Shaffer Sumner posted an update 2 months, 1 week ago
Before raising money for your first deal, we thought the reason accredited investors would passively put money into our deal would be because of the return. However, as there are other syndication and investment avenues that a venture capitalist can be, offering solid returns is not the driving factor. So, if returns aren’t their primary motivation, what exactly is? We’ve got refined the passive investors’ three primary factors behind committing to a rental syndication:
1. My money is in good hands
2. I will be updated on relevant info on the sale
3. To obtain the vehicle hassle-free
Need #1 – Is my profit good hands?
The main objective when managing other people’s money must be capital preservation. As with any investment, you will find never guarantees – not for returns or preservation of capital. So, I want to know that you’re proactively mitigating any major risks by the following these investing principles:
1. Don’t buy for appreciation
2. Don’t over leverage
3. Don’t get made to sell
I also must trust you as being a person. I want to possess a good feeling about yourself and truly believe you have my best interests in mind. This trust is made through the length and excellence of our relationship and also by you demonstrating your expertise by your experience, your team or your thought leadership. Using this trust, I am positive that you should have sound judgment, make good decisions, conservatively underwrite the deal, perform all the required research before purchasing a condo and at the very least, fulfill the projected returns you outlined. Finally, I want to know that you’re a responsive communicator. If you find an issue with the deal, I would like you not only to notify me with the issue, but possess a proposed solution also. And if I find you using a question or concern, I expect that very same lightning quick response with an answer.
Need #2 – Should i discover status updates on the deal?
Additionally, I must discover ongoing status updates from the project. On a consistent basis, I need a director level – not just a CEO or entry-level employee level – update on the take care of supporting data. To accomplish this, the syndicator must provide their investors with 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, along with your proposed solution
6. Any community engagement events
Need #3 – Is the task hassle-free?
Finally, I would like a hassle-free process. The reason why I am a passive investor happens because I want to park my take advantage a smart investment without having to worry about doing the day-to-day operations. I want a dull investment with little to no surprises. All I want to do is browse the monthly email updates and receive my distributions. So, to effectively provide investor distributions, set up a direct deposit, rather than sending checks in the mail. Easily do touch base which has a concern, I need a quick resolution with minimal back and forth. Therefore, you should proactively address potential concerns in your monthly updates and when an investor carries a concern, have a very solution in position just before replying.
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