Love Sumner posted an update 2 months ago
Before raising money for your first deal, we thought the main reason accredited investors would passively purchase our deal can be due to the return. However, since there are other syndication and investment avenues this agreement a venture capitalist can go, offering solid returns cannot be the driving factor. So, if returns aren’t their primary motivation, precisely what is? We have refined the passive investors’ three primary factors behind purchasing a rental syndication:
1. My financial resources are in good hands
2. We are updated on relevant info on the deal
3. The procedure is hassle-free
Need #1 – Is my take advantage good hands?
The target when managing other people’s money should be capital preservation. Like every investment, you’ll find never guarantees – not for returns or the preservation of capital. So, I want to understand that you’re proactively mitigating any major risks through the following these investing principles:
1. Don’t buy for appreciation
2. Don’t over leverage
3. Don’t get expected to sell
Also i have to trust you being a person. I have to have a good feeling about you and truly believe you have my best interests in your mind. This trust is established from the length and excellence of our relationship by you demonstrating your expertise using your experience, your team or perhaps your thought leadership. With this particular trust, I am positive that you’ll have common sense, make good decisions, conservatively underwrite the offer, perform all the required research before purchasing a condo at a nominal amount, satisfy the projected returns you outlined. Finally, I wish to understand that you’re a responsive communicator. If you have an issue with the sale, I really want you to not only notify me of the issue, but use a proposed solution also. And when I contact you which has a question or concern, I expect that same lightning quick response by having an answer.
Need #2 – Will I be provided status updates for the deal?
Additionally, I want to discover ongoing status updates with the project. On a regular basis, I would like a director level – not a CEO or entry-level employee level – update around the deal with supporting data. For doing that, the syndicator has to provide their investors which has a monthly email update that includes these information:
1. Distribution details
2. Occupancy and pre-leased occupancy rates
3. Actual rents vs. projected rents
4. Capital expenditure updates with photos of the progress
5. Relevant market and/or submarket updates
5. Any issues, as well as your proposed solution
6. Any community engagement events
Need #3 – Is the process hassle-free?
Finally, I need a hassle-free process. The main reason I’m a passive investor is because I wish to park my cash in an investment while not having to concern yourself with doing one of the day-to-day operations. I’d like a monotonous investment with little to no surprises. All I must do is browse the monthly email updates and receive my distributions. So, to effectively provide investor distributions, generate a direct deposit, rather than sending checks in the mail. Basically do touch base having a concern, I would like a fast resolution with minimal forward and backward. Therefore, you should proactively address potential concerns with your monthly updates if a venture capitalist has a concern, have a solution in place ahead of replying.
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