The 3 Secrets to Attract and Keep Your Passive Apartment Investors
Before raising money for first deal, we thought the reason accredited investors would passively spend money on our deal could be because of the return. However, because there are other syndication and investment avenues which an investor can go, offering solid returns can not be the driving factor. So, if returns aren’t their primary motivation, precisely what is? We now have refined the passive investors’ three primary factors behind purchasing an apartment syndication:
1. My funds are in good hands
2. I am updated on relevant facts about the deal
3. The operation is hassle-free
Need #1 - Is my profit good hands?
The main objective when managing other people’s money must be capital preservation. Like all investment, you'll find never guarantees - not for returns or the preservation of capital. So, I must know that you might be proactively mitigating any major risks by the following these investing principles:
1. Don’t buy for appreciation
2. Don’t over leverage
3. Don’t get expected to sell
I also have to trust you as a person. I want to have a very good feeling about you and honestly think that you've my favorite interests planned. This trust is made by the length and quality of our relationship through you demonstrating your expertise by your experience, your team or perhaps your thought leadership. Using this type of trust, I will be positive that you will possess good sense, make good decisions, conservatively underwrite the offer, perform all the required research before purchasing a rental and also at a minimum, satisfy the projected returns you outlined. Finally, I want to understand that you're responsive communicator. If you find an issue with the offer, I wish for you not only to notify me of the issue, but have a very proposed solution as well. And when I find you using a question or concern, I expect that very same lightning quick response by having an answer.
Need #2 - Can i discover status updates about the deal?
Additionally, I want to be provided ongoing status updates with the project. On a regular basis, I need a director level - not just a CEO or entry-level employee level - update on the take care of supporting data. To do this, the syndicator should provide their investors having a monthly email update that also includes the following information:
1. Distribution details
2. Occupancy and pre-leased occupancy rates
3. Actual rents vs. projected rents
4. Capital expenditure updates with pictures of the progress
5. Relevant market and/or submarket updates
5. Any issues, plus your proposed solution
6. Any community engagement events
Need #3 - Is the method hassle-free?
Finally, I need a hassle-free process. The main reason I'm a passive investor is really because I would like to park my money in a smart investment and not have to worry about doing one of the day-to-day operations. I want a boring investment with practically no surprises. All I must do is read the monthly email updates and receive my distributions. So, to effectively provide investor distributions, set up a direct deposit, rather than sending checks inside the mail. Only do touch base having a concern, I need a simple resolution with minimal back and forth. Therefore, you ought to proactively address potential concerns within your monthly updates and if an investor features a concern, have a very solution in place prior to replying.
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