night before, the previous management company had taken all of the computers and phones out of the office, so there wasn’t much for anyone to do. The staff could physically walk visitors through the model unit and show them the amenities, but that was it. Since the wire was delayed, we couldn’t do much either. Still, we figured it would be there any second and decided to go ahead and set up all our new computers and phones and begin training them on our management software.

Around 11:30, I started getting phone calls. Bruce, where’s the wire?

I sent it at nine, should be there any minute.

Thirty minutes later: Bruce—still no wire.

Now, I’m an eternal optimist, so I wasn’t exactly worried, but this wasn’t normal. I needed to do some digging. So I called the bank, assuming that’s where the disconnect was. But the bank didn’t have the money either.

The wire had definitely gone out shortly after nine that morning. As far as I could tell, all of my investors’ money was gone.

I collected supporting documents, tracking numbers, and confirmations, hoping that would keep us moving—I didn’t have anything more than that to offer the sellers. The money was in my account, and then it was gone, and somewhere between there and the seller, it was nowhere to be found.

At 4:30, my attorney called me for the last time that day: You have to get out.

Without the successful wire transfer, the property and staff weren’t mine. I didn’t own it yet. The process is normally so sure at that point that I hadn’t told anyone the sale wasn’t finalized—not even my wife. She’d been running around training the staff on our management software all day. No one else needed to worry about this thing that should’ve been resolved by now. But it was clear by that point that nothing was closing that day, and we had to go.

I now had to tell my wife that we didn’t own the property. We had to explain to the staff that the closing didn’t clear—and that we had to take our computers and phones with us. We couldn’t leave everything there over the weekend without knowing what was going on. They had to call the old management company back to figure out what to do. Before we left, someone showed up, dropped a single box with one phone and one computer on a desk, then turned around and walked out.

With the staff able to do at least part of their jobs, my wife and I packed up and drove straight to a restaurant for some food and some liquor. Needless to say, having $5.2 million disappear is a little bit stressful. I maintained most of my optimism—surely someone could figure this out—and by 5:30 it paid off. Sort of.

Here’s the thing: when money is wired, it runs from one bank, through the Federal Reserve, and to the other bank. Usually, it’s a simple and quick process. In between, there’s a division of the US Treasury Department called the Office of Foreign Assets Control (OFAC) who has the authority to make a pause. They’re charged with watching for money laundering and have a list of known bad actors throughout the world that they run against the participants of wires to see if anything pops.

Turns out, the name of the property we were trying to purchase was also the name of a known bad actor in Columbia. Since my proactive ass had already filed the DBA (doing business as) paperwork to match our investment group to the name of the property, guess what name was on the $5.2 million wire? Yep.

OFAC had flagged it immediately and had been under no obligation to tell us.

After one more terribly uncomfortable explanation—an email letting the investors know their money was gone and the property wasn’t yet ours—our Friday night had ended.

All eventually worked out, though. By Monday morning, we finally got word that the wire had been released, and we were finally good to close. Done—with a little bit of unneeded stress!

If you think you can handle that kind of excitement in your life, keep reading.

Why I Wrote This Book

Writing isn’t really my thing. I’ve had to teach myself to enjoy reading, and even then, it’s more like a task I know I need to do than something I think I’ll enjoy. But this topic really had to happen in a book. It’s a chance for me to be candid with you and get into some details that I might not be able to at a networking event or speaking engagement.

More importantly, it’s a chance for you to explore syndication from the safety and anonymity of your own home. When you show up to a conference or something, it’s way too easy to feel pressured into things. That either gets people into trouble or keeps them from showing up at all.

There’s no risk here. There’s nothing keeping you from getting a little bit more information. You might find out syndicating isn’t for you, and for many of you reading, I want that to be the case. I’d rather talk you out of something that’s not a good fit than to get you in over your head. Unfortunately, I’ve seen that happen to people—in fact, it happened to one of my closest friends.

Without exception, every single time for probably a year or better, he’d blow me off for lunch or happy hour or whatever we had set up. Something was obviously wrong, but I didn’t know what. He wasn’t talking to me about it, though, so I let it go. When we finally caught up, I found