Syndicators are Laughing at You and Me
I sat at lunch on Saturday with someone that has been doing apartment syndication long enough he was speaking at the real estate event that I attended. And yes, my small properties were laughed at.
There is the typical mantra that "A big deal takes just as much work as a small deal" and if you have been studying real estate investing for a little bit, you have heard this. This person doing syndication also has a limit on building size he tackles (I think 250 apartments in a complex) and got started in small apartment buildings.
Syndicators are working with outside investors and have a team that puts entire systems in place for the property. Some, like the person I was having lunch with, come in with a plan to sell the property in a relatively short time span for the life of an apartment building.
The term for this is apartment repositioning. People do a similar thing with houses, it is called flipping in single family homes.
At the conference several of the speakers mentioned they focus on selling the apartment complex before big capital items need to be replaced either a first or second time.
The syndicator has a duty to their investors to return money and be out of a building. This is not always a case but they all come in with a system for doing what they have laid out as a plan for the building, and a team of people to accomplish this.
How can you, as a small apartment building owner, operate as successfully as the people with systems designed to hit their specific goal?
What happens if you are investing for the long-term and intending for your children to inherit the property?
How will your spouse operate the property if they outlive you?
There are many resources out there for different parts of the industry.
Property Management can take care of the day today request leasing an emergency calls that happen at night and other inconvenient times. These people are professionals that know their market and what tenants are looking for in your type of building. They also have connections of people that provide the needed services for buildings like yours. I highly recommend leveraging their expertise.
The problem with small buildings is the management is not dedicated to your property and focus on it when there is a problem that needs to be solved.
A CPA will help you with the taxes and making sure you are approaching the financial side of things correctly. There are lots of tax advantages to both having a business and an apartment building that a CPA can help you make use of and they keep up with current text code.
Legal advice can review contracts and help you put in place long-term planning for events like setting the building up to be inherited by family.
What is missing here?
There has not been a service in place that helps guide an apartment owner like you in planning for the aging and replacement of buildings systems, protecting the building from preventable damage, and putting in place an efficient system for the overall plan you have as an investor.
TCI Building Services was formed to fill this role.
I see many people at real estate conferences that get very excited hearing about ways you can save money on taxes. All the tax professional is doing is preventing you from making a mistake and paying for something you should not.
Now imagine taking those savings from not making a mistake on taxes and compounding it with savings in large maintenance expenses from not making a mistake there.
The best part about this kind of savings is not only does it prevent the damage from happening it keeps your building in better shape to retain equity for sale and be attractive to potential tenants.
The tax person
Not planning to sell and instead pass it down to family?
Yes, was just talking about that.
Those savings from avoiding damage to the building become even more important. You also need to pass down the operating procedures so that your family can continue to operate the property.
You don't want to hand down a liability.
An owners manual by TCI Building Services takes care of both of those things.
This is something that has to be customized to each property. This is not digital content that can be infinitely duplicated.
Yes, the differences in scale that someone syndicating has will always have advantages over us. Now we can take care of our smaller properties with a system for the facility. We do this and without having to report to investors or the Securities and Exchange Commission.