The General Partner (also known as the Operator and Syndicator) first seeks out a Real Estate market or submarket where there is a strong in-migration of people and jobs. This will ensure that there will be a strong demand of renters looking to live in the future investment property. Once the market is selected the General Partner then works on building his team which will help analyze, buy, finance and manage the property. Some important team members would be Real Estate Brokers, Mortgage Brokers, Contractors, Property Managers, Accountants, Attorneys and more. All this time the General Partner is networking with investors and learning about their investment interests and needs. The size of the deal that the Syndicator will be able to take down is determined and dependent on how much capital he can raise.

Now the deals are starting to come across the Operators desk and it is his job to underwrite them conservatively and responsibly till he finds one that looks worthwhile. The Syndicator will need to understand what kind of returns his investors expect in order to be able to underwrite deals. Many of the good deals that will get everyone the returns they desire will be value add deals. Value add is when someone buys a property that is underperforming and adds value to it in order to get it to its full potential. Luckily there are lots of ways to add value to a property! You can either increase the income or reduce the expenses or better yet you can do both. Some classic ways are to renovate the actual units and then increase the rents or maybe you can add public laundry machines in the basement area. Another option may be to have the tenants billed directly from the utilities companies for their utility usage (only if that’s done in your market). The cool thing is that just a small increase in rents end up adding a lot of value to the property. For this reason, Operators will generally try to capitalize on every opportunity possible to increase the NOI (Net Operating Income) which is one of the key metrics (along with Cap rates) used for establishing the property’s value.

Once the price is agreed upon by both the seller and buyer and the contract is signed the earnest money deposit is submitted and the due diligence period begins. During this time the buyer should be searching for any inconsistencies in the seller’s documents and reports. He is verifying that the underwriting was on target and working closely with the team to finalize the property plan and operating budget. During this time, the Syndicator will be finalizing the list of investors and explaining to them exactly where their capital is going and how and when they can expect to receive their returns. It is then the attorney’s responsibility to create an operating agreement and a private placement memorandum and assuming everyone is still on the same page the Syndicator will close on the property and take ownership.

From this point on the Syndicator is basically an Asset Manager which means the team is in place and he has to ascertain that the project and budget are going as planned as well as making the promised distributions.

Assuming that the General Partner did his homework, due diligence and hired the right management company he will now be able to manage this project in very limited time per week which will allow him to have more time to close more deals and continue building his dynasty.