Gorman Willumsen posted an update 9 months ago
Before raising money for the first deal, we thought the main reason accredited investors would passively spend money on our deal would be as a result of return. However, with there being other syndication and investment avenues which an investor may go, offering solid returns cannot be the driving factor. So, if returns aren’t their primary motivation, what exactly is? We now have narrowed down the passive investors’ three primary reasons behind buying a rental syndication:
1. My money is in good hands
2. I am updated on relevant facts about the deal
3. The operation is hassle-free
Need #1 – Is my profit good hands?
The main objective when managing other people’s money ought to be capital preservation. Like all investment, there are never guarantees – not for returns or perhaps the preservation of capital. So, I need to understand that you might be proactively mitigating any major risks from the following these investing principles:
1. Don’t replace on appreciation
2. Don’t over leverage
3. Don’t get expected to sell
I additionally must trust you as a person. I must have a great feeling about you and truly believe you have my favorite interests at heart. This trust is made through the length and excellence of our relationship through you demonstrating your expertise via your experience, your team or your thought leadership. With this trust, We are certain if you will possess wise practice, make good decisions, conservatively underwrite the sale, perform all the required homework before purchasing an apartment possibly at the very least, fulfill the projected returns you outlined. Finally, I wish to realize that you’re a responsive communicator. If there is a problem with the offer, I really want you not only to notify me in the issue, but have a proposed solution as well. And if I reach out to you using a question or concern, I expect that same lightning quick response having an answer.
Need #2 – Can i discover status updates on the deal?
Additionally, I want to be provided ongoing status updates of the project. Regularly, I need a director level – not only a CEO or entry-level employee level – update on the deal with supporting data. To accomplish this, the syndicator must provide their investors using a monthly email update that includes the following information:
1. Distribution details
2. Occupancy and pre-leased occupancy rates
3. Actual rents vs. projected rents
4. Capital expenditure updates with images 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 procedure hassle-free?
Finally, I want a hassle-free process. The main reason I’m a passive investor happens because I would like to park my profit an investment and not have to concern yourself with doing some of the day-to-day operations. I need a monotonous investment with practically no surprises. All I would like to do is read the monthly email updates and receive my distributions. So, to effectively provide investor distributions, create a direct deposit, instead of sending checks inside the mail. Basically do connect with a concern, I want an instant resolution with minimal forwards and backwards. Therefore, you need to proactively address potential concerns inside your monthly updates if a venture capitalist has a concern, use a solution set up before replying.
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