How big a project to syndicate?

The simple answer is the biggest one you can. The reality is limited to how much money you can raise from investors, how much money you can contribute, and how much you can borrow against the property.

Estimating the projects size;

Make a list of all the investors and put a dollar number next to their name, then decide how many on the list might actually pony up the money. Add up the amount of money you can raise, then multiply by four. That is your starting project size.
Not big enough? Add your personal cash to the total. Still not enough?

You can expect to be able to borrow 70% to 75% of the total purchase price of the property. You will also need money to set up the syndicate, for a cushion account to cover unexpected cost, and money for the closing cost, which can be quite a tidy amount. I like 5% to 10% of the total project cost in addition to the down payment in the bank. If you have property repairs planned and most projects do have, then that will need arrange for that in the loan or have the cash on hand.

As you gain experience and can point to successful projects that you have syndicated you will attract more investors and then can do large projects.

Estimating the size of the mortgage;

You can expect to be able to borrow 70% to 75% of the total property cost but that does not mean you should.

Most investors want a 12% to 20% annual return on their cash. If you can pay that with some reasonable amount of certainty and still borrow 75% of the purchase price? By all means do so. If on the other hand all the positive cash flow and profit is going out to pay interest, payments and operating expenses then you will have difficulty attracting investors.

I Like to run my projections for the property under consideration and if the net cash flow is 12% or more, I have a good candidate for a 70% loan. If I can get a mortgage loan at under 8% interest then that should run my positive cash flow up over 20% annually (cash on cash).

The examples of actual deals provide provided in this report will help you understand my reasoning. There is available some good real estate management software that will make the calculations easy and using a CPA specializing in real estate can be very helpful.

The more you borrow as a percent of the properties total cost cost the bigger the risk to you and to your investors, and the harder it will be to get the deal underwritten. If you want to play it safe, borrow 50% of the projects appraised value after repairs and improvements.