Introduction
If you’re ready to scale your real estate investing, you’ll face a pivotal fork in the road: Should you continue syndicating one deal at a time, or launch a real estate fund? Your attorney will help you handle the paperwork and ensure compliance, but the strategic decision—what’s right for your business, investors, and long-term goals—is ultimately yours.
Let’s explore the strategic factors you must consider, so you can confidently choose the right path for your situation.
Why Your Lawyer Can’t (and Shouldn’t) Decide
Attorneys are experts in law, not in your unique vision or entrepreneurial ambitions. They’ll explain legal structures, draft documents, and outline compliance requirements. But they won’t—and shouldn’t—tell you how to build your business.
That’s because the best structure for you depends on factors like:
- Your desired pace of growth
- The types of investors you want to attract
- Your risk tolerance and appetite for complexity
- Your ambitions for scalability and legacy
Learn more about legal structures for real estate funds here.
Key Strategic Considerations
#1. Deal Flow and Pipeline
- Syndication is ideal if you source deals sporadically or want to test the waters before scaling.
- A fund makes sense if you have a strong pipeline and want capital ready to deploy quickly.
#2. Investor Relationships
- Syndication: Investors come and go with each deal, requiring repeated fundraising efforts.
- Fund: Investors commit for the life of the fund, fostering deeper, longer-term relationships.
#3. Diversification and Risk
- Syndication: Each investor’s risk is tied to one project. If a deal underperforms, there’s no cushion.
- Fund: Capital is spread across multiple properties, reducing the impact of any single asset.
#4. Control and Flexibility
- Syndication: Investors may want more say in each deal. You’re tied to that specific property until exit.
- Fund: You have more discretion to pursue opportunities that fit the fund’s thesis—without asking for approval each time.
#5. Speed and Scalability
- Syndication: Each new deal requires new paperwork, new capital raising, and new investor onboarding.
- Fund: Capital is pooled upfront, allowing you to move fast when great opportunities arise.
What Your Lawyer Will Do
- Advise on legal risks and compliance.
- Draft the appropriate documents for either structure.
- Ensure your offering meets SEC and state regulations.
But only you can weigh the business trade-offs and choose your trajectory.
Making the Decision
Ask yourself:
- Am I ready to manage multiple assets at once?
- Do I have a network of investors who trust my judgment across several deals?
- Is my pipeline strong enough to deploy raised capital efficiently?
- Do I want to build a scalable, long-term investment platform?
If you answer yes, a fund may be your next step. If you prefer a more focused, deal-by-deal approach while building experience, syndication can still serve you well.
Need more clarity?
Register for my free on-demand training to see real-world examples, success stories, and a step-by-step action plan for launching your fund.
Conclusion
Your attorney is a critical advisor—but the strategic direction of your business is up to you. Understanding the business implications of syndications and funds will empower you to move forward with confidence and control.