Trust is the binding factor that gives investors and partners confidence in a real estate syndication, fund, or joint venture; this confidence allows the sponsor or manager to negotiate real estate deals more successfully while spending less time and effort trying to convince investors to part with a percentage of their wealth portfolio.
Here are a few tips used by successful sponsors and managers about how you can earn, establish, and maintain an investor’s and/or partner’s trust in your multifamily syndication company, fund or joint venture.
Prioritize Transparency
Remember that your passive investors and partners are investing in both you and the investment. As such, they will show confidence in a well-organized, detail-oriented sponsor or manager who is transparent, accessible, and capable of communicating ideas in a clear, concise, and consistent manner.
Easy and prompt access fosters and reinforces a partnership culture where virtues like integrity, loyalty, and trust can flourish.
Open Communication is a Two-Way-Street
As cliche as it may sound, open communication is the foundation of a reliable real estate partnership. Open communication doesn’t necessarily mean frequent meetings; rather, it refers to a culture where investors and partners can voice their concerns and receive prompt attention and sponsors or managers provide honest and timely input on the projected or actual performance of an asset or investment.
Maintaining a synergistic connection with your passive income investors and partners is no different from doing so with any significant client or business enterprise.
As a rule of thumb, always remember open communication and trust is a fascinating cycle where concentrating on one strengthens the other.
Develop an Effective Communication Framework
Understanding communication fundamentals, including the manner of communication, choice of words, and how investors interpret your message is necessary to develop and maintain trust in your syndicate.
Utilize the Right Communication Channels
Proper communication channels are essential to establish a robust and open relationship with investors. You’ll be able to comprehend their priorities better, which will support maintaining a constant and shared understanding of the investor’s business goals while reducing the possibility of antagonism toward management.
The number of communication channels has grown tremendously due to technology, which has decreased the likelihood of miscommunication.
As a sponsor or manager, the following communication channels are at your disposal for regularly updating passive income investors and partners.
- Newsletters
- Emails
- Phone calls
- Video conferencing using Zoom, Google Meet, and Skype
- Physical Meetings
Give Room for Feedback
According to most multifamily syndicates, two-way feedback is essential for establishing trust. This method critically measures and manages the sponsor/investor relationship in order to assure mutual satisfaction and maximize the benefits of the syndicate.
Given that some sponsors are in charge of a sizable investor population, using performance management software to track feedback given and schedule upcoming feedback sessions can be crucial for ensuring that it is given on time and consistently.
Always Update Investors
The main benefit of regularly updating your investors is to manage expectations and to keep your investors informed. It is preferable to inform your passive investors upfront whether there are any changes or delays in your syndicate’s predicted asset revenues or the acquisition of an asset. Also, be transparent with your investor and provide them with a solution to prevent similar delays in the future investments.
Be Realistic About ROI
It’s human to want to promise our investors the best performances of our syndicates; however, history will always tell us that investments aren’t a straightforward course.
When interacting with others, especially your investors, it is ideal to be clear about your ROIs. Don’t ever over promise and under deliver! Be realistic and present them with a conservative scenario. Earn your investor’s trust in you.
Wrapping Up
Early trust-building allows for open knowledge sharing between all parties in a multifamily syndicate and fosters a team-oriented environment that increases the chances of success.
As a sponsor, implementing these tips are key to building a lasting, trusting relationship with your investors. Cheers!
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