MB 138: Syndication vs. Creative Financing for Multifamily Capital – With Jake Stenziano & Gino Barbaro

While syndication is the most popular way to raise money to fund a multifamily deal, it is not the only option. A resourceful real estate investor can leverage a number of other creative possibilities. Jake Stenziano and Gino Barbaro have built an impressive portfolio without syndicating a single deal, but now they are adding the strategy to their repertoire. What drove them to add ‘investor relations’ to their skill set? In what situation might a different approach, like owner financing, be appropriate? What are the pros and cons of syndication? Jake and Gino are the co-founders of Jake & Gino, LLC, an educational platform that leverages their expertise in multifamily real estate to help others attain financial freedom by way of apartment building investing. A few short years ago, Jake and Gino were a pizza guy and a drug rep; today, they own 900-plus multifamily units. They share their creative approach on the Wheelbarrow Profits Podcast, and they are the co-authors of the Amazon bestseller, Wheelbarrow Profits: How to Create Passive Income, Build Wealth, and Take Control of Your Destiny Through Multifamily Real Estate Investing. Today, Jake and Gino join me to explain how they were able to build a portfolio without syndication, discussing the benefits of using community bankers and partnering with high-net-worth individuals. They share the case study of a 281-unit owner-financing deal and describe how good broker relationships can reveal creative financing opportunities. Jake and Gino also address the differences between community bank and agency debt and the value in understanding the story behind every deal. Listen in for insight around why Jake and Gino are adding syndication to their list of options and learn the advantages—and the drawbacks—of syndicating a multifamily deal! Key Takeaways The advantage of using community bankers Build in rehab budget Much less cash down (15-20%) How to address the down payment Partner with high-net-worth individual Do day-to-day operations for equity Jake & Gino’s owner-financed 281-unit deal No money in, walk away with $150K Facilitated by track record The right conditions for owner financing Understand seller’s motivation Every deal has own story Why Jake & Gino are syndicating now Vision to scale requires capital injection Comfortable speaking to investors The disadvantages of syndication Less equity (10% vs. 30%) More work on front-end Meet projections vs. ‘do right thing’ Investors expect liquidity event in year five The difference between community bank and agency debt ‘Ease of doing business’ with community bank Community bank requires personal guarantee Agency debt = nonrecourse, low interest rates What surprised Jake & Gino about syndication Timeline once LOI signed Can’t accept $ until docs in place How Jake & Gino raised money so quickly Position as experts in space Live events (e.g.: investor dinner, meetup) What’s next for Jake & Gino Continue to look for big deals Grow education platform (book in 2019) Connect with Jake & Gino Jake & Gino’s Website <a href= "https://itunes.apple.com/us/podcast/wheelbarrow-profits-podcast-multifamily-real-estate/id1025080737?mt=2"...