The other day, I got a handwritten letter in the mail from Yurisney, the little girl in Colombia whom I sponsor through Children International.
In her letter, she told me about how she is doing well in school, how she goes to the park to play and eat ice cream with her mom and sisters, how she helps out at home by doing chores, and how she loves to play hide and seek.
I’ve never met Yurisney in person. I’ve never even spoken to her on the phone. I’m not the one she wants to snuggle with when she’s scared or the one she wants to sit by at dinnertime. But I also I don’t have to wash her shirt when ice cream drips on it or remind her for the third time to finish her chores.
I often tell people that investing passively in a real estate syndication is like sponsoring a child. You get all the benefits of investing in real estate without the hard day-to-day work of operating the building.
Every month or two, I get updates about Yurisney, and every year, I get a photo of her on her birthday. I get to send her letters and cards and share photos of my family as well. It’s a great relationship.
Similarly, when I invest in a real estate syndication, I get regular updates on the progress of the project after the deal closes. At any time, I can ask for more information or clarification. But when a unit floods due to plumbing issues, I’m not the one the tenants call.
Typical Real Estate Syndication Communications and Touchpoints
Here are the things you can expect from the time a real estate syndication deal closes through the time that the asset is sold:
- Investor Guide – upon closing
- Progress updates – monthly
- Cash flow distributions – either monthly or quarterly
- Financial reports – quarterly
- Schedule K-1 – annually
Upon Closing
As soon as the real estate syndication deal closes, you can expect a note from us letting you know that we closed on the deal.
Included within that note will also be an Investor Guide, which will give you a high level overview of what to expect moving forward and answer some frequently asked questions, including questions about the timing and logistics of your cash flow distributions, tax-related questions, and more.
Monthly
Every month after that, typically around the middle of the month, you can expect to receive an update on the progress of the real estate syndication project via email. Depending on the deal, you would also receive either monthly or quarterly cash flow distributions.
The update emails include things like the current occupancy, how many units have been renovated that month, whether we’re on track with the business plan, and occasionally some photos of the latest progress. They’re perfect for keeping a quick pulse on the project.
Below is an example of what you might see in a monthly update email.
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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
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As you can see, the progress updates are mostly anecdotal and include a quick high level overview of the different initiatives going on at the property. For a more detailed look, you can look forward to the quarterly financial reports.
Quarterly
Every quarter after you invest in a real estate syndication, you can expect to receive a detailed financial report, including the rent roll and the profit and loss statement from the trailing twelve months.
Beyond the anecdotal updates you’d get each month, these quarterly reports are much more detailed and give you a line-by-line breakdown of exactly how the asset is doing financially.
These quarterly financial reports are not exactly the most fun to read, especially if you’re not a #spreadsheetnerd like I am, but I highly recommend you at least crack them open to take a look.
Even a quick scroll through the pages will give you a decent idea of the overall performance of the asset and the metrics used to assess the ongoing progress.
Annually
Every year, during tax season, you can expect to receive a Schedule K-1, which is a tax document issued for an investment in a partnership, like a real estate syndication. The purpose of the K-1 is to report your share of the income, deductions, and credits.
A separate K-1 is issued for each real estate syndication you’ve invested in. They are typically issued around the same time as 1099s and serve a similar purpose for tax reporting.
Recap
Once you’ve reviewed the investment summary, signed the PPM (private placement memorandum), and sent in your funds for a real estate syndication, your active participation is complete.
Once everyone sends in their funds and the deal closes, then the team can get started on executing the business plan – renovating the units, improving the common spaces, increasing rents, and more.
From the time that the deal closes through the time that the asset is sold, you can expect to receive the following:
- Investor Guide – upon closing
- Progress updates – monthly
- Cash flow distributions – either monthly or quarterly
- Financial reports – quarterly
- Schedule K-1 – annually
Just like when you sponsor a child and get to hear regular tidbits about their life , these communications help keep you in the loop on the overall progress and goings on throughout the lifecycle of the deal.
