Stilling Sumner posted an update 2 months ago
Before raising money for the first deal, we thought the main reason accredited investors would passively invest in our deal will be because of the return. However, because there are other syndication and investment avenues to which a venture capitalist can go, offering solid returns can not be the driving factor. So, if returns aren’t their primary motivation, what is? We have reduced 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 facts about the sale
3. To obtain the vehicle hassle-free
Need #1 – Is my take advantage good hands?
The main objective when managing other people’s money needs to be capital preservation. Like any investment, you’ll find never guarantees – not for returns or even the preservation of capital. So, I want to are aware that you’re proactively mitigating any major risks through the following these investing principles:
1. Don’t replace on appreciation
2. Don’t over leverage
3. Don’t get made to sell
Furthermore, i have to trust you being a person. I must have a good feeling about yourself and honestly think that you’ve my favorite interests at heart. This trust created by the length superiority our relationship and also by you demonstrating your expertise via your experience, your team maybe thought leadership. With this trust, I’ll be confident that you will have wise practice, make good decisions, conservatively underwrite the sale, perform all the required due diligence before purchasing a rental and at the absolute minimum, fulfill the projected returns you outlined. Finally, I want to understand that you’re responsive communicator. If you have a problem with the sale, I wish for you to not only notify me of the issue, but possess a proposed solution at the same time. And when I reach out to you with a question or concern, I expect that same lightning quick response with the answer.
Need #2 – Will I be provided status updates for the deal?
Additionally, I want to find ongoing status updates with the project. On a consistent basis, I’d like a director level – not a CEO or entry-level employee level – update about the cope with supporting data. For doing that, the syndicator has to provide their investors with a monthly email update that features the next 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, 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 because I wish to park my cash in a great investment while not having to bother about doing one of the day-to-day operations. I need a dull investment with little to no surprises. All I want to do is see the monthly email updates and receive my distributions. So, to effectively provide investor distributions, generate a direct deposit, as opposed to sending checks in the mail. Only do reach out which has a concern, I need a quick resolution with minimal backwards and forwards. Therefore, you should proactively address potential concerns in your monthly updates and when a venture capitalist has a concern, possess a solution set up prior to replying.
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