Checking the Validity of an Investor Group?

Question

Guys & Gals off all shapes and size of bank accounts,,, how do I check to see if an investor group is real and not some slick organization trying to steal money from investors?  Thank you.

Brian Adams · Answer

Account Closed I have syndicated over 1000+ apartment units and haven't ever had one of my investors ask for a bank statement. Not sure how helpful or relevant having a bank statement would be.

Instead, prospective investors do ask me for investor referrals, prior deals, understanding of my investment philosophy, why I target certain assets in certain markets, why I got in this business, and a host of other items.

Investors also want to know what happens after they wire funds such as how often do I communicate with property updates, financial and tax information, when will they receive cash flow checks, etc.

The bottom line is you need to feel comfortable that the operator/sponsor has the experience to run the type of deal you are looking to invest in. You also need to feel very comfortable that the operator is trustworthy and credible and trust isn't given it is to be earned.

Lennon Lee · Answer

Account Closed.

If after doing your due diligence on the sponsor you are still not convinced, then it probably is better for you to pass and go with another investor group that you feel comfortable with.

I personally believe that there's nothing like an in person meeting and spending time with the person you are about to invest with. So if you have the opportunity, go ahead and spend a few hundred bucks on a plane ticket (if out of state)  and set up an in person meeting with them.

Hope it helps.

Best,

Lennon

Joel Owens · Answer

Jeff Martinez,

There are no absolutes in business.

I have found that people that are hard to find should be red flags. I see a pattern of companies that make big claims but when you want to see videos of them somewhere,pictures, talking on Skype they make excuses as to why they can't do it.

References are key. If you are local meet them in person and look them in the eyes. Easy for some to lie on the phone but in person or Skype you can watch their mannerisms.

The fakers hide behind smoke and mirrors and make wild claims that are unrealistic and the always famous (act fast!) or it's gone crap.

Joseph Gozlan · Answer

Account Closed remember that vetting the team is just one of 3 aspects you want to look at when investing.

1) The Opportunity: the property, the numbers, the rents, comps, condition etc.

2) The Market: location is the only think you can't change in a property. Make sure the location is decent, in a growing economy

3) The Team: as mentioned above, ask for referrals, results of previous deals, knowledge of the industry and the market, etc.

Do some homework yourself. For example: if a group tells you they plan on raising rents from X to Y because the market supports that, call some competitors and ask how much they rent their apartments for.

Good luck!

Brian Adams · Answer

Account Closed awesome and thank you for your kind words.

Good luck on this venture and would enjoy us staying in contact with each other. I will send you a PM.

Account Closed · Answer

@Arissa Pedroza, thank you so much, I would have never thought about bank statements,,, that's a top of the top 10 responses. #1.

Arissa Pedroza · Answer

BBB

Bank Statements in their name or LLC

Referrals

Properties they have been involved with

Account Closed · Answer

@Brian Adams,,, how cool is this, I just listened to you on a podcast wit Kevin Bupp and now I saying thank you for your insight and knowledge.

I just got a response from one of the sponsors of the deal we're looking at and she sent me a wealth of information that really summed up the group and its looks really solid, really good. The more my wife kept asking me those questions the more I had to know for sure what we were about to do was the right thing and I now have no doubt.

Thanks again for your response and I would love to learn more about your operation and possibly subscribe to one of your deals as a passive investor.

Checking the Validity of an Investor Group?

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