From 63 to 955 units, Norman Choi Leverages RE Syndications to Gain Time Freedom as a Busy Professional

Norman Choi, like you and me, is a busy professional. We work full-time jobs, often demanding and time-consuming. Norman, whose background is in accounting and information systems, spent the last 10 years building his career and has found real estate syndications to be his admission ticket to the real estate world.

Through investing as a Limited Partner (LP), Norman is able to still be involved in real estate without the roller coaster hurdles that come with being a landlord. Norman started his real estate journey in 2013-2014 by owning and managing 3 units. He soon realized that it was impossible for him to take tenant calls while at work. He then attended a RE conference and learned about syndications – the rest is history.

First deal as an LP

Norman took a leap of faith and invested in his first “friends and family raise” (506b) deal, a 63-unit, Class C property in Houston, Texas. As a first-time passive investor, Norman invested with people he liked, knew, and trusted. He knew that the lead sponsor was technical, as both he and Norman come from accounting backgrounds. Fundamentally, he trusted the sponsorship team and wired his money to fund the deal.

While reviewing the deal, he learned “value-add” which is similar to flipping a property – investing money in CAPEX projects to force appreciate the value of the property. His first deal went full cycle after 4 years of ownership. He received quarterly distributions and dividends from the final sale of the property while still attending to his busy career as a Senior Consultant working for the Big 4.

The average person does not know a syndication is an option

Many investors believe that there’s a path of progress that one must follow in order to elevate to real estate syndications. The conventional path is to start with a few rentals, then progress to flipping and wholesaling then finally, advance to real estate syndications. But a traditional path does not necessarily mean a required path for all.

Norman stresses that “people do not realize that syndication is available to the average person.” It’s very similar to private equity firms pooling in private money and acquiring large-scale commercial properties except private placement syndications are done on a smaller scale. Then why not invest in large-scale commercial properties and gain back time freedom?

Thoroughly vetting the GP team

The crux of real estate syndications is to properly and thoroughly vet the GP team. After all, you are investing in the quality of the team’s execution vs the actual asset. Norman encourages investors to pay attention to track records and to meet GPs face to face (and get on a call at a minimum). Norman advises “get to know the person to see if their values align with yours and see if you guys jibe.”

If you “know, like, and trust” them, those key factors will determine if investors want to work with the syndicators or not. There are risks that come with every investment – minimize them by asking questions and educating yourself on the process. Projections and numbers can be artificially made to look alluring, but judgment on character reigns supreme in the vetting process.

Find what works for your lifestyle

Real estate syndications may not work for everyone. Specifically speaking, it may not be the optimal investment for those that want to be more hands-on with the day-to-day operations. It may also not be ideal for those that are still building their capital as the minimum investment amount is $50,000.

Norman encourages all real estate investors to try everything. At one point, he even tried wholesaling but it’s the time and effort that he did not have while building his career. If you have time but limited capital, wholesaling may be more suitable as it requires no money down. It is once you try different niches that you can confidently choose a specialization that complements your lifestyle.

For many busy professionals with high income, that is often real estate syndications. After vetting the GP team, LPs can sit back and watch the quarterly distributions flow in. There are also monthly newsletter updates that include financials so that there’s transparency for everyone that’s invested in the asset. The best part is that Norman, like many other LPs, has a piece of mind to commit to his career without the stress and back and forth managing tenants.

Lighting round questions

1. Syndications work because “it’s been a model that has been done in the past. People have always been pulling money together to purchase assets and share the wealth together.”
2. The biggest bs I’ve heard about syndications is “It’s a scam and it doesn’t work. They are taking your money to gamble.”
3. If I had to change anything about my LP investments it would be “Nothing – I got lucky. The ones I’ve invested in, I’ve had great sponsors and gotten my quarterly distributions.”
4. The best book for passive investors to read is “Rich Dad Poor Dad” because that book has helped change my mind about using my time for money. Kiyosaki emphasized that you want your money to work for you – leverage your time through your money.”
5. Sponsors that do x are ones that I can trust “ Having a track record and really understanding their past experience. The guys I’ve invested with have a previous background and understand the real estate world, even if it’s short-term rentals.”

Watch the full interview with Norman: