189. Funds vs Syndications: Pros & Cons
Self Storage Income
AJ Osborne
4.9 • 591 Ratings
🗓️ 25 January 2023
⏱️ 48 minutes
🧾️ Download transcript
Summary
There are many ways to finance a self storage deal. You can bring your own money, leverage your own assets, or enlist the help of others, like investors, banks, and even the sellers themselves.
Today we're talking about two of the most common ways to finance a storage facility: Funds and Syndications.
Funds pool together capital to invest across a series of investments or properties, such as a portfolio, hence diversifying the capital you invest.
Syndications aggregate a group of investors together to "crowd-finance" a single property or deal, but allows for more parties to help manage or secure deals, especially larger ones.
We're breaking down what you need to know BOTH as an investor AND a sponsor. What are the pros and cons of each?
Need help funding a deal? We can help you figure out what type of loan or financing structure you need, and where you can get them. Just send us a message here:
https://www.cedarcreekwealth.com/debt
Our partners:
Live Oak Bank - liveoakbank.com/incomepodcast
Tenant Inc. - https://www.tenantinc.com/
Janus International - https://www.janusintl.com/
Grab my audiobook Growing Wealth in Self Storage for FREE: https://www.selfstorageincome.com/free-audiobook
Want to invest in storage without dealing with the day-to-day operations and management? Learn more about our syndication company Cedar Creek here: https://www.cedarcreekwealth.com/
Transcript
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| 0:00.0 | Yeah, normally the best deals that you get, there's a reason why they're good deals. |
| 0:04.0 | It's a great point. And it brings up something that I'm finding more and more frequent, |
| 0:07.3 | which I personally find very alarming. Sponsors are raising an excess and promising distributions right away. |
| 0:15.6 | And with that promise of distributions, if they don't have assets to pay those distributions, |
| 0:20.0 | what that means is they're |
| 0:21.3 | raising more capital than they need. So I think that is the biggest hesitation and concern for |
| 0:26.1 | investors is placing capital and not getting invested somewhere. Welcome back, everybody, to the |
| 0:31.9 | self-storage income podcast. We're so excited to dive into today's episode this podcast is being brought to you guys by |
| 0:38.7 | live oak bank tenant ink and janice international welcome everybody to self storage income and today |
| 0:50.8 | we have a important podcast, a very informative podcast. |
| 0:55.5 | It is a question that we get asked all the time. |
| 0:58.0 | There's a lot of misunderstandings about it from both the operator side and the on the private equity side. |
| 1:07.3 | Like, what should I do? |
| 1:08.8 | Should I start a fund? |
| 1:09.8 | Should I do a syndication? |
| 1:10.8 | What are the |
| 1:11.0 | pros and cons and differences? But then also the investor side. So what does it mean for an investor |
| 1:18.1 | the difference? What are the pros and cons? And if you're setting up a fund and if you're taking |
| 1:22.3 | investors money, you need to be aware of the differences, both on your side when creating it, but also from |
| 1:29.2 | the investor standpoint and why you're doing it a certain way so you can communicate that. |
| 1:34.0 | So today I got Kaylee back with us. |
| 1:36.3 | How's it going? |
... |
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