Lately I have heard more and more from brokers and real estate advisors who are creating income by “Sponsoring” or “Syndicating” Group Investments. A leading authority on group sponsorships is Gene Trowbridge of Trowbridge and Taylor. I had the pleasure of interviewing Gene earlier this week to learn more about how a commercial real estate broker can leverage their market knowledge and relationships to create opportunities in today’s challenging market.

These type of opportunities are not for everyone. However most of Gene’s clients are creating group investments which total less than $2 million. Thus, this may be more of an opportunity than you first thought.

The following is a transcript from my interview with Gene Trowbridge of Trowbridge and Taylor

ROD SANTOMASSIMO: Good Afternoon, this is, Rod Santomassimo of the Massimo Group. Welcome to our next installment of the Massimo Monthly. Each month we interview an industry leader that will impact you as a commercial real estate broker. This morning we have the privilege of having Gene Trowbridge of Trowbridge and Taylor on the line with us. Gene is without a doubt the foremost expert on commercial real estate syndications and specifically group sponsorships.

Gene, welcome to Massimo Monthly, Please, introduce yourself and welcome to the group.

GENE TROWBRIDGE: Well, thank you, Rod, it’s a pleasure to have you interview me and I’m looking forward to it.

ROD: Well, fantastic, let’s get right into it. Our listeners are owners, brokers, associates, advisors, all in one way or another practicing in the commercial real estate arena. This arena, let’s face it; it’s a different one for most of them. Most of the folks have yet to see a cycle such as this during their tenure. I, unfortunately, have seen several. I’m sure you have as well. But, this I see as also one of opportunity. I know because of your expertise, you’re really taking advantage of the markets. Tell us, what opportunities are you seeing today for individuals like a commercial real estate broker in regards to your expertise?

GENE: Thanks, Rod. You mentioned the different cycles that we have. I was a real estate syndicator myself from 1972 – 1994. I have been involved in cycles like this. What a cycle like this always presents to a syndicator is an opportunity to be a buyer of properties that you couldn’t buy in more of an up cycle. That’s what I think is attracting commercial real estate brokers today…brokers and owners to the syndication business…is that there are good properties that are going to be coming for sale that normally wouldn’t be coming for sale. This is going to be our opportunity to take our investors and take our money and buy some of those properties. I think another thing that’s happen…that always happens in a downturn like this…is financing becomes an issue. The availability of financing is the issue today. Not so much the cost of financing, but, the availability of it. Rod, as I always say if the world is made up of investors who expect to buy something with 20% down, in our marketplace today the banks want 40, 50, 60% down, sometimes we have to buy property all cash…we simply have to pool our investors to come up with the increased equity necessary to buy some of these good properties that are out there.

ROD: Makes perfect sense. Gene, the word in itself, syndication, can be pretty intimidating. Syndication sounds so complex and so comprehensive. But, you think about it who is better than the commercial broker who is an expert in a particular marketplace to understand the trends of the market to identify the opportunities? How do we get beyond the bridge, beyond that challenge? Maybe the stigma of most syndication that sounds like trouble?

GENE: Rod, when was the last time you took an airplane ride?

ROD: I am seemingly always on a plane. I took one just last week.

GENE: Ok. Every time you get on an airplane ride, Rod, you’ve entered the syndication world because you have pooled your resources with a bunch of other passengers and you have hired good equipment and you have hired professional management. The purpose is to get you from one place to another while you’re on your trip. You can’t do it yourself. That’s all we’re trying to do in commercial real estate syndication. We’re trying to use the commercial real estate person as the pilot and the pieces of real estate that you can’t own yourself as the vehicle. Let’s just get a bunch of people together and let’s just go out and buy something. It’s as simple as that, Rod. Let’s just go out and buy something. It’s a security and, yes, there are IRS issues but, that’s a topic for a different day. All we’re going to do is find a good property and find a bunch of investors who don’t want to own it themselves, can’t own it themselves, need a professional commercial real estate person to do all the work. Let’s go buy something.

ROD: Ok. When I heard it, I heard opportunity. It screamed to me opportunity. Other people though may have heard, a couple of times there, let’s go do the work. It’s work. That’s a lot of work. But work generally comes with a reward. Are there potential fees you can earn or just income you can generate through being a group sponsor? Give us a quick overview of the potential, not the amount, but the potential for fees if you were to actually create the sponsorship on your own as a real estate broker.

GENE: Sure, Rod. I think we could identify up to seven to ten different ways that you can make money being a real estate syndicator. Let’s just keep it to the major ones. First of all, there is an opportunity to get real estate brokerage commissions throughout the syndication process through acquisitions, through leasing to financing to sale to property management. All the things that I call deal-making activities that you like to do anyhow as a commercial real estate person. Those are all available to you in the syndication process where you actually step-up and control the property. That’s pretty attractive from a deal-making perspective. Then, you can make money on acquisition fees. You can make money on asset management. Shares of the cash flow can come to you as you share the profits with your investors. Two major areas…number one, there is all sorts of real estate work that you can do that you can get paid for. Then, there’s all the effort that you have to put in managing the investors. There are fees. There are shares of profits that you can attract, you can keep for your own for the work you do in managing the investors. Rod, action in the syndication business is much more about managing the group of investors than it is about real estate. We can do real estate. The question is can we manage ten investors for the next five years in a deal. That’s a lot of work. You should get paid for that.

ROD: That’s fantastic, the points, Gene. Thank you very much. I have to always be transparent with our listeners. I have a series of coaching clients who have initiated their own personal group sponsorships based on either reading your book or going to one of your programs. I have heard nothing but fantastic things about these opportunities available to the brokers’ community by going to your website. Gene, you want to share that website for everyone else so they can make sure they can learn more about your programs?

GENE: Sure, Rod. My website is www.groupsponsor.com. At that website you’ll learn more about me. You’ll learn about the book. You’ll learn about the workshops we offer. Then, you’ll learn about the availability of using me as the attorney to write the documents that you need to do all this business painlessly and legal.

ROD: Gene, I’ve got to tell you that there are some great opportunities out there. Thank you for making us aware of these alternative sources.