Before raising money for the first deal, we thought the reason accredited investors would passively purchase our deal will be as a result of return. However, since there are other syndication and investment avenues which a venture capitalist can be, offering solid returns is not the driving factor. So, if returns aren’t their primary motivation, precisely what is? We now have narrowed down the passive investors’ three primary reasons behind purchasing a rental syndication:
1. My cash is in good hands 2. I'll be updated on relevant info on the sale 3. The procedure is hassle-free
Need #1 - Is my cash in good hands? The attention when managing other people’s money should be capital preservation. Like all investment, you'll find never guarantees - not for returns or preservation of capital. So, I need to realize that you are proactively mitigating any major risks with the following these investing principles: 1. Don’t purchase for appreciation 2. Don’t over leverage 3. Don’t get expected to sell
I also have to trust you like a person. I have to have a very good feeling with regards to you and truly believe that you've my favorite interests in mind. This trust is established with the length and quality of our relationship and also by you demonstrating your expertise through your experience, your team or your thought leadership. With this particular trust, We are certain that you will have wise practice, make good decisions, conservatively underwrite the sale, perform all the due diligence before purchasing an apartment and also at the absolute minimum, meet the projected returns you outlined. Finally, I would like to are aware that you might be a responsive communicator. If you have an issue with the offer, I would like you not only to notify me from the issue, but have a very proposed solution at the same time. And if I contact you using a question or concern, I expect that same lightning quick response by having an answer.
Need #2 - Should i be provided status updates about the deal? Additionally, I want to discover ongoing status updates with the project. On a regular basis, I need a director level - not a CEO or entry-level employee level - update for the handle supporting data. To accomplish this, the syndicator must provide their investors which has a monthly email update that also includes the next 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'd like a hassle-free process. The key reason why I'm a passive investor happens because I wish to park my take advantage a smart investment while not having to concern yourself with doing one of the day-to-day operations. I would like a boring investment with little to no surprises. All I would like to do is look at monthly email updates and receive my distributions. So, to effectively provide investor distributions, set up a direct deposit, rather than sending checks from the mail. If I do reach out using a concern, I want a simple resolution with minimal forward and backward. Therefore, you should proactively address potential concerns within your monthly updates and when a venture capitalist carries a concern, have a very solution available ahead of replying.
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