Stilling Sumner posted an update 4 months ago
Before raising money for your first deal, we thought the main reason accredited investors would passively invest in our deal would be because of the return. However, as there are other syndication and investment avenues to which a trader can go, offering solid returns cannot be the driving factor. So, if returns aren’t their primary motivation, what exactly is? We’ve got simplified the passive investors’ three primary causes of committing to an apartment syndication:
1. My cash is in good hands
2. I am updated on relevant facts about the offer
3. The procedure is hassle-free
Need #1 – Is my cash in good hands?
The attention when managing other people’s money must be capital preservation. Like every investment, there are never guarantees – not for returns or preservation of capital. So, I want to understand that you might be proactively mitigating any major risks from the following these investing principles:
1. Don’t upgrade on appreciation
2. Don’t over leverage
3. Don’t get forced to sell
I additionally should trust you like a person. I have to have a good feeling in regards to you and truly believe which you have my best interests at heart. This trust is made by the length and quality of our relationship and also by you demonstrating your expertise by your experience, your team or perhaps your thought leadership. With this trust, I will be confident that you should have common sense, make good decisions, conservatively underwrite the sale, perform all the due diligence before purchasing a rental and at a nominal amount, match the projected returns you outlined. Finally, I must know that you’re responsive communicator. If there is a problem with the sale, I wish for you not only to notify me in the issue, but possess a proposed solution also. If I find you having a question or concern, I expect that same lightning quick response having an answer.
Need #2 – Am i going to discover status updates on the deal?
Additionally, I must discover ongoing status updates with the project. On a consistent basis, I want a director level – not only a CEO or entry-level employee level – update around the take care of supporting data. For doing that, the syndicator has to provide their investors using a monthly email update that features the following information:
1. Distribution details
2. Occupancy and pre-leased occupancy rates
3. Actual rents vs. projected rents
4. Capital expenditure updates with pictures of the progress
5. Relevant market and/or submarket updates
5. Any issues, together with your proposed solution
6. Any community engagement events
Need #3 – Is the process hassle-free?
Finally, I would like a hassle-free process. The main reason I’m a passive investor is simply because I wish to park my cash in a smart investment and not have to concern yourself with doing some of the day-to-day operations. I need a monotonous investment with virtually no surprises. All I would like to do is see the monthly email updates and receive my distributions. So, to effectively provide investor distributions, set up a direct deposit, instead of sending checks within the mail. Basically do reach out with a concern, I’d like an instant resolution with minimal forward and backward. Therefore, you ought to proactively address potential concerns in your monthly updates of course, if a venture capitalist includes a concern, have a very solution available prior to replying.
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