7 Tips for Choosing Real Estate Syndication Software

The best businesses today know how to effectively leverage technology to help scale their business - and private equity real estate companies are no different. 

But leveraging software in real estate syndications serves two unique goals - providing GPs and Fund Managers the ability to operate more efficiently, and providing passive investors the ability to confidently invest and build trust in their sponsor’s operations.

In this quick guide, we'll provide you with essential tips for vetting and selecting the best real estate syndication software for your business to streamline your operations and deliver on investor expectations.

Tip 1: Define Your Strategy: Insto vs Retail?

Before you start your search for real estate syndication software, it’s important to clearly define your firm’s capital raising and investment strategy, and how the software will align with those goals. 

Raising and managing capital for a small handful of institutional LPs, versus hundreds of passive investors will mean differing requirements driven by the needs and expectations of those groups.

For example, if syndicating with one or two larger investors - white glove service may be able to be provided entirely over email, however, if onboarding retail investors, they will bring high expectations compared to other software that will be used in their day-to-day lives.

With the continued expansion of access to private markets, more and more investors are looking to invest in private real estate operators and the best sponsors are able to attract and onboard new capital quickly - leveraging high-quality user experiences and integrations with existing tools.

Tip 2: Review Existing Technology Stack

In today’s software-enabled world, it’s critical that your technologies integrate with each other to ensure seamless data movement and complimentary workflows for your business.

When introducing new real estate syndication software, having a comprehensive view of your existing technology stack will enable you to identify how it will fit in the broader technology stack.

Relationships are often the lifeblood of a private equity real estate business and customer relationship management (CRM) software is as foundational as a company website. Check for compatibility with your CRM system to maintain a unified view of investor relationships like HubSpot or ActiveCampaign.

Understanding how your real estate syndication software will fit in with tools like these will help you make educated decisions and avoid siloed systems that don’t talk to each other.

Tip 3: Set a Budget

Establish a clear budget for your software investment. Knowing your budget upfront will help you narrow down your options and avoid overinvesting in technologies.

Software and technology costs are commonly capitalized by real estate sponsors into the deal, meaning the cost can be shared by all stakeholders that benefit.  

Real estate syndication software may be one of the larger software expenses in your business but shouldn’t be thought of as a cost center but rather a profit driver for your business.  Access to capital is critical and without great software, you may struggle to attract and manage the investors you need.

While pricing options in market may change over, newer firms and emerging investment managers should expect to be paying $5,000 to $15,000 for syndication software.

Tip 4: Plan for Growth

If you’re looking to grow your business, considering scalability as an important factor will help future-proof changes as your business evolves. 

Similar to CRM software, investor management software can be highly stuck given the number of variables it manages and being the storefront for a lot of your investor interactions. If you plan to expand your syndication business, ensure the software you choose can adapt to your growing needs.

Ensuring your real estate syndication software can scale to onboard 100s of investors, provide real-time visibility on investor activities, and pipeline visibility on active capital raisings is key.

Tip 5: Prioritize Investor Experience

The world of private investing is changing and investors have high expectations on the software and experiences when working with other businesses.

Choosing software with robust investor onboarding, communication, reporting, and ACH distribution features will help to ensure your investors feel confident in your operation and more likely to invest in future deals.

An example of these may be the Know-Your-Customer (KYC) and investor accreditation tools when onboarding. Reducing friction for newer investors to verify their accounts and confirm their investment eligibility in the syndication will reaffirm their decision to trust your firm with their capital.

Tip 6: Ensure Security and Compliance

As Warren Buffett teaches us on reputation "It takes 20 years to build a reputation and five minutes to ruin it." - and the security of your investor’s data is no different.

Protecting sensitive financial and legal data is mission critical. 

Ensure that the company you work with and their software development practices are of the highest quality. This includes:

• Infrastructure: ensure they use industry best practices to provide their services.
• People: ensure every team member is vetted and trained
• Development: ensure their platform is built with security and quality top of mind.

Security practices and technology development can be complex; however, you should focus on companies that have enterprise-grade security with regular audits to ensure you and your investors are always protected. 

Tip 7: Create a Shortlist and Complete References

Based on your research and assessments, create a shortlist of software options that align with your needs and budget. 

This can include:

1. Request Demos: Contact software providers on your shortlist and request live demos to get a firsthand look at how the software operates.
2. Evaluate Pricing: Compare pricing plans, considering both initial costs and ongoing fees.
3. Complete Reference checks: Ask to speak to one of their customers similar to you and assess their experience on the platform 

People often think references are only for hiring employees, but references about a software platform can be just as, if not even more valuable, because the average software investments will outlast the average employee tenure. 

Here are some questions to ask on your reference all:

1. How long have you been using this software?
2. What was the main problem you were trying to solve when you decided to use this platform?
3. What would you consider to be the software's "superpowers"?
4. What areas for improvement have you identified?
5. Have you encountered any significant bugs or limitations?
6. How easy was it to implement the software?
7. How responsive is their customer support?

Responses to these questions will help you get a complete picture of the platform and how it will work for you.

Conclusion: Your Path to Choosing the Best Real Estate Syndication Software

Choosing the best real estate syndication software for your business is a pivotal decision for your firm’s investor management success. 

By following these tips, you'll be well-equipped to swiftly select the ideal real estate syndication software to enhance your real estate syndication endeavors.