Real estate syndication platforms are booming in this new era of online real estate investing. By pooling your funds with other investors on your chosen platform, and having the deal professionally managed by the platform’s real estate sponsor, you can leverage other people’s money and expertise to increase your return potential!
But how do you choose a real estate syndication platform?
In this article, we’ll explore:
The green flags to look for,
The red flags to watch out for,
And the other factors that can improve your investment experience by tailoring to your preferences.
Consider this your guide to choosing a real estate syndication platform!
What to Look for in a Real Estate Syndication Platform
Here are five “green flags” to look for when comparing real estate syndication platforms.
1. A History of Strong Returns
An established track record is among the best indicators of a real estate syndication platform’s potential. Check to see how long the company has been in operation. Then look at the financial results from the completed projects, paying attention to the actual returns vs. the projected returns.
While market conditions can affect performances, solid leadership and smart investing strategies can help syndication companies return profits to investors even in slower markets.
2. Real People with Real Reputations
Behind every platform is a team of professionals making critical decisions with your investment capital. As an investor, you deserve to know who these professionals are. Look for syndication platforms that proudly identify their team with bios and photos on their website. They might also be active on social media and professional networks like LinkedIn. Founders who are willing to associate their reputations with the platform have a greater stake in its success.
3. Transparency in Reporting and Fees
Reputable platforms don’t just brag about their wins; they’re also honest about the challenges they face. Look for transparency in reporting the details of past deals, including those that didn’t meet expectations. Pay special attention to ROI vs. annualized ROI. Quality platforms will provide annualized ROI figures so investors can compare different returns over standard 12-month periods.
Also, look for information about fees. All syndication platforms charge fees to compensate the sponsors who manage the deal. But a good platform will clearly explain the fee structure upfront so there are no surprises for investors at the end of the project.
4. Clear and Accessible Communication
Top-tier platforms keep investors in the loop with regular updates, offer dashboards to track performance, and provide responsive support when questions arise. When choosing a syndication platform, look for contact information on the website. Options for reaching real people by email or phone are a good sign. You might even reach out to see if someone responds and how quickly.
5. Legal safeguards and investor protections
Make sure the platform operates under proper legal frameworks. Legitimate syndication companies are registered with the Securities and Exchange Commission (SEC). You should also see clear documentation of your ownership, often through structures like LLCs or Trusts, which confirm your rights as an investor.
What to Watch Out for When Choosing a Syndication Platform
In addition to looking for green flags, it’s important to watch out for red flags. If you see any of the following red flags in a syndication platform, you may need to do a bit more research to determine if this is a company you trust with your money.
1. No Established History of Performance
Syndication to the public only became possible as part of the 2012 JOBS Act, so all syndication platforms are fairly new. This means you won’t see decades of data for any platform. However, if a company has less than five years of verifiable experience in syndication (or they’ve only completed a handful of deals since being founded), they may not have the experience necessary to produce strong yields.
2. Lack of Info About the Team Behind the Platform
Be wary of any syndication platform that doesn’t offer information about the people managing your money. Keeping the team in the shadows can lead to a lack of accountability if a project fails to perform.
3. Confusing Information About Results and/or Fees
Incomplete information about performance is a big red flag. If only the best-performing deals are reported on the website or the final ROI is shown without any information about the timeframe or projected ROI, the platform may be purposely withholding information.
This is especially important when it comes to fees. Look for the fee structure on the details page for any investment project you’re considering. You should see a clear structure that explains how much the syndication platform stands to earn and how much you stand to earn after their fees are paid.
4. Inconsistent or Unclear Communication
If it’s hard to get assistance or answers to questions while you’re still deciding to invest, it may be even harder once the platform has your investment capital. The lack of contact information on the website is a major red flag, as is a failure to respond to inquiries.
5. Lack of Investor Protection
Watch out for companies that aren’t registered with a relevant oversight body, like the SEC. This increases your risk as an investor. Also, beware of any weak or ambiguous legal structure. The inability to verify your stake in the investment with legitimate documentation is a major concern.
Additional Considerations When Choosing a Syndication Platform
Some factors are neither red flags nor green flags; they’re simply preferences that should be considered before investing. Here are the additional considerations you should be aware of in syndication.
Debt vs. Equity
Some investors have strong preferences regarding debt vs. equity investing. Debt investing is when you act as the lender, loaning money to a deal in exchange for a set rate of return. Equity investing is when you own a share of the deal and are entitled to a share in the profits. Debt investing offers more predictable returns, but equity investing offers higher return potential.
Whole Fund vs. Deal-by-Deal
If control is important to you, consider whole fund vs deal-by-deal investing. Whole fund investing is when you buy into a portfolio, with no control over the assets in the portfolio. Deal-by-deal investing is when you choose the individual properties you wish to invest in. Whole fund offers automatic diversification, but deal-by-deal offers more control.
Investment Minimums
Some real estate syndication platforms offer minimum investments of $10,000, others require $50,000 or more.
Project Duration
Short-term projects (like single-family house flips) can be completed in just 6-12 months. Mid-term projects (like multi-family developments) might take 1-3 years. And long-term projects (like long-term rental properties) might take five years or more.
The Syndication Company’s Niche
Many syndication companies choose a niche, such as a specific geographic market or a specific property type. Make sure you’re comfortable with the niche before investing with the company.
Investor Type
Due to SEC restrictions, many syndication platforms are only available to accredited investors. If you don’t yet meet the income or asset requirements for accredited investor status, consider general real estate crowdfunding, which is more likely to serve non-accredited investors.
Ease of Use
Some real estate syndication platforms are easier to use than others.
Evaluating Gatsby Investment as a Syndication Platform
Gatsby Investment is a Los Angeles-based real estate syndication company that specializes in unique deals with high return potential.
Here is how Gatsby stacks up as a syndication platform, based on the green flags, red flags, and additional considerations discussed in this article:
Gatsby’s Green Flags
Strong returns. From 2017-2024, Gatsby provided average annualized returns to investors of 22%, outperforming the market by a wide margin.
Real people. Gatsby’s executive team, led by Dan Gatsby, proudly stands behind the company, staking their reputations on the platform’s success.
Transparency. Gatsby publishes financials on each deal so investors can see exactly how each asset performed. These financials include clear fee amounts. Available investment projects also display projected returns and fees, helping you make informed investment decisions (anyone with a free Gatsby account can log in to see these details).
Communication. Gatsby’s dedicated investor relations team is easily accessible by email, phone, or even in-person meetings at the Beverly Hills HQ. Investors can check the status of their investment(s) 24/7 through the online platform, while also receiving email updates as the project progresses.
Legal safeguards and investor protection. Gatsby is registered with the SEC and allows investors to download their certificates to confirm their ownership stake in each investment at any time.
Additional Information to Consider About Gatsby/
Equity investment opportunities. Equity investments with Gatsby provide an ownership stake in the underlying real estate, with rights to the project’s profits.
Deal-by-deal control. With Gatsby, you can view the details of each property, including the property address, to choose the individual project(s) you want to invest in.
Reasonable investment minimums. With Gatsby, you can invest in real estate for $25,000, avoiding the high upfront cost of traditional real estate investing.
Flexible durations. Gatsby’s project timelines start at around 10 months for a house flip. You could also invest in development projects of 2-3 years or long-term rentals of 5+ years.
An in-demand niche. Gatsby specializes in the desirable Los Angeles residential market, focusing on high-performing projects like multi-family development and attainable housing.
Available to accredited investors worldwide. Any accredited investor can invest with Gatsby (investors outside the US will need to invest through a C-Corp).
User-friendly platform. Gatsby’s innovative platform is easy to use and efficiently streamlines the investment process.
It’s easy to see why thousands of investors choose Gatsby as their real estate syndication platform.
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