What to Expect After Investing in a Real Estate Syndication

As you may have discovered already, the very powerful feature of real estate syndications is the ability to invest in real estate and obtain all of the benefits of real estate investing without having to be a landlord.

It is an amazing investment vehicle for passive investors to earn passive income – usually with a preferred return on a quarterly basis – while receiving extraordinary tax benefits all while the general partners, who have a proven track record of success (or at least should have), do all of the work on behalf of the passive real estate investors in these real estate syndication deals.

A common question investors have after they have decided to invest in an apartment complex is: “What can I expect next?”

Once you are a part of these investment opportunities, the next step is that you can plan on receiving regular communications on the progress of the business plan being carried out by the deal sponsor team.

The general partnership will provide you with all of the different ways that the team is making improvements to the apartment building. You will receive these communications in monthly updates so that you’re always being informed on the status of your investment opportunity.

Some deal sponsor teams like to do quarterly updates, but we most often perform monthly updates for our group of investors.

As a passive investor, you receive these consistent updates on the progress of the investment strategy, but you never have to deal with any aspect of taking care of or managing the property. Pretty sweet deal, right?

What Type Of Communications Can You Expect Once You Have Invested In A Syndication?

The important thing to remember is that there are at least 5 different key communications that passive investors can expect once they have invested in a real estate syndicate. These key touchpoints will help you understand every step of the way what to expect – from the purchase of the real estate investment with consistent communications throughout the hold times all the way and including communications about the sale or disposition of the multifamily syndications.

Here’s what you can expect:

• Investor Guide – you will receive this helpful guide upon the closing of the property
• Progress reports – are sent out to the investors monthly
• Cash flow distributions – will be distributed to investors either monthly or quarterly
• Financial reports – are sent out quarterly to investors
• Schedule K-1 – are sent to investors annually

What Happens Upon Closing?

Once we have closed on the property and all of the legal documents have been signed, recorded, and filed, you can expect a celebratory email from the general partners and along with that a detailed Investor Guide with an overview of the important considerations that will be taking place with your investment property including what to expect during the hold period, answers to frequently asked questions and important information about your cash flow distributions, K-1’s and taxes.

What Can You Expect Monthly?

Each month thereafter, the passive investors in the limited partnership should expect an email giving them a progress report on the real estate syndication project. Depending on how the real estate syndicators have structured the deal, the passive investors can expect either monthly or quarterly cash flow distributions.

The monthly progress report email will highlight such information as to how the property manager plans on increasing efficiencies and implementing better management strategies, what the current occupancy rates are, how many units have been renovated, and various updates such as these. It’s a great way to show you the progress that has been made with the business plan objectives overall.

Here’s an example of what you may see in a monthly progress report:

On-site, the progress at ABC Apartments is going well as we continue to execute our business plan objectives.

Here are some specific property updates:

• The current occupancy rate is 93.9%
• Units renovated to date is 26 since acquiring ABC Apartments, and another 32 unit renovations are underway.
• We are meeting our objectives and continue to achieve our projected rents on all of the renovated units

Capital improvement projects:

• Building repairs: the siding, and roofing repair projects are completed
• Exterior paint: the prep for painting 12 buildings is in progress
• Dumpster enclosures: completed
• Energy efficiency measures: lighting fixtures ordered and install started on 2 of the buildings
• Parking lot: concrete repairs are underway and restriping will be conducted when repairs are completed likely at end of next month.
• Water conservation project: completed

The monthly progress reports are one of the best ways to give investors a birds-eye view of what is happening with their new investment each month. The monthly progress reports portray the scope of work being conducted with multiple initiatives to improve the value of the asset and create an even more desirable place for residents to live.

More in-depth analysis is provided to investors in the quarterly financial reports. But you should always know that at any time if you want to speak with someone directly that our team is just a phone call away to answer any questions you may have.

What Can You Expect Quarterly?

Every quarter each individual investor can expect to receive a report detailing the financials of the commercial real estate syndication they have invested in whether it is an apartment complex, mobile home parks, student housing, office buildings, or various other commercial syndications.

This quarterly report provides you with more detail than the monthly reports such as financial statements, rent roll, profit and loss statements, market conditions, and asset management assessments, and any other pertinent information that you may find valuable in seeing how the asset is performing as improvements and efficiencies are being made.

It’s the best way for investors to gain an understanding of how their investment dollars are being put to work for them by the deal sponsorship team, so even though these reports may be somewhat dry, they have a wealth of information to help you glean how well your asset is performing.

What Can You Expect Annually?

Every year, well before tax season, you will receive a Schedule K-1 for you to submit to your CPA for your tax returns. Every investor that invested in the syndication will receive a K-1 for their tax reporting. This tax document reports your particular share of the income as well as the deductions, and the credits.

Let’s Recap

Once you have reviewed all of the paperwork (the investment summary and the PPM – private placement memorandum) and you feel you can make an informed decision about whether to invest, the only other thing left for you to do is….invest. The next step is to decide on the investment amount you feel comfortable with if you want to invest more than the minimum investment or not, then send in your funds.

That’s all you have to do – the deal sponsor team and asset managers and property managers take care of the rest for you executing the business plan to see to it that they can create the best possible investment returns for the limited partners (passive investors) – a.k.a. – YOU!

So, just to recap, here’s what you can expect during milestones in your investment journey:

• The Investor Guide – you will receive this helpful guide upon the closing of the property
• Progress reports – are sent out to the investors monthly
• Cash flow distributions – will be distributed to investors either monthly or quarterly
• Financial reports – are sent out quarterly to investors
• Schedule K-1 – are sent to investors annually

Hopefully, this has been helpful in understanding what to expect when you invest in a real estate syndication, and I hope this gets you one step closer to learning how to Earn Passively & Live Abundantly.

Until next time…

Ready to Learn More? 

The best way for you to learn more about passive investment opportunities in commercial real estate syndications is to join the PCRP Passive Investor Club.

Through the PCRP Passive Investor Club, you’ll get a priority review of all the deals we offer. We’ll work with you to determine your investing goals and then present you with the best deals to meet those goals. We’ll then guide you every step of the way as you invest in those deals.

So if you’re ready to start investing passively in institutional-grade, commercial real estate in fast-growing, climate-resilient markets in the U.S., join the PCRP Passive Investor Club  – IT’S FREE! – and get started on your path to EARN PASSIVELY and LIVE ABUNDANTLY!

If you would like to know more about what we do and how it may be of value to you, please reach out to us anytime.  We’re always happy to help!