puzzle with missing piece and key takeaways

Our Multifamily Investment Firm’s Most Important Takeaways from “The 7 Keys,” Part Two

Further Recommendations for Finding a Strong Multifamily Investment Company

In this article, we continue our guide to the most important takeaways from “The Seven Keys to Passive Investing.” We will focus on the last four keys: transparency, type, thesis, and terms.

In the first part, we explored why it is important to look for trust when vetting investment firms.We also discussed why a multifamily investment company’s track record is an important consideration. Additionally, when looking for opportunities as an accredited investor near you, you should take the firm’s team into consideration. This is because vertical integration is an advantage over teams that aren’t structured this way.

Before we move into the next four of the “Seven Keys,” we will begin with a general summary of the keys. Whether you are looking for a firm that deals with Kansas City real estate or any other area, these keys can help. The keys will guide you to the right multifamily investment company for you and your family.

A Refresher on “The 7 Keys to Passive Investing” from Our Multifamily Investment Firm

An exploration of each of the keys is available on our blog. However, you may want to use the first and second parts of this takeaway guide during the vetting process. As a quick reference, here is a list of the “Seven Keys” that you should use to make your decision:

  • Trust
  • Track Record
  • Team
  • Transparency
  • Type
  • Thesis
  • Terms

Accredited investors near you are taking these characteristics into account. They have recognized Kansas City real estate as having a high upside. When looking for multifamily investment companies, they’ve found that our firm, Worcester Investments, fits these keys well.

However, you have to decide for yourself. You likely want a company that offers transparency about your investment. If you’ve done some research, you know the value of vertical integration. Further, you want to know that the deal – and its terms – can yield potentially high returns. Below are the questions and key points to remember when vetting for these characteristics: transparency, type, thesis, and terms.

Questions to Ask and a Key Takeaway Related to Transparency and Multifamily Investment

Transparency is all about communication. You want to be sure that the multifamily investment company you are working with is straightforward with you. They answer your questions and hear your concerns. It is easy to access them when needed. It is easy to get a hold of them at any time. Online portals, reports, and other information you need about your investment are very clearly presented. There are clear paths to get questions answered.

Here are the questions you should ask a firm that invests in Kansas City real estate (or any area). These will help you determine their level of transparency:

  • Does the firm offer thorough, clear communication, both monthly and quarterly?
  • Is the communication simply a phone call? Or is it more of a detailed story that explains everything you need to know about the success of the fund?
  • Can you and all other accredited investors near you who have invested in this fund access an online portal? Can you see any data you need on the investment properties’ performance and more?
  • When you have an issue, is it clear where you should take that issue?
  • When you take an issue to the firm, can the person answer your question succinctly?
  • When you need information, do the answers you are provided with make you feel more secure in your investment?

Key Takeaway on Transparency: The most important takeaway on transparency is that the level of communication is acceptable to you. A sign that communication will be strong is when the company has structured itself by the principle of vertical integration. This means, in part, that a clear communication channel has been established for all parties, including you.

Questions to Ask and a Key Takeaway Related to Type and Multifamily Investment

Type is a simple concept. What type of investment are you and other accredited investors near you getting involved with? Do you have all of the information about the type of investment? Has the multifamily investment company provided this for you? You may not necessarily know this if you are new to investing. The following questions will help you understand the investment fund you are participating in:

  • What is the timeline for this project in Kansas City real estate or elsewhere?
  • Is the timeline worth my while? Is the project valuable enough to warrant a longer timeline?
  • What is the expected rate of return on this investment?
  • What kind of risk am I able to tolerate?
  • Does this investment seem logical to me when I think it through? When I ask others?
  • Does the risk feel comfortable to me in the context of the projected returns?
  • What challenges seem to stand in the way of this investment providing value for me? Is the sponsor foreseeing any challenges? How are they responding to them?

This last point is particularly important. A strong multifamily investment company that practices vertical integration will anticipate challenges. This is because they can see down the line. They are involved in the entire investment process. They are also likely to be transparent about these challenges and how they plan to mitigate them.

Key Takeaway on Type: It is up to you to determine whether the investment type is one that will be worth it for you. You have to consider your risk tolerance, the value of the investment, and what you are able to do at this time. However, a firm that can explain how the investment is projected to perform is a good sign.

Questions to Ask and a Key Takeaway Related to Thesis and Multifamily Investment

Thesis is all about understanding the deal. A multifamily investment company should communicate the deal in a way that makes sense. Much like a thesis on a term paper, the deal should be clear, evidence-based, and logical. Any deal in Kansas City real estate that is successful will have a strong thesis. You and accredited investors near you looking for high returns on investment should look for firms with an exceptional thesis.

Here are the questions you can ask to find a firm that can offer what you’re looking for:

  • Could you explain how this investment will progress from beginning, middle, to end?
  • Does this story make sense?
  • Will this deal add value to my portfolio?
  • Is this multifamily investment company a good fit for managing this investment?
  • Could anything go wrong here?
  • In the best-case scenario, what could happen to my investment?

Key Takeaway on Thesis: If the multifamily investment company you are considering practices vertical integration, you’re in luck. This means the company can explain the entire deal thoroughly because they are involved in all of its parts. You will notice the confidence that comes with this when you are vetting firms. See if the thesis of the deal makes sense to you when they explain it. If it does, you know you’re in the right place.

Questions to Ask and a Key Takeaway Related to Terms and Multifamily Investment

“Terms” is our final key. At this point, the multifamily investment company you are working with should be talking numbers. They should be telling you what to expect, and how any fees work.

  1. Ask the following questions of any firm, whether they are investing in Kansas City real estate or in any other area.
  2. Do the numbers match the business plan or thesis?
  3. What is the likelihood of the fund performing better than planned?
  4. How aggressive are the terms? Are they beneficial to you first?
  5. Are the fees structured to cover costs and break-even?
  6. Is the sponsor profiting because of a fee or because of the investment?
  7. How aligned is the sponsor and their investors?

Key Takeaway on Terms: Accredited investors near you are all looking for the same thing: value. If the key numbers for the investment don’t suit you, move on. Look for a firm who offers numbers that are beneficial to you – and that benefit you first.

A Final Takeaway on the 7 Keys from Our Multifamily Investment Company

After reading part one and two of our guide, you should have a good sense of how to go about vetting a multifamily investment company. The Seven Keys to Passive Investing can be put to work for you as an accredited investor.

As a final takeaway, always work with firms that are committed to vertical integration, have a great track record, and a great deal of expertise. This will work to your advantage.

If you think Worcester Investments has your answer for a potentially high upside, reach out to us here. Or you can give us a call at (816) 759-0901. We look forward to getting to know you, hearing your goals, and sharing our successes with you!