Boosting Your Real Estate Syndication Game During Slow Periods

For any business in any industry, periods of low activity are inevitable. These times arise from various factors such as economic downturns, seasonal fluctuations, or changes in local real estate markets.

In real estate syndication, recognizing these lulls is essential for syndicators to adjust strategies. Instead of viewing them as setbacks, you should see those as opportunities to reassess and plan your next steps.

Understanding when the market is slow and lean helps you pivot effectively and be proactive. Staying alert and adaptive ensures you remain prepared to seize new opportunities when the market picks up again.

Below are recommendations you can try to hone your skills and sharpen your tools for when the tide turns again.

Practice Strategic Patience

When the market slows down, it can be tempting to simply wait for conditions to improve. However, doing nothing could lead to missed opportunities and might even jeopardize your long-term goals. What you should do is to stay engaged with the market.

This could mean temporarily shifting your focus, exploring new avenues, or refining your current strategies. Avoid the trap of abandoning your real estate dreams and use this time to stay active and committed. By doing so, you maintain momentum and position yourself for success when the market rebounds. Staying proactive ensures you’re always in the game, ready to seize new opportunities as they arise.

Expand Deal Opportunities

When deals are hard to find, increase the number of Letters of Intent (LOIs) you send to significantly enhance your chances of landing a good one. Casting a wider net can often yield unexpected opportunities.

Additionally, consider branching out into new markets. Exploring different geographical areas could uncover untapped potential and give you access to deals you might not find in your usual territory.

Diversifying your focus can also help balance your portfolio and mitigate risk. Don’t limit yourself to familiar ground. Sometimes, the best opportunities are in places you haven’t yet considered. This approach keeps you active and opens doors to new possibilities.

Broaden and Grow Your Portfolio

Don’t limit yourself to one type of investment. Explore different property types to open new revenue streams and help balance your investments. Think of commercial or mixed-use developments, self-storage facilities, hotels, development projects, recreational properties, and industrial spaces. Developing vacant land is another option, as it offers unique opportunities for growth.

Expanding into various sectors not only reduces risk but also increases your chances of finding profitable deals. This approach keeps your portfolio dynamic and adaptable, ensuring you are well-positioned to capitalize on a broader range of opportunities.

That doesn’t mean you should chase every new opportunity, but if you haven’t had success within a couple of hours of your location or in an unrealistic market, it might be time to expand your search. Stay open-minded and consider areas you haven’t yet prospected to maximize your potential returns.

Improve Your Skill Set

Consider enrolling in industry-specific courses, attending workshops, or participating in webinars to stay current with market trends and new strategies. Broadening your knowledge in areas such as financial modeling, property management, and market analysis can provide a competitive edge.

Spend time and effort in thorough education, additional training, and one-on-one coaching. This will enable you to approach investing from a fresh perspective. Seek out mentorship as well from seasoned professionals who can offer insights and advice based on their experiences.

Continually upgrading your skills positions you to make informed decisions and seize opportunities as they arise. Take this time to become more proficient in various aspects of real estate syndication and well-equipped to handle future challenges and successes.

Utilize Your Network

One of your strongest assets is the real estate circle you move in, especially when the market is slow. Connecting with fellow investors can introduce you to joint ventures, allowing you to take on larger projects that may have seemed out of reach on your own. You can fund other people’s deals and create a “fund of funds” dedicated to identifying and investing in promising projects.

This setup will be its own syndicate, so you must comply with securities laws, but by bringing capital to other deals, you’ll likely earn a spot in management and a share of the profits. It allows you to oversee the investment on behalf of your investors, offering them opportunities to invest smaller amounts in deals they couldn’t access individually due to high minimum investment requirements. Additionally, it keeps you in control of your investors without transferring them to another syndicator.

Leverage your existing relationships to explore potential partnerships and funding avenues. Networking can also lead to referrals and introductions, widening your circle and enhancing your market presence.

Pooling resources not only diminishes individual risk but also brings diverse perspectives and innovative ideas to the table. Collaborative efforts can help you discover new opportunities and refine your strategies.

Modify Your Strategies

The market no longer supports returns of 20%+. Current average annual returns for multifamily properties are projected in the mid-to-high teens. However, you can educate your investors and shift their expectations to more realistic figures by keeping them informed about changing market conditions and reminding them that returns in the mid-to-high teens still outperform historical stock market trends.

Adjust your expectations to align with current market realities. This means being open to new and various types of deals or accepting different terms than you usually would. Review and refine your marketing materials to ensure they accurately reflect your value proposition and speak directly to your target audience. Effective marketing can attract new partners or investors, giving you the leverage needed to pursue larger or more diverse projects.

Also, consider tweaking your deal criteria. For instance, if you’re used to looking for high-yield properties, it might be worth exploring those with stable, lower returns that can provide consistent income during uncertain times. Keep a close eye on emerging trends and be ready to pivot as needed. By staying adaptable and proactive, you can turn a challenging market into an opportunity for growth and innovation.

The Bottom Line: Maximize Your Downtime as a Real Estate Syndicator

The market is indeed challenging right now. Identifying properties that make financial sense is akin to finding a needle in a haystack. Furthermore, numerous real estate experts are educating thousands of your competitors on how to buy the same properties you’re eyeing. So, what’s a real estate entrepreneur to do?

Develop a proactive mindset and a willingness to adapt. During slow periods, it’s crucial to use your time wisely to bolster your position for future success. Engage in activities that foster growth, and even get a coach if you don’t have one to keep you accountable. Each step you take now can provide a solid foundation for when the market picks up again.

Staying active in the industry, even when deals are scarce, helps maintain your momentum and keeps you in the loop with current trends and opportunities. Take this chance to refine your approach and strengthen your capabilities.

If you’re not already taking action, you’d better start, because you’re either about to do something significant or you’re among those who will remain merely wishful thinkers.

Are you considering exploring new avenues in your lean season as a real estate syndicator? Make sure you’re staying compliant while doing it by consulting an expert attorney! Shams Merchant is the leading real estate private equity and syndication lawyer representing real estate syndicators across the country in multi-family, industrial, retail and office real estate projects. Specializing in real estate syndications, fund formations, securities law, and private placements for commercial property investments and development, Shams has been featured in publications like Law360, The Business Journals, BisNow, and The Real Deal.