Multifamily Syndications Get Squeezed, Capital Calls Are Coming

Episode #214 Multifamily syndications are getting squeezed. With short-term financing coming due and mortgage rates at multi-decade highs, syndicators are calling on their original investors to raise more money so they don’t lose the deal. The problem? If you’re an investor, how do you know if your additional investment will ever be returned? Could a syndication simply burn through your money without making any promising changes to the investment? What should you know BEFORE you put up the cash for a capital call? We brought two syndication experts, Brian Burke and Mauricio Rauld, on to share their tips for navigating capital calls. Before we start, let’s clarify this isn’t exclusively a syndication or multifamily problem. Much of the commercial real estate market is facing financing problems as loans come due and mortgage rates stay high. However, this problem has become a lot more common for syndication investors since rates started rising. In this episode, we’ll break down what a capital call is, why syndications do them, whether or not you’re obligated to invest more, and what investors MUST look for before putting up cash. If a capital call comes your way, we have the exact questions you should ask the syndicator to ensure your money is being used correctly. Plus, if you’re a syndicator or plan on being one in the future, we share the steps to pull off a capital call the right way and make your investors whole. Making the wrong move could cost not only your investor’s money but also your money and lead to serious legal consequences. Don’t get stuck in that spot; stick around! ~~~~ Join BiggerPockets for FREE 👇 https://www.biggerpockets.com/signup?... ~~~~ Listen to The “On The Market” Podcast Wherever You Listen to Podcasts: https://link.chtbl.com/OTM ~~~~ Join the Future of Real Estate Investing with Fundrise: https://www.fundrise.com/bpmarket ~~~~ Find an Investor-Friendly Agent in Your Area: http://biggerpockets.com/agentmatch ~~~~ Find Investor-Friendly Lenders: http://biggerpockets.com/findlenders ~~~~ Grab Brian’s Book, “The Hands-Off Investor”: https://store.biggerpockets.com/produ... ~~~~ Recent Episodes with Brian: On the Market 71: https://www.biggerpockets.com/blog/on... On the Market 147: https://www.biggerpockets.com/blog/on... Real Estate Podcast 900: https://www.biggerpockets.com/blog/re... ~~~~ BiggerPockets Money 219 - Syndications: Everything You Need to Know BEFORE You Invest: https://www.biggerpockets.com/blog/bi... ~~~~ Connect with Brian on BiggerPockets: https://www.biggerpockets.com/users/c... ~~~~ Connect with Mauricio on BiggerPockets: https://www.biggerpockets.com/users/a... ~~~~ Connect with Dave and Our Panel of Expert Guests: Dave Meyer: https://www.biggerpockets.com/users/d... Henry Washington: https://www.biggerpockets.com/users/h... James Dainard: https://www.biggerpockets.com/users/j... Kathy Fettke: https://www.biggerpockets.com/users/k... ~~~~ Follow Dave and Our Guests on Instagram: Dave: @thedatadeli or   / thedatadeli   Henry: @thehenrywashington or   / thehenrywashington   James: @jdainflips or   / jdainflips   Kathy: @kathyfettke or   / kathyfettke   BiggerPockets: @biggerpockets or   / biggerpockets   Show notes at: https://link.chtbl.com/OTM 00:00 Intro 03:24 What’s a Syndication? 07:49 Multifamily is Getting “Squeezed” 12:41 Why “Capital Calls” Happen? 16:04 What Investors MUST Look For 22:09 Sponsor Loans and Raising More Money 28:10 Ask THESE Questions 37:19 The Right Way to Capital Call