#175 Part 2: Real Estate Syndications in 10 Steps, ft. Peter Kim, MD
In this episode, Dr. Peter Kim dives back into the essentials of real estate syndications. Whether you’re new to real estate investing or a seasoned investor, tune in to the second part of the 10 steps to think about in every deal.
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Thank you to MLG Capital for sponsoring this week’s episode…
For 35 years, MLG Capital has excelled in intelligent real estate investments and building investor relationships. Their funds prioritize diversification, cash flow, and low leverage, offering a robust hedge against inflation. Ideal for medical professionals and other accredited investors seeking stability amid market volatility. Making smart, relationship-driven investments.
Episode Highlights
Now, let’s look at what we discussed in this episode:
- Step 6: Understand the fees
- Step 7: Know your exit strategy
- Step 8: Do they have good communication?
- Step 9: Look at the legal documents
- Step 10: Does it fit with your investment goals?
- The Physician Real Estate & Entrepreneurship Conference (PIMDCON)
Here’s a breakdown of how this episode unfolds.
Episode Breakdown
Step 6: Understand the fees
Dr. Kim shares the necessity of understanding the fees included when it comes to syndications, particularly the “sponsor promote”, or how the sponsor/general partner gets paid. He points out key factors to become familiar with so you foster mutual success and trust in the investment process.
“Charlie Munger, he works with Warren Buffett, he has this amazing quote about incentives. He says, ‘Show me the incentive, I’ll show you the outcome.’ That’s like everything in life, everybody’s human, and we work on incentives. So if there’s no incentive for the sponsors, they’re not gonna do a good job.” — Peter Kim, MD.
Step 7: Know your exit strategy
Dr. Kim emphasizes why you need to understand the exit strategy since it determines when and how you might retrieve your investment along with potential profits. He provides questions to include in your decision-making process along with some advice when the market does not behave as expected
“Understanding this exit strategy will help you understand if this aligns with your goals, your timeline, and whether the returns at the end match what you expected. You should always ask, what if the market doesn’t cooperate? What will be my plan?’” — Peter Kim, MD.
Step 8: Do they have good communication?
Dr. Kim stresses the need for effective communication when choosing your partners. He shares that the key lies in responsiveness and transparency. Know if the sponsor is within your reach when you need them. Along with understanding if the partnership fosters trust, even in misunderstandings. He advises that receiving at least quarterly updates and having the option to directly converse with a company representative are non-negotiables.
“There’s nothing worse than making an investment and just being left in the dark for months, and months and months, and not knowing how things are going.” — Peter Kim, MD.
Step 9: Look at the legal documents
Peter Kim emphasizes the need to carefully review all investment-related legal documents since they contain everything that you need to know about the investment. He advises you to look to make sure the written terms match the initial promises. He advises that if you feel unsure, consider seeking legal advice.
“You’ve got to look at the legal documents… it basically states everything that you need to know in terms of what your role is in the investment, what your rights are, and what you can expect for the duration of this deal” — Peter Kim, MD.
Step 10: Does it fit with your investment goals?
In the last step, Dr. Kim highlights the importance of aligning investment goals with some reflection on the “why”. He says that whether seeking immediate returns or long-term cash flow, it’s crucial to evaluate if the investment fits your objectives. While the fear of missing out (FOMO) can be tempting, Dr. Kim advises taking a step back, assessing the bigger picture, and understanding that opportunities will always arise.
“It’s a hard balance to make. But the more deals you look at, the more you invest in, the more you’ll understand how to make quick decisions that are decisive and ones that you know will help you out ultimately in the long-term.” — Peter Kim, MD.
Physician Real Estate & Entrepreneurship Conference (PIMDCON)
Dr. Peter Kim closes by inviting everyone to join the Physician Real Estate & Entrepreneurship Conference (PIMDCON) this September 21 – 23, 2023 in Los Angeles, CA. The event is for those who want to learn more about real estate, investing, finances, passive income, entrepreneurship, and more.
“Our virtual ticket will give you exclusive access to all featured speakers, and keynote sessions. Along with expert LED panel discussions, you’re gonna be able to participate in the conference from the comfort of your own home with the ability to engage with a virtual community of like-minded individuals and network with high achieving professionals like yourself.” — Dr. Peter Kim
