Investing in multifamily apartment syndications is a passive investment when you invest as a limited partner. Syndications provide “hands free” income as you don’t need to worry about managing operations of apartment buildings, dealing with tenants, and managing relationships with other investors. You invest your money and get paid periodically as cash flow comes in from the investment property. You could be anywhere in the world, at your house or relaxing on the beach. You can even be out of this world, on a tourist trip to space – your money is at work while you are not.
This seems too good to be true right?
There has to be a catch, right?
Well, the reality is that while investing in syndications is passive there is active work that needs to be done upfront so you can find these investment opportunities. The benefit however is that once you do that upfront work you can sit back and relax.
Assuming that you have identified how to find investment opportunities we are going to discuss what happens when you actually find an investment opportunity. Specifically, when the investment opportunity is being presented to you. This is only one step in the overall passive investor investment cycle.
Maybe you find yourself in this situation right now? You finally found a syndication group and you got an email saying you should sign up for their investment webinar to review their upcoming investment opportunity. It’s your first deal so you are not sure what to expect. What is an investment webinar even all about? We will dive into those questions.
What Is A Passive Investor Webinar?
A passive investor webinar is usually a live webinar held by the syndication sponsor during the due diligence/financing period after they have signed a purchase and sale contract for a new investment property. The intention of the investment webinar is to provide an executive summary of the investment opportunity to potential passive investors and answer questions in a more in-depth manner than a few paragraphs on a document can explain. If you miss the live webinar there is usually a recording that is shared after the event.
What Happens Before The Passive Investor Webinar?
If you have been connected with this syndication group, they will likely send you an email a few days – weeks in advance of the webinar giving you a heads up that a new investment opportunity will be available.
There is a benefit in having an existing relationship with the syndication group because a lot of the upfront work you would need to do (such as vetting the sponsorship team) may already be done. If this is the first time you are getting to know the sponsorship team, you will want to evaluate the credibility and experience of the sponsorship team.
The email announcing the webinar will usually have some high-level details of the investment opportunity and may even have a preliminary slide deck for your review. You should ensure that you take a look at these documents to familiarize yourself with the market and features of the deal. Start preparing a list of questions you would like to know answers to and bring these with you to the webinar.
What Do You Do During A Passive Investor Webinar?
Ok – its show time! The sponsorship team has been working tirelessly to put together the investment webinar and now you get an opportunity to see what all the hype is about.
You should come prepared to the webinar with the questions that you created in advance. It is likely that many of the questions will be answered during the webinar. You can take notes as these questions are answered. If there are remaining questions you can ask them during the question-and-answer portion of the webinar.
Webinars will vary in format of what information comes in what order but typically you will see that presentations start off with an introduction of the sponsorship team and their investment experience. Subsequently there will be a discussion of the macro and micro economic environment for the market where the investment is located. After discussing the market there would be a discussion of the actual investment property and related business plan. Finally, the webinar would conclude with details of expected performance of the investment opportunity, what investors can expect and how they can participate. The leader of the webinar will provide next steps such as signing up to an investment portal so you can access all investment documents and get more details on the specifics of the deal. There will also be a projected timeline for when all key activities such as executing documents, funding and closing of the deal will take place.
What Do You Do After A Passive Investor Webinar?
The goal of the webinar is to get passive investors to invest so this is the time for you to make your decision. Will you invest or not? There may be some unanswered questions that you have from the webinar. This may be questions that you need to research further, or you need to ask the sponsor team directly. Another piece of due diligence you can do is have other investors take a look at the deal and provide an opinion for you.
You can use this post webinar time to complete your due diligence. The sponsor team may offer a follow up webinar, one on one investor calls or even site visits. Depending on what is offered you can take this opportunity ensure you are comfortable with investing in the opportunity.
Assuming you are comfortable with the opportunity you will then need to ensure you are financially able to make that investment. This may entail reviewing your overall financial position and the current and future financial plans of you and your family. You may also want to have your accountant and lawyer review the investment documents. If you find that you are both willing and able you can now go ahead and take the leap and invest. Congratulations!
Interested in learning more about investing in multifamily apartments? Give us a call or check out some of the other free resources we have available at Investupmultifamily.com.