Being a property syndicator, I thought the main thing that would make accredited investors want to passively invest and partner with our firm was the return. But I soon seen that wasn’t the greatest concern.
My experience has given me the opportunity better understand passive investors. Plus today’s blog, I will be referring to the major causes I’ve seen to be why investors invest passively within our apartment syndication.
1. Knowing their money is safe hands
2. Like a portion of a procedure that is trouble-free
3. Consistent updates on information and facts about the deal
Knowing their is within safe hands…
As with every other investments, there aren’t any profit or capital preservation guarantees in the real estate investment business. Therefore, passive investors wish to know that we’re taking all safety measures to attenuate risks. We accomplish this in-part by sticking with the next three basic principles of apartment investing. (i) We secure lasting debt (ii) We don’t purchase for appreciation only for cashflow (iii) We make sure there exists adequate cash reserves. On the whole, investors wish to know that the money is safe. For their syndicator, we suggest to them this when you are excellent communicators, minimizing associated investment risks, keeping the necessary industry experience and constructing a good meaningful relationship.
As a portion of an activity that is certainly trouble-free…
Every passive investor wants a trouble-free process. They need to turned into a passive investor since they planned to place their profit a profit-yielding investment and never have to bother themselves about daily operations. Most savvy passive investors are busy with money-making small business ventures, in order that they have little time to spare.
After undertaking initial due diligence on the deal before investing, investors want an investment that won’t allow them to have difficulty sleeping. It can be on that basis the one work we wish our investors to do is check their monthly email around the deal and receive their cashflow and profits.
Consistent updates on information in regards to the deal…
What our investors want is what we supply, a definite, plain english, to-the-point, no fluff investment update with real numbers, solutions (if there’s a problem) and live property info & data. To ensure our investor obtain the finest communication on a monthly basis our deal updates include but aren’t tied to:
Any community engagement events
Any issues and our proposed solutions
Actual rents versus projected rents
Rehab and expense updates with images of the progress made
Distribution details
Actual rental premium versus expected rental premium
Relevant market and/or submarket updates
Then, every four months, we offer investors together with the current rent roll along with the profit and loss statement to enable them to evaluate the operations from the property and punctiliously investigate the details if they desire to. Our passive investors get distributions on a monthly basis (not quarterly or yearly) in order that they not just receive updates and also receive payment.
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