We are going to be taking questions from one of our podcast listeners about syndications. What are some good numbers to syndicate? Do you need experience? How would you go about it? Billy Keels, a long distance real estate syndicator and investor, who syndicates US properties from Barcelona, Spain.

Tell us a little bit about you.
I am originally from the Midwest, and I've been very fortunate to have lived and worked in some 86 different countries. I currently live in Barcelona, Spain. I was one of those people who was an A student and I was doing what I was always told, and I was getting a corporate job and working on climbing the ladder. And that was until 2008 when, for the second time, my portfolio that I had been putting to the side, because that's what you do as a good a student, took a 33% hike down, I got crushed. That was when I decided that I needed to do something different. At that point, I was a father of two, I had been recently married, and I just needed to get control over my financial life. And like so many other people, that little purple book came across my line of sight. Unfortunately, I didn't actually finish it the first time I picked it up, but I thought it was really cool. And then a couple years later, I picked up that book. And I thought to myself, wow, this is seems really awesome. But how do I put it into play? Because where I was living in Barcelona, Spain, and I did the numbers and none of them were working like in the books where I was supposed to be earning $200-$300 per door.

So I got a little bit frustrated, and I had some awesome friends that told me, You are from the United States, why don't you think about purchasing real estate back in the United States? It seemed a really far out idea. But for the last eight years, I have been investing exclusively long distance, meaning I live in the European continent, and I invest exclusively in real estate that is back in the United States.

I've been very fortunate to do that, I continue to work on gaining more control over my financial life, and now helping other people to do the exact same thing. Because I just know that there are a lot of us that are in these corporate roles that we enjoy what we're doing during the day. And at the same time, we really know that there's something else that's out there beyond Wall Street. And we're just continuing to pull that beacon of light like you're doing, and helping people know that there are definitely ways to have more control over your life, and do that on your own terms, outside of Wall Street.

When it comes to the number of partners in a limited partnership, how many is too many?
There are two questions that you want to ask yourself. Number one, who is it that you really want to serve through the syndication? And number two, what type of systems do you currently have in place, because that's going to have a direct impact on the number of partners that you have. You want to be able to have the right people that you're serving. Sometimes you may want to serve people that are only accredited investors. And that is going to make sure that you're serving someone with a specific type of syndication tool. If you want to be able to serve other people that are more sophisticated investors, then you will want to use a different type of tool, you have specific names. And I know you've talked a lot about 506(c) for accredited investors or a 506(b) for sophisticated and accredited investors.

If you're going to do let's say, a million dollar raise, you want to have the right number of people. And I would typically say if you're going to have accredited investors, you're typically going to have maybe $100,000 minimum, so you may be looking at 10 people, and provided that you have the systems in place. Are you already further along in your journey where you have a specific investor portal, where you can actually show the different offerings that you have, all of your documentation is somewhere, or are you just getting started, and you have the people that you want to serve, and you'll be able to get to the million dollar raise, and you're still using maybe an Excel spreadsheet. Or it may be even more basic than that. By asking yourself those two basic questions, you then don't overdo it. If you are just getting started, to have maybe 20 investors that are investing $50,000 each, that may be a bit overwhelming. But I think it comes down to Who do you want to serve? And what systems do you have?

I am in my mid 20's, and experienced only on the brokerage side of commercial real estate. However, I am taking a commercial real estate financial modeling course to thoroughly understand the numbers, what kinds of qualities, experiences, achievements would make you feel confident enough to invest your money with someone like me, and is direct investment experience an absolute must?
It sounds like you already have lots of experience, even in your mid 20's! I think this is such an individual question. You want to ask yourself what is the right experience for the individual for the person? One metric that I think a lot of people don't talk about is ROS, which is the return on sleep metric, because sometimes you can see lots of fantastic IRR, or cash on cash, or AAR's, etc. But at the end of the day, are you going to be the type of syndicator that is answering the questions in the way that they need them answered? Are you providing graphics on the numbers, experience, references, so that the investor begins to feel confident?

At the end of the day, each one of us are very different. And we need to make sure that you as a syndicator and your team, you need to be able to understand exactly what each potential investor is looking for. As far as having direct investment experience, I'm more interested in her and her team. I want to understand if the team that she is representing has the experience on that asset class. It's not just about the individual, it's more about the team and their overall experience, to make sure that if I'm investing time, energy, capital, that the team will give me as the investor the highest probability of getting the return on whatever it is that I'm looking for. And that could be an ROI, it could be tax benefits, or whatever the case may be.

I'd say find somebody that has experience if you are just beginning and partner up with them so you're not doing it alone, with no experience, which you actually have experience, based on your next question, you currently have 6 units right now, single family homes, and you're looking at getting into a small apartment building, to me that is experienced if those numbers make sense on the single family. But I would also want to see you partnering up with someone that has a little more experience.
I completely agree with you on that. And going back to the concept of the team.

For someone who's just getting started in syndications, what are the realistic goals for scaling and growing? For example, she currently has six single family homes, and she's putting together her first syndication for a six unit multifamily property. What would be a good next step, for example, a 12 unit, or a 40 unit apartment building? Does it matter how slow or fast you scale? And do you plan these things? Or take it deal by deal?
This goes back to the very first question, which is what are realistic goals for scaling growth as you continue to move forward? It appears to me that you not only have relevant experience, you're also very determined to continue to move forward and the fact that you're here listening and asking questions, you are someone who is taking action. My question to you would be, why do you want to have something that is realistic? Why do you want to have someone else set the goals for you? In my own experience, I know that I set out a five year goal for myself. But once I started taking action, once I started being around other people that were more experienced than me, once I started asking questions, getting input, making a couple of mistakes, learning opportunities, I blew through those five year goals in less than two years. In the end, I know that based on what I see, based on the types of questions that you're asking, I would almost push you to the opposite extreme and say, Hey, what are the goals that would make you feel a little bit uncomfortable, because that's also going to have you talking to the right people that have already been there before. And it will get you to expand your thinking, in a way that you're going to be outside of your comfort zone. So you're going to continue to move forward, and you won't be frustrated, because in 20% of the time, you've already achieved the goal that you wanted.

Seeing where I am now, and knowing the type of individual that you are, based on the types of questions that you're asking. As Russel Gray says, create that big, hairy, audacious goal for yourself, and then continue to move forward on that. Sometimes you'll find that a larger syndication with the right people is going to give you the opportunity to learn from others, to be a part of a syndication, and you're buying a much larger business. As the opportunities become larger, you have the resources to actually do things on a more efficient scale, which means that you're not pulling your hair out quite as frequently. Know yourself, and push yourself a bit outside of your comfort zone. As you push yourself outside of your comfort zone, make sure that you are also working with other syndicators who have been there before, be a part of a network that would allow you to leverage their experience.

Great point on setting your own goals and knowing where you want to go. Also, I think it's super important if you want to be aggressive, to make sure you have the the infrastructure in place, so you can grow exponentially, that I cannot highlight this enough, it's super important.
I completely agree with you, it's definitely one of those things that sometimes you find that you end up doing more work, and that is probably not the best use of your time, or you're not the best person to do it. If you're buying something that is "smaller" you may not have the specific resources to be able to efficiently handle a resident request in a timely manner. At the same time, you don't want to do 1,000 units as your first project, because you probably don't have the infrastructure yourself. But if you're working with other people that do, you can learn and grow much faster in an environment that feels a bit safer.

When you consider your most successful deals, what was different?
As a syndicator, it was being able to spend the appropriate time with each of the investors getting a very clear understanding of what each of the motivators were for the individuals that were part of the syndication. And being able to help them get a very clear picture of not just what the project was, meaning buying a certain asset. But what were the benefits and the impact, that that particular investment of their time, energy and capital was going to return not only to them, but also to the communities in which they were investing. And the impact that it was going to make on the syndication's team.

Having a very clear understanding of how the results or the outcomes tied into what each of the investors wanted to be able to do. And that goes way beyond just money investment, or return of their capital, or the high tax benefits, which a lot of investors that work with were interested in, but being crystal clear on why each one of them were involved. And of course, some basic things like making sure that there's a return on their trust and energy, which means that the transfer, the ACH, or the checks were arriving to them on time. And that created a positive experience for them to the point that not only did they want to continue doing that, but they've also gone out and continue to advocate to others about the positive experience and impact that they were having as an investor.

Really good points on understanding what each investor wants, they really don't care, you know about your 100 page PowerPoint presentation, you really should actually turn the tables and ask what is important to you, as you were alluding. As a great, amazing salesperson, yourself, that's definitely something that you have experience with and works.
Exactly. If I can just add one thing there. As someone who is bringing together individuals that have similar goals and dreams, make sure that you're focused on what it is that they want. And sometimes people may feel like if you don't get an answer really quickly, then it's a waste of time. And that's the wrong mindset. Because when you are able to attract the right people that you believe that you will be able to help. It's then being focused on what are their goals? What are their dreams, not just how much money do they want to invest? It's getting a chance to understand what is behind all of the reasons that they've come forward to speak to you and then you invest quality time to understand, to ask the questions, and to be able to engage in those types of conversations. Some of the most successful deals or syndications have been because we're spending quality time together, getting to build a relationship and getting to know one another, not just me understanding the investor, but the investor also understanding more about me, my philosophy, and when I say me, meaning me in my in my team.

Who are your mentors? And how did you meet them?
My mentors knew me before I was even born. I've always considered watching my parents, because they worked really hard and continue to work really hard, making sure that we were in the right school so we have the right education. They worked tirelessly, to make sure that we had the things that we needed, even though they didn't have it. Watching them work tirelessly, being there, even now when I have questions just on life, in terms of what I would do as a father, or what I'm thinking about this promotion, and things like that. My mother and my father are my mentors, in helping me become a better person.

As it relates to real estate, there's a person that I have been very fortunate to know personally, and every single time I've had an interaction with him, he makes my mind, consider the big, hairy, audacious goals. And also the way that you can positively impact other people's lives. He is Russell Gray. As someone who is approachable, someone who's constantly thinking or pushing my thinking, and I'm 1000's of miles away. Sometimes it's just through listening to podcasts, or sometimes it's reading things that he's written, or blogs, or having his point of view and then having the opportunity to speak to him through mentoring club and things like that. It's he's someone that is definitely a mentor to me and someone who has positively impacted me in the approach that I have with others in the real estate space, in the syndication space, specifically.

Billy Keels
Going Long Podcast