Tilden Moschetti: When you're putting together a real estate
syndication, a lot of your world gets consumed by the world of
Regulation D, and the SEC and syndication and funds and all
those things. But what we oftentimes forget is that many
people in the world don't know what we're talking about when we
say, real estate syndication, and they would be interested,
but they just don't know. And so a lot of times you'll get the
question, well, can you give me an example of what a real estate
syndication would look like? So in this video, we're going to do
just that.
My name is Tilden Moschetti. I'm a syndication attorney with the
Moschetti syndication Law Group. Let me give you an example of
what a real estate syndication is. I understand that if you're
watching this video, you probably already know what it
is, but many people don't. And I'm oftentimes surprised myself
because I forget, you know, this is my world that I live in 24
hours a day, seven days a week, 365 and one quarter days a year.
But most people aren't living in this world that are thinking
about this stuff all the time. So here is sort of an example
that I could use if I was asked, you know, can you give me an
example of a real estate syndication? So I probably would
say, let me tell you about one of the first deals that I did.
So I found this piece of property on that property, it
was already developed by a developer, it was a medical
office property. And they had a tenant lease already signed.
Now, I knew that who the developer was, I already had the
relationship with them. And I knew that they were interested
in just selling it pretty quickly because they wanted to
move on to their next project. So I immediately thought this is
a good opportunity to buy in at a lower price, and get a nice
piece of real estate. I could have bought this property for
myself. But I wanted to get started in syndication. And so I
did this deal, right, so I bought the property, I put the
property under contract. And then I started looking for
investors. In this case, I have a good network. So I was using
rule 506. B in order to find investors. So which meant I
could take both non accredited and accredited investors. So I
went around to all my everybody that I know, and I talked to
them about this investment. I said, I'm buying this piece of
real estate, I'm getting it at a discount, because the developer
who's just finished it, they already have the major tenant in
place and is ready to move in as soon as development is over. But
they want to go off and do develop another project for that
same tenant. So I'm getting it at a good discount. Now I know
that in the area, there is only one of these buildings and one
of this kind of tenant, this is a medical tenant. And so I know
that this is only one. There are some other reasons of why this,
this is a very specific purpose. And that it's an underserved
community for the services that this medical company provides.
So there was a there was a good need in the marketplace for it,
which creates a value in that tenant, right? So they want that
tenant there, the tenant is most likely going to stay there for a
very long time and keep renewing their leases. Also the economics
of the area, the demographics were really, really strong. It
was strong in most areas, but it was also uniquely strong in the
same medical service that was necessary that was being
provided by my client by my my tenant. So I had this great
opportunity, right? So what I did is I divided it up, I think
it was approximately a $2 million raise. And I'm rounding
here because I don't remember exactly. It was a $2 million
raise, and then I put financing of another $2 million on it. So
I put a low got a loan had that done $2 million, so I still
needed to raise $2 million. So I divided it up into at that time,
I think I divided it up into $50,000 shares. And then I
started selling those $50,000 shares out to people that I knew
people who were already in my network. Now some people came in
through family some of it was family and I would explain to
them what the family was and they wanted to support me so
they came in others were friends so friends were interested in
they wanted to support me as well and they saw a good
opportunity. They knew I knew the industry very well and so
they trusted me with their money. The other was business
associates so business associates knew that I knew what
I was doing that I knew the property well and I knew what I
and that they stood to gain, you know, well financially with it.
Some people chose to invest just cash out of their savings out of
their checking accounts or what have you. Some chose to invest
with their self directed IRA, at the end of the day, we raised
that $2 million. So then at closing, all $4 million, went to
the property, I manage that property. I didn't hire a
property manager, it was on basically a triple net lease, so
it wasn't very difficult to manage. And then every quarter I
made distributions, I made distributions to my investors,
it turned out that we were making distributions, you know,
right around the amount that we told investors we would be
making. And we made them very, very regularly, we didn't let a
day go by when if we said it was going to be probably on the
first of the month, it had to happen on the first of the
month, or the first Monday of the month. In order for them to
get their check. It was in we didn't let a week go by in order
for me to make that distribution. At the end of four
and a half years, I projected that it was going to be a five
year term. At four and a half years, I decided the market was
in a really good position at that point. I wanted to sell the
property. I told all my investors, I think it's now's
the time to sell what do you all think? Everybody seemed to agree
with me, we, I marketed the property I found, I did this
deal myself where I put put it on the market. And I sold the
property myself. The first transaction didn't go through
second one did made a lot of money for my investors made my
final distributions. So that so each investor, I was projecting
that each investor would make a 15% IRR, which is an internal
rate of return. So you can think of it almost like it's 15%
annually that they were getting from their investment. And at
the end of the day, that's they got round like I think it was 15
and a half percent. So we overachieved just by a little
bit. Investors got their money, they were happy, and investors
came with me on the next round. So that is an example of a real
estate syndication a very, very simple one. I had one tenant, I
had a bunch of investors, I think I had maybe 1617 investors
at that time in that deal, and we made the money. So there is
an example of what a real estate syndication is. Hope you found
that useful. My name is Tilden Moschetti. I am a real estate
syndication attorney with the Moschetti syndication Law Group.