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The 7 Keys to Passive Investing Pt. 7: Terms

Finally, Look at Numbers with Your Multifamily Investment Company

We are now at the final key to passive investing: terms. At this point, the following has hopefully occurred for you as an accredited investor:

  1. Trust: You’ve established trust with a multifamily investment company.
  2. Track Record: You’ve studied the evidence behind the sponsor’s claims.
  3. Transparency: The firm is accessible and accountable.
  4. Team: They manage all aspects of their investment properties.
  5. Type: The deal is positioned at a risk-level you’re comfortable with.
  6. Thesis: The narrative of the deal is logical and clear to you, all the way through.

If you’ve made it this far with a sponsor, congratulations to both you and the sponsor you’re working with. It is rare to find an excellent multifamily investment company that can fulfill all of these priorities. It is even rarer to find one that can offer historically-high returns on investment. At Worcester Investments, we pride ourselves on being one such company. As leaders in Kansas City real estate, we’ve put in the work to benefit our investors. We’ve built our investment firm on all of the aforementioned keys, including this last one: terms.

Understanding the Final Key to Passive Investing: Terms

According to Jesse Worcester, Co-Founder and Partner of Worcester Investments, this key is all about “alignment.” Worcester explains one of the ways you can identify whether you are aligned with a sponsor. He states that if the accredited investor receives the return before the sponsor, that is alignment. Therefore, it can be said that aligning with a multifamily investment company is about how they privilege your success.

At Worcester Investments, we offer the first 8% of returns to our accredited investors. When you invest in our Kansas City real estate fund, returns are possible from our investment properties. Offering historically-high returns on investment is always our aim, and we want to be sure our investors experience them first. Therefore, Worcester Investments is aligned with your interests, because your interests should come first. This is part of what we mean by beneficial terms, our seventh key to passive investing.

Further Understanding of the Final Key to Passive Investing

As we have done with the previous six keys, a list of questions should prove helpful to any accredited investor. Through these questions, we can elaborate on acceptable terms when working with a multifamily investment company. While alignment is the overarching theme, there are specifics we will explore.

The following questions will prove useful when determining whether to work with a given sponsor for passive investing:

  1. Do the numbers match the business plan or thesis?
  2. What is the likelihood of the fund performing better than planned?
  3. How aggressive are the terms? Are they beneficial to you first?
  4. Are the fees structured to cover costs and break-even?
  5. Is the sponsor profiting because of a fee or because of the investment?
  6. How aligned are the sponsor and the investors?

Evaluating the terms of a deal is essential to success. Whenever you’re seeking a sponsor to invest in a Kansas City real estate fund – or anywhere – use these questions. They will help you ensure that what you’ve been told will happen is identified very clearly, and the numbers bear it out. You should feel exceptionally confident about this sponsor’s deals related to investment properties.

Additionally, you are vetting the sponsor to understand how they profit, and how that relates to you. It’s almost as if you are evaluating trust and transparency again at a deeper level. That is why we began with these two keys to passive investing. Trust and clarity are very important in passive investing. We’ve found that these values lead to success. With the final key – terms – you get to put trust and transparency to a deeper test. If the sponsor passes this test, potentially-high returns on investment are possible.

Elaboration on Key Questions About Terms for Success in Passive Investing

We hope that our multifamily investment company has provided strong recommendations. As we’ve done with past articles, we can elaborate on questions about the seventh key. This will help experienced and inexperienced accredited investors understand this final step. Once you feel secure about this key, you can finally move forward with a sponsor. You will hopefully benefit from their investment properties. You will also be poised for potentially-high returns on investment. When you work with Worcester Investments and our Kansas City real estate fund, this is our goal for you as well.

Here are some points to consider as you take this final step toward passive investing:

  • It is important to understand the investment firm’s fee structure. You want to be sure the sponsor is utilizing their fees to cover their costs, not to profit. The sponsor and accredited investor should both be profiting from returns.
  • Also, make sure to ask your multifamily investment company if the numbers and underwriting all match the claims made during your meetings. The numbers that are discussed should be parallel, no matter which team member you’re speaking with.
  • Find out if there is a projection for even higher returns on investment than planned. This is always good to know as it shows the firm is putting energy into their investment on your behalf.
  • Lastly, stick with a multifamily investment company with aggressive terms. For example, at Worcester Investments, our accredited investors receive significant benefits in the Kansas City real estate market. We will cover these in our final section.

The Worcester Advantage: Why We’re Leaders in Passive Investing

Now that we’ve covered our seven keys, we want to explain the terms that make our multifamily investment company special. We offer terms that accredited investors will appreciate. We are aligned with our investors. That’s why we work hard to ensure we make great deals in the Kansas City real estate market. We want our investment properties to work for those interested in passive investing. We want you to realize the potential high returns investment that we’ve seen in the past.

Here is an overview of how our accredited investors benefit:

  • A 0% management fee – we’ve removed the middlemen.
  • An 8% preferred return – our investors see returns first.
  • Monthly distributions for our accredited investors.
  • A 9-12% targeted return on investment

Ready to put the seven keys into action with Worcester Investments? Learn more about our multifamily investment company’s investment properties in Kansas City real estate. Find out about the historically-high returns on investment that could potentially await our accredited investors. Connect with our Investor Success team today. Get in touch with us here, or call us at 816-759-0901 to schedule an appointment. We look forward to connecting with you!