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Published:January 15th, 2009 10:01 EST
Real Estate

The Rest of the Top 10 Critical Mistakes That Real Estate Syndicators Make

By Joel G. Block (Mentor/Columnist)

The remaining 5 critical errors listed below are the ones that take all of the profit from the promoters who syndicate real estate. If you get involved in a real estate syndication project, watch out for the following:

6.  All of the investor returns come at the end: Investors are thinking about the opportunity cost of their funds. This means that they would like to meet appreciation at the end, certainly, but they would also like to know that some amount of return is being allotted to them on a cash flow and short-term basis.

7.  The syndicator does not have enough control over the transaction: If the syndicator gives up responsibility for some of the critical functions such as management, maintenance, accounting and/or bookkeeping, they may find themselves in a position where they are at a disadvantage as far as taking care of the investment.

8.  The syndicator raises too little money: As a fiduciary, the syndicator has to be certain to properly capitalize the transaction. The limited partners or the members in an LLC have limited liability and are generally only liable to the extent of their original investment. It`s a very difficult situation to go back to those investors because you made an error in calculating what was necessary. Therefore, except for planning for the situations that are impossible to predict such as acts of God, it`s always better to raise more money than less.

9.  Inadequate insurance and other coverages: The syndicator must, at all times, be careful when acting as a fiduciary. They must properly insure the risks and protect the interests of the investors at all times. There are no short cuts.

10. The investors don`t want to reinvest in future deals: Investors are customers for life " if you do it right. The easiest way to raise money is to successfully liquidate one investment, returning proceeds and profits. A successful exit is the fastest opportunity for raising capital for the next deal. Make sure that you have the next deal ? ready for your investors to get into.

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About Joel G. Block, President of Growth-Logic, Inc.
Often dubbed a "Growth Architect" by his clients, Joel Block advises companies on explosive growth strategies by driving revenue and sales. Well known in the capital markets, Joel is a successful entrepreneur, speaker, advisor and faculty member of the iLearningGlobal community. To bring Joel into your company, please visit or Also, be sure to check out our newest project: a blog to organize the blogs that cover entrepreneurship - And finally, for film makers: - our newest project.