What to Look for in a Multifamily Investment Company’s Team
Having covered trust and track record, you should now have developed a better sense of the firm you’ve decided to work with. Hopefully you have met with a multifamily investment company you can trust. Additionally, this firm should have a track record with their investment properties that matches their claims. Before we move into the next stage of the funnel toward success with choosing a firm, let’s do a recap.
We will explore the most important points about trust and track record. It is important that these keys are established first. This is because you will likely find you can’t move forward without them. At Worcester Investments, we feel it is important to educate accredited investors on the facts about passive investing.
If you decide to choose us as a sponsor, we want to make sure you get all the information you need to experience success. It’s true that we can talk about our historically-high returns on investment in Kansas City real estate. However, we also want to develop a relationship with you. That relationship includes a clear understanding of the investment process. That’s why we’re a different kind of firm.
While we’re proud of our investment properties’ performance for our investors, we also include something more. We make sure that you feel confident, secure, and heard at each stage of investing.
Recap: Why Does Trust Matter in Passive Investing
Trust matters in passive investing. It is the first step in establishing a relationship with a multifamily investment company. You want to be sure that you are experiencing an instinctive feeling that you can trust this firm. You also want to see if there is evidence that also supports your gut feeling. Evidence might include the following:
- The sponsor’s claim of high returns on investment matches the hard data.
- The sponsor’s claim about new deals on investment properties is evidenced with a presentation or portfolio.
Also remember that trust can be broken, as well as continually established. Keep in mind that accredited investors will want to continually do a gut check when working with any investment firm. Trust is important at any of the stages in the process of successful passive investing. At Worcester Investments, we believe you’ll find trust right away. When you schedule a call with our Investor Success team, you will notice our commitment to communication. We’ll tell you our entire philosophy of passive investing. We’ll tell you about great deals coming down the pipeline. Additionally, we’ll be able to share our historically-high returns on investment. As an accredited investor, we want you to feel confident about your work with us. We want you to see that Kansas City real estate offers prime opportunities, and that these can be accomplished with our firm.
Recap: Why Does Track Record Matter in Passive Investing
Along with trust, you should also ensure that a firm’s track record is sound. Trying to determine the track record of a multifamily investment company involves developing a relationship. When you meet with a sponsor, you want to be able to feel comfortable enough to ask them questions. Specifically, you will want to get into their past, present, and even future performance.
For example, at Worcester Investments, we can show you our pre-closing projections. Then, we can show you how our investment properties performed. You’ll get a sense of our effectiveness at making profitable deals in Kansas City real estate. We also ensure that our deals are smart and effective. Our portfolio, our numbers, and our presentations reveal this to you. Accredited investors come away from our discussions feeling confident. There is a reason for our historically-high returns on investments, and one big aspect is our decision-making. Strong decision-making leads to a solid track record. Watch out for sponsors who can establish trust, but don’t have the evidence to back it up.
Understanding the Third Key: Team – An Important Part of Successful Passive Investing
While trust and track record matter, these limit you to understanding the past of a firm, not necessarily the present. The team you are meeting will handle deals going forward. When you have a sense of trust and track record, and the results are favorable, it’s likely that the team operated well, too. However, you are entering into the fund in the present. You want to be sure that the team that is making deals continues to be strong. A multifamily investment company can only remain strong with new deals. In Kansas City real estate, investment properties are waiting for the right firm to take them on. High returns on investment are a possibility for accredited investors. Passive investing takes continued effort, and momentum counts. But how a team is operating now is a good indicator of how it will operate in the future.
At this stage, you may meet several members of the team. You’ll meet those who are making the deals, and those who are underwriting them. You can ask the following questions about your team to get a sense of how they operate during times of high-levels of success. You can ask about how they handle adversity as well. It is important to remember that a team can experience setbacks no matter what the track record has been. You want to know how a team handles setbacks, as well as success.
Key Questions You Can Ask a Sponsor for Passive Investing
Here are some key questions you can ask of the multifamily investment company’s team.
- What is your investment philosophy?
- Can you describe how your team works together?
- Who is the finger pointed at in times of adversity?
- Who is managing the investment property? Is it a third-party or self-managed?
This last question brings up a point we want to ensure we focus on in particular. In this next section, we’ll take a deep dive into the importance of a team and its relationship with property management.
The Importance of the Passive Investing Team in Investment Management
It may be best to illustrate the concept of how a team manages its properties by describing how it’s done at our firm. At our multifamily investment company, our Kansas City real estate assets are all self-managed. We believe that keeping these properties in-house leads to success. In fact, it is a primary reason for our historically-high returns on investment. When accredited investors find out that our investment properties are managed under the Worcester Investment umbrella, they are relieved. The reason for this is that we don’t have the additional fees and voices in the room from third-parties. We can get a deal going fast, and our process of repositioning is expedited. We don’t have to wait for outside parties. We don’t rely on them in the same way as third-party-managed properties do. This leads to success in passive investing.
The general idea here is that you want to seek out a firm that is a comprehensive team. From deal making, to underwriting, to property management, this is important. When additional middlemen enter the picture, fees are higher, and the investment can suffer. Also, deals can be moved along quickly when key relationships are already in place. Therefore, make sure you ask the questions about the team’s management philosophy. Teamwork isn’t necessarily about company culture. It’s about how a team is organized for your financial interests.