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January 28 2020

TomaszNicholson

The 3 Secrets to Attract and Keep Your Passive Apartment Investors

Before raising money for the first deal, we thought the main reason accredited investors would passively invest in our deal can be as a result of return. However, since there are other syndication and investment avenues this agreement an angel investor can go, offering solid returns can't be the driving factor. So, if returns aren’t their primary motivation, precisely what is? We now have refined the passive investors’ three primary reasons for investing in a flat syndication:
1. My cash is in good hands
2. I am updated on relevant information about the sale
3. To obtain the vehicle hassle-free
Need #1 - Is my profit good hands?
The main focus when managing other people’s money must be capital preservation. Like any investment, you'll find never guarantees - not for returns or perhaps the preservation of capital. So, I have to know 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 instructed to sell

I additionally have to trust you as being a person. I must have a very good feeling in regards to you and truly believe you have my favorite interests planned. This trust created with the length and quality of our relationship and also by you demonstrating your expertise using your experience, your team or your thought leadership. With this particular trust, I am confident that you will possess common sense, make good decisions, conservatively underwrite the sale, perform all the research before purchasing a rental possibly at the very least, meet the projected returns you outlined. Finally, I wish to realize that you're responsive communicator. When there is an issue with the sale, I would like you not only to notify me in the issue, but use a proposed solution too. Of course, if I get in touch with you having a question or concern, I expect that very same lightning quick response with an answer.
Need #2 - Will I discover status updates about the deal?
Additionally, I want to be provided with ongoing status updates of the project. Regularly, I want a director level - not really a CEO or entry-level employee level - update about the take care of supporting data. To achieve this, the syndicator has to provide their investors using a monthly email update that also 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 task hassle-free?
Finally, I would like a hassle-free process. The reason I'm a passive investor is simply because I wish to park my take advantage a great investment and not have to concern yourself with doing any of the day-to-day operations. I'd like a dull investment with hardly any surprises. All I wish to do is see the monthly email updates and receive my distributions. So, to effectively provide investor distributions, set up a direct deposit, instead of sending checks in the mail. Basically do reach out having a concern, I need a fast resolution with minimal forward and backward. Therefore, you need to proactively address potential concerns in your monthly updates of course, if an investor has a concern, have a very solution available before replying.
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