Investing in a real estate syndication is a commitment that promises exponential growth and positive impact without the day-to-day hassles. As a passive investor, your involvement extends beyond merely contributing funds; you receive regular updates on the project’s progress. Let’s explore what you can expect after investing in a real estate syndication, a journey marked by key communications and touchpoints.
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
1. Investor Guide – Upon Closing
The journey begins with the closing of the real estate syndication deal. Shortly after, expect an email notification indicating the successful closure of the property acquisition. Accompanying this notification is the Investor Guide, a comprehensive document outlining what to anticipate in the coming months and years. This guide serves as a valuable resource, addressing frequently asked questions about cash flow distributions, taxes, and overall project expectations.
2. Monthly Progress Updates
In the subsequent months, you’ll receive regular email updates providing insights into the ongoing progress of the real estate syndication project. Depending on the deal’s structure, these updates may occur monthly or quarterly. The emails typically include information on current occupancy rates, the status of unit renovations, and adherence to the business plan. It’s an anecdotal yet informative overview, often featuring photos of the latest developments on-site.
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:
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
3. Quarterly Financial Reports
Every quarter, you can anticipate receiving detailed financial reports. These reports, more extensive than the monthly updates, delve into specifics such as the rent roll, profit and loss statements, and additional metrics illustrating the asset’s performance. While perusing spreadsheets might not be everyone’s cup of tea, a quick review provides valuable insights into the project’s ongoing progress and overall investment performance.
4. Annual Schedule K-1
During tax season, an annual Schedule K-1 will find its way to your inbox. This tax document, integral for partnership-type investments like real estate syndications, reports your share of income, deductions, and credits. Issued individually for each investor, the Schedule K-1 serves as a crucial component of your tax reporting, complementing the information provided by 1099s.
Conclusion: Staying Informed Throughout the Journey
Your active participation in a real estate syndication evolves from the initial investment stage to a phase marked by continuous communication and updates. From the Investor Guide upon closing to the annual Schedule K-1 during tax season, these key touchpoints keep you well-informed and engaged throughout the lifecycle of your real estate syndication investment. These communications ensure you remain connected to the evolving story of your investment.
