Syndication is a great mechanism for passive investors who do not with to actively manage their portfolio, either because they are merely interested in the returns from the cash flow and have no interest in actually dealing with a property acquisitions and management, or they lack the time to do so.
However, there is a group of people who wish to become syndicators and run a syndication business, but don’t have the knowledge, experience or the tools make it happen. They haven’t invested in real estate before – actively or passively and want to make the shift to syndication. For this group, my suggestion would be to start investing passively alongside a syndicator first, then become syndicators.
It is extremely difficult to close a deal if you have no experience in real estate, especially now because the market is hot and there is so much money chasing deals out there. Here are three ways that being a passive investor first can help you overcome the challenges above and eventually become a syndicator. In this post, I’ll discuss the challenges a person with no experience in real estate faces, and how passive investment can help remove those challenges:
- No real knowledge about purchasing real estate and managing it
- Lack of track record to get a deal
- Lack of tools and track record to raise money
No Real Knowledge About Purchasing and Managing Real Estate
The Problem: future syndicators do not know much (if anything) about real estate investing, and are hesitant to invest and raise money for a deal. Being cautious is not a bad thing in this situation. After all, how can you run a syndication business without actual knowledge about real estate investment?
How Passive Investing Can Help: There is so much you can learn by investing with a syndicator, especially how they study the market, analyze deals, and create a business plan to enhance the property’s value. When you invest with a syndicator, you can learn, first hand, what works and what doesn’t, observe how the syndicator communicate with passive investors and basically learn by observing.
No Track Record To Get the Deal
The Problem: Brokers are constantly vetting buyers and make sure that only potential buyers with a high probability to close the deal will be considered to be awarded the deal. Vetting buyers is one of the main ways brokers provide value to sellers, who want to have surety of closing for obvious reasons.
How Passive Investing Will Help: By investing with other syndicators, you are able to build a portfolio that you can present the broker, especially if you are interested in investing as a syndicator in the same market you have been investing as a passive investor. Building a passive portfolio can help you build the credibility you’ll need to be considered as a serious buyer.
No Track Record To Raise Money
The Problem: Since you have no experience in real estate, you also have no track record of raising money. Most people, even those you know or even consider close friends, will not invest with you unless you have experience in real estate.
How Passive Investing Will Help: When you own real estate by investing with a syndicator, you begin to build a track record. Under the assumption the deals went well, you can prove that you know how to identify the right deals in the right markets and can present your passive experience to your new investors.
Summary
To conclude, passive investing is a great way to learn about real estate investing and a syndication business. You can how to evaluate deals, markets, and opportunities, build a portfolio, gain credibility and build a track record. By overcoming these challenges with passive investing, you are one step closer to become a syndicator.
---
About Ellie Perlman
Ellie Perlman is the founder and CEO of Blue Lake Capital, a woman owned multifamily real estate investment firm focused on partnering with family offices and accredited investors to build and preserve generational wealth. Since its founding in 2017, Blue Lake has successfully acquired and operated multifamily assets across high-growth U.S. markets, completing $1B+ in transactions.
At Blue Lake Capital, Ellie and her team work exclusively with family offices and accredited investors, offering carefully curated investment opportunities that emphasize long-term wealth creation, stability, and risk-adjusted returns. A defining aspect of Blue Lake’s investment strategy is its integration of advanced AI-driven analytics and data science into the entire lifecycle of acquisitions and asset management. By leveraging cutting-edge technology, the firm executes data-driven forecasting on market trends, asset performance, and tenant behavior, ensuring strategic decision-making and optimized returns.
In addition to leading Blue Lake Capital, Ellie is the original founder and host of "REady2Scale - Real Estate Investing" podcast, which provides insights into multifamily real estate, alternative investments, and finance.
Ellie began her career as a commercial real estate attorney, structuring and negotiating complex transactions for one of Israel’s leading development firms. She later transitioned into property management, overseeing over $100M in assets for Israel’s largest energy company.
Ellie holds a Master’s in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.
