Real Estate Syndication Investing

by Christopher Levarek

"It is literally true that you can succeed best and quickest by helping others to succeed."

– Napoleon Hill

If you’ve been following the content on this blog, you can see that our company partners with private equity to invest into apartment buildings. This is what is called real estate syndication investment opportunities, you can read more on the subject here if unfamiliar. However, one common question we get regarding investing into these real estate syndications is what happens after I invest?

This is of course important to understand for an investor. Many are familiar with investing in stocks and 401ks and understand the process of how to find out how their investment is doing but what happens after investing into a private equity investment with a syndication group. Well, let’s take a look at how it works and what an investor can expect after investing into an investment opportunity such as this.

What to Expect AFTER Investing?

So you’ve invested in your first real estate syndication, now what? Here’s the five most common communications and actions you can expect after your investment, throughout the hold time and finally at the sale of the asset.

Upon Closing

After the property has been purchased and at closing, you can expect a detailed email explaining that the property closed successfully. This first piece of communication will layout what to expect as far as distributions and updates over the next few months/years from the team.

Common other questions and Information regarding when to expect scheduled K-1’s or tax information will also be provided in this email. The main point of contact for questions or concerns will also be highlighted so that investors are able to reach out at anytime for further assistance.

Updates - Monthly

One of the benefits of being invested into a real estate syndication is the higher degree of visibility on the monthly on goings of the property. After the initial closing email, one can expect monthly communications or investor updates regarding the business plan initially presented on the investment summary or webinar. These updates will highlight occupancy numbers, rental rates, the renovation schedule and any issues encountered thus far. The monthly updates are typically brief and give a quick look at how the property is doing.

Here is an example monthly update on a ongoing project :

Hi there Investors,

Hopefully you are able to have a few days of relaxation during the Easter holiday weekend. Here is some light reading for you to do while on break {or while working.}

A few tasks that have been accomplished in March were:

Painted the exterior
Achieved 100% occupancy {based on 56 of 84 available units}
28 down units electrical & plumbing is complete

Here is a look into some of the projects that were put on hold for the time being:

Parking lot repaving and striping will wait until there is consistent good weather

A few Issues and Risks that are being worked on:

Due to an increase in rent delinquencies, our Property Management team is working with tenants face to face to review past due payments & their availability to pay moving forward
They will be waiving late fees until further notice

We invite you to please reach out via email at….

As you can see, this is a quick summary of the current property performance and issues.

Updates - Quarterly

After investing into a real estate syndication, you can expect a quarterly update as well as the monthly updates. These quarterly updates will come out every 3 months or four times a year, once per quarter.

Unlike the monthly updates, these emails will have more detail on the actuals vs projections of the property, rent rolls and include pictures of renovations or turned units.

If you are looking to get a more detailed view on the numbers and compare expenses vs income, this is the update for you! You can expect more detailed metrics and a review on the property performance in this email update.

Distributions - Monthly/Quarterly

Relative to your investment amount, distributions typically start after the first 90 days of holding the property. Depending on the investment opportunity, distributions can be issued monthly or quarterly and will be sent by direct deposit straight to the bank account. Some syndication groups might send distributions via paper check straight to your mailbox or what’s known as “mailbox money”.

Annually - K-1’s

Every year, taxes will be filed for the LLC holding the investment property. When these taxes are filed, a scheduled K-1 is sent to all investors reporting the income, deductions and any credits applicable to owner/investors. This is how property depreciation and the many tax benefits to investing in real estate are passed onto investors involved in the partnership.

In Final

Investing into a real estate syndication is partnership and should be treated as such. After closing, the communication and updates are important to ensure all partners are aware of how the property is doing. So as a recap, here are what to expect from a good syndication group AFTER closing :

A Closing Notification Email
Monthly Updates
Quarterly Updates
Monthly/Quarterly Distributions
Annual Scheduled K-1 for Taxes

A major benefit to investing into real estate is to have the visibility on the deal and ability to better understand the investment. This should continue at closing all throughout the hold period until the sale of the asset. If this isn’t the case, be sure to find other investments or syndications that prioritize these items. Happy Investing!