Before raising money for first deal, we thought the main reason accredited investors would passively spend money on our deal can be because of the return. However, since there are other syndication and investment avenues to which a venture capitalist may go, offering solid returns can not be the driving factor. So, if returns aren’t their primary motivation, precisely what is? We now have simplified the passive investors’ three primary causes of committing to a rental syndication:
1. My money is in good hands
2. I am updated on relevant information about the sale
3. The procedure is hassle-free
Need #1 – Is my cash in good hands?
The target when managing other people’s money should be capital preservation. Like all investment, you will find never guarantees – not for returns or preservation of capital. So, I must are aware that you happen to be proactively mitigating any major risks with the following these investing principles:
1. Don’t replace on appreciation
2. Don’t over leverage
3. Don’t get forced to sell
I additionally should trust you as a person. I need to possess a good feeling with regards to you and honestly think which you have my favorite interests planned. This trust created with the length and excellence of our relationship through you demonstrating your expertise via your experience, your team or perhaps your thought leadership. Using this trust, I am confident that you will have good sense, make good decisions, conservatively underwrite the deal, perform all the required required research before purchasing a rental possibly at the very least, match the projected returns you outlined. Finally, I want to are aware that you’re responsive communicator. If there is an issue with the offer, I wish for you to not only notify me of the issue, but have a very proposed solution as well. If I contact you with a question or concern, I expect that very same lightning quick response by having an answer.
Need #2 – Can i discover status updates around the deal?
Additionally, I would like 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 for the take care of supporting data. To accomplish this, the syndicator must provide their investors which has a monthly email update that includes the subsequent 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 method hassle-free?
Finally, I need a hassle-free process. The reason I am a passive investor is simply because I want to park my money in an investment and not have to worry about doing the day-to-day operations. I need a dull investment with practically no surprises. All I want to do is browse the monthly email updates and receive my distributions. So, to effectively provide investor distributions, set up a direct deposit, as opposed to sending checks inside the mail. Basically do reach out using a concern, I would like a simple resolution with minimal backwards and forwards. Therefore, you must proactively address potential concerns within your monthly updates and if a venture capitalist has a concern, possess a solution set up just before replying.
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