If you are setting up a multifamily syndication, it’s important to foster transparency. Your investors need to know whether or not they are getting massive returns. This involves producing financial reports and maintaining a positive cash flow year after year.
Without transparency, you are putting your syndication at risk. After all, you need data to adjust your business strategies and to come up with the best possible solutions to problems that entail a negative cash flow. The lack of openness, on the other hand, will prevent you from focusing on the most critical elements. This results in unwanted conflicts that could trigger lawsuits.
As a syndicator, you understand the value of cooperation. The only way to nurture a harmonious working relationship with investors, lenders, securities lawyers and property managers is to allow a high level of openness when it comes to making financial and operational reports.
It’s easy to promote transparency in a multifamily syndication. You only need to go through the proper steps.
Investors generally want to know your availability in answering queries. Being prompt to these queries gives the impression that you are taking care of your investors. Addressing their most urgent concerns requires this level of openness.
In a bid to maintain your investor base, you are sometimes tempted to provide them with satisfying data that’s not even real. Moreover, it’s fairly easy to give assurances to your investors that they will get their returns within a specific period. This comes off as bad practice since you will be exploiting the good faith your investors have placed on you. It puts your reputation under a bad light and prevents you from opening up opportunities in the future.
There’s a wide array of communications apps and software we can use to communicate with investors over long distances. These enable you to update them on the status of your property portfolio in real-time, keeping them informed throughout the process. I would use Webex, Zoom, and Facetime. Although I use all three, I mostly prefer Zoom since it has the right features needed for when I am doing lectures and engaging investors. It allows me to schedule meetings, conduct high-quality presentations and share screens with my audience simultaneously. We record all video meetings and send the links to the investors after we give quarterly meeting presentations for each asset.
Passive income investors want updates on the latest developments and events. For sure, these events can potentially affect cash flow performance. With that being said, make it a habit to inform your investors about the slightest changes. This gives them a good reason to trust you even more since it shows that you are placing ROI as a top priority in your syndication. Sending emails or chatting them through the apps I mentioned above is a good way to maintain effective communication and keep your investors fully informed.
If you encounter issues along the way, it’s essential to find viable solutions. The key to maintaining a highly profitable business venture is to involve investors in the process of solving a problem. More importantly, you may also want to lend your own voice to the discussion. This lets investors know you are focused on helping them realize their goals.
Make sure to use these tips if you want to improve transparency in your syndication. Feel free to share these tips with anyone who wants to make it big as a syndicator.
Download my free guide and get weekly real estate investing advice
Become a member of Vinney's Real Estate Community
I'd like to offer you my exclusive guide called 7 Reasons Why Real Estate Syndications Build Long-Term Wealth + 2 Bonus Credits
Subscribe to my weekly newsletter and I'll send you this FREE guide to learn why Real Estate Syndications build long term wealth and why you should consider them.