Have you ever been to the doctor or emergency room? Usually when you’re there, it’s because something is wrong. Whether that’s a fever, a broken bone, or any number of medical ailments, the doctor treats you or gives you next steps and asks to “see you again in two weeks”.
This next appointment is just a follow up, a progress report per se. And you continue having these ‘progress reports’ until your body is back to normal.
Investing in a real estate syndication is very similar in this aspect. As a passive investor, you would receive regular updates on the progress of the project after the deal closes.
Typical Real Estate Syndication Communications and Touchpoints
There are 5 key communications you should receive at important intervals once you invest in a real estate syndication. From the closing date, through the hold period, until the asset sale, here’s what to look for:
Investor Guide – upon closing
Progress updates – monthly
Cash flow distributions – either monthly or quarterly
Financial reports – quarterly
Schedule K-1 – annually
Upon Closing
Upon the close of a real estate syndication deal, you should expect an email notification letting you know that we have closed on the property. Included in that same package should be an Investor Guide, which will provide an overview of what to expect in the following months/years and answer some frequently asked questions, including questions about cash flow distributions and taxes.
Monthly
Each month thereafter, you should expect an email update on the progress of the real estate syndication project. Depending on the deal’s structure, you may receive monthly or quarterly cash flow distributions.
The monthly email will likely contain current occupancy rates, the number of renovated units, whether progress is in line with the business plan, and, occasionally, some photos of the latest progress.
Here’s an example:
Example Monthly Progress Update Email
On-site, things continue to go well at XYZ Apartments as we execute our business plan.
Here are some specific property updates:
● Current occupancy is 90.8% and preleased occupancy is 92.6%
● We’ve renovated a total of 11 units since acquiring XYZ Apartments and another 28 units are in the process of being renovated
● We’re continuing to achieve our projected rents on all renovated units
Capital improvement projects:
● Building repairs: the carpentry, siding, and trim repair projects are completed
● Exterior paint: the prep for 8 buildings is in progress
● Dumpster enclosures: in progress
● Parking lot: repairs are completed and restriping will be scheduled
● Water conservation project: completed
As you can see, the monthly emails are mostly anecdotal and include a quick, high-level overview of multiple initiatives occurring at the property. More details are provided in quarterly financial reports.
Quarterly
Each quarter, or every 3 months after investing in a real estate syndication, you should expect to receive a detailed financial report. This report is much more detailed than the monthly emails and typically include information on the rent roll, profit and loss statements, and additional metrics on exactly how the asset is doing.
While the quarterly reports might not be the most fun thing to look at, especially if you’re not a spreadsheets nerd, but you should definitely take a closer look. Even a quick flip through the pages will provide you great insight as to the ongoing progress on site and the overall performance of your investment.
Annually
Each year during tax season, you should be on the lookout for a Schedule K-1. This tax document gets issued for partnership-type investments, like real estate syndications, and reports your share of the income, deductions, and credits.
A separate K-1 is issued for every investor in the deal and is typically available around the same time as 1099s, serving a similar purpose for tax reporting.
Conclusion
Your active participation in a real estate syndication is complete once you’ve reviewed the investment summary, signed the PPM (private placement memorandum), and sent in your funds.
Once all investor funds have been submitted and the deal closes, the sponsor team begins executing the business plan through renovations, property improvements, and increasing rent and occupation rates among other things.
From closing through sale, you can expect the following:
● Investor Guide – upon closing
● Progress updates – monthly
● Cash flow distributions – either monthly or quarterly
● Financial reports – quarterly
● Schedule K-1 – annually
Similar to how your doctor schedules follow up appointments to check on you, these key communications help keep you in the loop throughout the lifecycle of your real estate syndication investment.
Join Us!
I’d love to share upcoming deals with you, but first we need to talk so I can hear about your investing goals. I have a couple deals with different tier structures and would be happy to help direct you toward the one that will move you toward those goals more efficiently.
Apply today at Nima Equity Doctors Investing Club to get the “inside scoop” on our past and upcoming deals. Once you apply to join the club, I’ll get on a call with you so we can see if we’re a good fit to invest alongside each other on any future real estate syndication deals! I can’t wait!
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