Embarking on the journey of selecting a single real estate syndication deal from the myriad of investment opportunities available can be quite daunting. However, attending an investor webinar during your evaluation process can prove to be a strategic move, offering valuable insights into the potential success or pitfalls of the deal.
In this comprehensive guide to investor webinars, we’ll explore what they entail, why they’re indispensable to your investment decision-making, when they occur, and the critical questions you should pose.
What Is an Investor Webinar?
Let’s start with the basics. What exactly is an Investor Webinar?
An Investor Webinar is akin to a conference call-style presentation where members of the sponsor team expound upon the investment summary. They delve into various aspects such as the deal structure, business plan, market comparisons, and showcase their track record of success.
It’s crucial to note that not all investment opportunities offer webinars, and the absence or presence of one does not inherently determine the potential success of the deal. Webinars can be conducted via platforms like Zoom or Google Hangouts, may be recorded for later viewing, and might feature either a panel or individual presenter. Sponsors typically organize these webinars to provide investors with an opportunity to acquaint themselves with the team responsible for day-to-day operations, communications, and project management.
Why Investor Webinars Are So Valuable
Whether you’re a novice investor or have partnered with the same sponsor numerous times, attending an Investor Webinar allows you to directly engage with the sponsors themselves. It provides a platform for a virtual face-to-face interaction, enabling you to comprehend their rationale behind selecting the property, their perspectives on the potential opportunities and challenges, and their overall investment strategy.
This interactive session grants you the chance to pose questions in real-time and gain insights not only from the sponsor team but also from fellow investors in attendance.
When Investor Webinars Take Place
Typically, when a new investment opportunity is announced, an investment summary is disseminated to all potential investors, followed by the scheduling of a webinar by the sponsor team.
While attendance at the live webinar is beneficial for posing immediate questions, most sessions are recorded and shared with interested investors afterward. However, given the competitive nature of securing investment opportunities on a first-come, first-served basis, watching the recorded webinar promptly is advisable if you’re unable to attend live.
Investor Webinar FAQ Types
During an Investor Webinar, you have the opportunity to pose queries directly to the sponsor team. But what should you ask? Let’s explore some common question types along with examples tailored to real estate syndications.
#1 – Questions about things that are already in the investment summary
While it may seem redundant to inquire about details explicitly stated in the investment summary, asking such questions provides insight into the sponsors’ thought process and decision-making rationale. For example, the deal summary deck might say that the frequency of distributions are quarterly, starting six months after closing but asking “what is the frequency of distributions?” on the webinar may lead to a more detailed answer you need before making a decision.
The GP might answer something like this:
“Thanks for asking. The distributions will begin six months after closing, and each quarter thereafter. This allows us time to stabilize the property and begin renovations. We will have a catch-up on the preferred returns and anticipate that the preferred return will be shored up by the 18-month mark. In addition, remember, we don’t get paid on asset management fees until the asset is generating returns above eight percent. This ensures our interests are aligned with our investors.”
Other example questions:
What are the acquisition and asset management fees?
What’s the projected hold time?
What’s the renovation budget per unit?
#2 – What if ________?
These questions explore theoretical scenarios, challenging the sponsor team to articulate their strategies and contingency plans. Examples include inquiries about potential foreclosures, market downturns, or unexpected increases in vacancy rates.
Some examples of What If Questions include:
What if we had to foreclose on the property?
What if we hit a downturn?
What if the vacancy rate hits 25%?
What if renovations take longer?
# 3 – Why ______?
Asking “why” allows you to delve deeper into the motivations behind certain aspects of the investment plan. Understanding the rationale behind decisions like the projected hold time or renovation strategies provides valuable insights into the sponsor’s approach.
Some great Why example questions are:
Why is the exit cap rate projected to be 5.5%?
Why is the first-year return significantly lower than those following?
Why is the plan to only renovate 75% of the units?
#4 – In your own research you found…
Share any pertinent findings from your independent research during the webinar, seeking the sponsor team’s perspective on how these factors might impact the investment. This could involve uncovering details about the local market or property conditions not explicitly addressed in the investment summary.
Through this conversation, you’ll likely uncover some information the GP team found during due diligence.
Some great research-based webinar questions might be:
I saw there’s a potential new development planned for across the street from this property. How will that impact the investment?
According to reviews of the property, tenants have complained about poor outdoor lighting. What does the renovation plan include to address these complaints and improve the safety of the community?
From Google Maps, it appears that the roof on one building is much older than the others. Have you found that to be true in the property improvement records? And if so, what’s the plan to replace it?
#5 – Logistics & coordination details, please.
Seek clarity on practical aspects such as the target close date, communication protocols post-closing, or preferred modes of transaction. Pay attention not only to the answers themselves but also to how the sponsor team addresses these logistical queries.
Some great logistics questions may be:
When is the target close date?
Are you investing in this property personally?
What communications should I expect before and after the closing date?
Can I send in a check or are you accepting wires only?
Plan Ahead
Before the webinar, conduct thorough research and compile a list of questions regarding the investment opportunity. While some queries may be addressed during the session, others may require direct submission to the sponsor team afterward.
Summary
Whether you attend solely to listen or aim to have several critical questions addressed, participating in an investor webinar offers invaluable insights. Keep in mind the five most common question types outlined above during your next evaluation process. Remember, there are no trivial questions when it comes to making informed investment decisions based on the trust and confidence instilled by the sponsor team’s responses.
