Once you have identified a project in which you are interested in investing, it’s time to do a deep dive on the deal specs.
Most syndicators/operators will hold a webinar shortly after a deal is issued. This could be live or pre-recorded. During live calls, they will usually have a Q&A where you can ask direct questions and listen to questions from other investors as well. If the webinar is recorded, you can draft your own list of questions and then follow up with the sponsorship team after the presentation.
If you are new to syndications, you should definitely watch these investor webinars for educational purposes, even if you don’t plan on investing.
During the webinar, you will receive a lot of information about the project including:
- The Team – You will get a chance to meet the general partners (GPs) and the sponsorship team, learn about their backgrounds and track record and listen to the details of the deal directly from them.
- The Market – The general partners (GPs) will detail their market analysis, and explain what they love about the area including demographics, major employers etc and why they want to invest there.
- The Business Plan – The GPs will outline the business strategy for the property and how they plan to monetize the asset so their investors will make money.
Some common strategies include:
- Value-add: Renovating existing units and improving operational inefficiencies
- Loss to lease: Bringing under-market rents up to current market prices
- Additional income streams: Adding services and amenities such as covered parking, valet trash and storage rentals to increase revenue
- Buy and hold: Purchasing the property with the intent to own for an indefinite period of time for ongoing cash flow
- The Financials – The team will provide an overview of the information outlined in the Private Placement Memorandum (PPM) including the pro forma financials, market comps, debt structure and cash flow assumptions along with the project timeline.
Once you’ve had a chance to review the deal specs with the operating team and ask any questions, you will have a clearer understanding if this particular project will be a good fit for your personal investing goals.
Be sure to check out the additional blogs in this series to see all 10 Steps to Invest in a Real Estate Syndication.