Questions about Real Estate Syndication
How is it that some people perform badly but their clients continue to invest with them?
Unbelievably, in the stock market, during turbulent times when things weren’t going well, even when investors were taking losses, the brokers would continue to get investment instructions from their clients, largely because they learn to be good communicators. If they called the client and they told them what was going on, the client would retain their confidence and continue moving forward. The issue of dealing with hardship is always one of communication. Be a good communicator, be honest, and people will respect the good effort that you make on their behalf.
How do you deal with some investors who want straight interest, while others want an equity position, or some who may want both?
If you have different kinds of investors who want different kinds of returns, you can create multiple classes inside of your operating agreement. You have to know what kind of investors you have access to. If you have investors who simply want a strong rate of return and a secure interest in the property that gets paid before others get paid, then structure a deal where they provide a certain kind of loan to the deal, while the equity investors get a subordinated interest in the property. By doing that, you can accommodate many different kinds of investors.
Should the syndicator always be a partner in the deal?
When the syndicator is an investor in the deal, it provides great confidence to the investors because you put your own money on the table. That puts you on the same side of the table as the investors. However, as a syndicator you have to ask yourself if you have enough money to put a lot into every deal. Putting a lot into every deal is contrary to the concept of leverage that the syndicator gets. Therefore the syndicator needs to take a small and properly calculated interest in each deal that he takes. And the syndicator needs to manage when the cash gets put into the deal. The syndicator does not necessarily have to write a check on day one to get into the deal. The syndicator may instead place that money into the deal over time, as his cash flow permits. There are strategies that we will discuss in the live seminar program that help the syndicator to manage this very delicate situation.
Tomorrow I'll give you more. To register for more free info and possibly the seminar visit Joel'sSeminar
Labels: Real Estate Investing, realestate seminars, realestatesyndications