Why I Don’t Syndicate

And Why a “35% IRR” Deal Can Still Be a Bad Deal

Written by Jai Thompson

My Operating Reality (Context Matters)

I manage a private equity platform deploying $13–18 million per quarter across multiple real estate asset classes.

Our model is asset-based, escrow-directed, and execution-driven, allowing us to close in 23 days or less with certainty and clean title flow.

We acquire and operate across:

• Luxury estates

• Single-family residential portfolios

• Multifamily communities

• Hospitality and hotels

• Mixed-use properties

• RV parks and mobile home communities

• Golf resorts and destination assets

• Specialized housing and income portfolios

Capital is structured.
Operators are paid.
Reserves are built in.
All disbursements are controlled through escrow, not hope.

We deploy with discipline, transparency, and speed—and we tithe back to the communities we serve.

Because of that model, I do not syndicate, I do not raise capital, and I do not take partners.

This article explains why.

The Deal That Sparked the Lesson

I was recently shown a 129-home single-family rental portfolio being marketed as a sponsor-led equity deal.

On paper, it looked impressive:

• Below replacement cost

• Large portfolio

• 35%+ targeted IRR

• Predefined exit within 12 months

But numbers don’t care about marketing.

So I ran it the same way I run every deal—like a third grader, one step at a time.

Here’s what the math actually said.

Step 1: Start With Stabilized Rent

Why: Rent is the top number. Everything comes from this.

The sponsor projected stabilized rent of:

$2,650,000

So that’s our starting point. No arguments there.

Step 2: Subtract Operating Expenses

Why: You never get to keep gross rent.

Using the sponsor’s own deck, operating expenses were running very high in Year 1—about 76% of revenue.

To be generous, I assumed expenses would improve to 70% at stabilization.

Expenses:
70% × $2,650,000 = $1,855,000

Step 3: Calculate Stabilized NOI

Why: NOI is what pays debt. No NOI = no safety.

NOI = Rent − Expenses
$2,650,000 − $1,855,000 = $795,000

Stabilized NOI ≈ $800,000

That’s the real earning power of the asset.

Step 4: Look at the Debt

Why: DSCR is non-negotiable.

The deal carried approximately $1,912,515 in annual debt cost (interest-only, best case).

This is where most syndications quietly break.

Step 5: Calculate DSCR

Why: If NOI doesn’t cover debt, the deal is living on borrowed time.

DSCR = NOI ÷ Debt Service
$795,000 ÷ $1,912,515 ≈ 0.42

DSCR ≈ 0.42

That means the property generates less than half of what it needs to service the debt.

No cushion.
No margin.
No safety.

Step 6: What NOI Is Actually Required

Why: I don’t buy below my floor.

My standards:

• Minimum DSCR: 1.25

• Target DSCR: 1.50+

Required NOI:

• For 1.25 DSCR:
  $1,912,515 × 1.25 = $2,390,644

• For 1.50 DSCR:
  $1,912,515 × 1.50 = $2,868,773

Reality check:

• Actual stabilized NOI: ~$800K

• Required NOI: $2.4M–$2.9M

That’s 3× to 3.5× more NOI than the asset produces.

This isn’t close.
This isn’t conservative.
This is exit-dependent speculation.

Step 7: Yield Tells the Same Story

Why: Yield reveals whether an asset works without financial gymnastics.

Total project cost was approximately $22,386,500.

Yield = NOI ÷ Total Cost
$795,000 ÷ $22,386,500 ≈ 3.55%

My rule:

• Day-1 or near Day-1 yield ≥ 9%

This deal doesn’t even reach half of my minimum.

Step 8: Income-Based Valuation (Not Exit Fantasy)

I don’t value assets based on a future buyer’s optimism.
I value them based on what the income can safely support.

For SFR portfolios, I underwrite at 8–9 caps.

Using $795,000 NOI:

• At a 9 cap:
  $795,000 ÷ 0.09 = $8.83M

• At an 8 cap:
  $795,000 ÷ 0.08 = $9.94M

True FMV range: $8.8M – $9.9M

Step 9: My Actual Offer (If I Were the Buyer)

I never pay full FMV.

Offer = 85% of FMV:

• Low end: ~$7.5M

• High end: ~$8.4M

My control-buyer range: $7.5M–$8.4M total

The sponsor’s targeted exit?

$27.8M

That’s over 3× my valuation.

This Is Why I Don’t Syndicate

This deal “works” only if:

• The exit happens on time

• The market stays hot

• Capital markets stay liquid

• Someone else pays more

That is not investing.
That is passing risk downstream.

Syndications require:

• Partners

• Capital calls

• Exit timing

• Consensus

• Hope

I don’t operate on hope.

How My Model Is Different

I buy control.
I buy income safety.
I buy Day-1 structure.

In my deals:

• Debt is covered from Day 1

• DSCR is built in, not projected

• Yield meets threshold immediately

• Seller payoff is guaranteed

• Reserves are escrowed

• No partners, no votes, no capital raises

If a deal can’t stand without a resale, I pass.

Final Word

A high IRR doesn’t mean a good deal.
A big portfolio doesn’t mean a safe one.
And partners don’t reduce risk—they spread it.

I don’t syndicate because I don’t need to.
I structure.

Structure over sacrifice. Stewardship over struggle. Every deal builds legacy.