How to Foster Trust with Investors in Syndication
In any real estate deal, trust should always be the most important element that should bring out the best results. Professionals need to learn how to build rapport. It would be hard for them to look for opportunities to grow their ventures if they are unable to make any friends.
As you meet people along the way, you also need to make sure that the networks you are forging will produce something of value.
The same is true in real estate investing. If you are set on acquiring an apartment complex and create a multifamily syndication, you need people who are ready to commit to your project. For them to offer their resources, it’s imperative to reach a certain level of trust.
Business, after all, is all about building relationships that benefit everyone involved. To make this happen, you need to show that you can deliver on the terms you have set for the syndication. It might seem like the easiest thing to do, but when you are faced with investors who are focused on getting the most profit, it would take some time (and several cups of coffee) before you can get them to commit.
I would like to say that your investors are your partners in syndication. They bring the equity share of the deal as class A members of the purchasing LLC. As such, they share in the monthly and quarterly cash flow and acquire gains upon the sale of the apartments. They are also on the title.
With that being said, here are the best ways to building investor trust.
Listen and observe
One way to let investors know you can deliver on the promises of a good return is to sit down and listen to their needs and opinions. Investors, after all, are more focused on getting the highest possible returns from their investments. By paying attention to this need, you will be able to make valid proposals that will attract them to your venture. With the internet and many platforms available it’s so easy to Webex, Zoom or FaceTime to build strong relationships even across the long distances.
Provide the most important details
Your investors will trust you more if you involve them in the process. In other words, it’s important to give them everything they need to know about your plans for a multifamily syndication. Make the effort to give them the information they need every step of the way. Doing so will keep them interested. They are bound to stay with you until your syndication takes off! I like to send newsletters periodically; keep them updated with positive new pieces of news, articles about the growth of the targeted emerging segments of the market where we are doing extensive research and underwritings.
Another way to keep investors within your circle is to make them happy. In this sense, try to offer them a proposal they couldn’t refuse. And I don’t mean place a severed horse’s head beside them while they are asleep. A better (and more legal) way is to know what’s valuable to your investors and build your offer around it.
Apply these tips so you can create a syndication that’s full of happy investors.