What to Expect After You Invest In A Real Estate Syndication

Have you ever heard about or explored the opportunity to sponsor a child through a non-profit program such as Children International? Contributions through these organizations change children’s lives exponentially in areas of health, education, and even safety.


As you may know, when you choose to help a child through such programs, you receive updates about the child regularly, including notes they’ve written and even pictures of them. You get to have a supportive hand in their growth from afar while never having to enforce a bedtime or wash the ice cream off the child’s shirt.


Investing in a real estate syndication is very similar in this aspect. As a passive investor, you would receive regular updates on the progress of the project after the deal closes, but you don’t have to field phone calls from tenants when an issue arises.


Typical Real Estate Syndication Communications and Touchpoints


There are 5 key communications you should receive at important intervals once you invest in a real estate syndication. From the closing date, through the hold period, until the asset sale, here’s what to look for:


  • Investor Guide – upon closing

  • Progress updates – monthly

  • Cash flow distributions – either monthly or quarterly

  • Financial reports – quarterly

  • Schedule K-1 – annually


Upon Closing


Upon the close of a real estate syndication deal, you should expect an email notification letting you know that we have closed on the property. Included in that same package should be an Investor Guide, which will provide an overview of what to expect in the following months/years and answer some frequently asked questions, including questions about cash flow distributions and taxes.


Monthly


Each month thereafter, you should expect an email update on the progress of the real estate syndication project. Depending on the deal’s structure, you may receive monthly or quarterly cash flow distributions.


The monthly email will likely contain current occupancy rates, the number of renovated units, whether progress is in line with the business plan, and, occasionally, some photos of the latest progress.


Here’s an example:


Example Monthly Progress Update Email

On-site, things continue to go well at XYZ Apartments as we execute our business plan.


Here are some specific property updates:

  • Current occupancy is 90.8% and preleased occupancy is 92.6%

  • We’ve renovated a total of 11 units since acquiring XYZ Apartments and another 28 units are in the process of being renovated

  • We’re continuing to achieve our projected rents on all renovated units

Capital improvement projects:

  • Building repairs: the carpentry, siding, and trim repair projects are completed

  • Exterior paint: the prep for 8 buildings is in progress

  • Dumpster enclosures: in progress

  • Parking lot: repairs are completed and restriping will be scheduled

  • Water conservation project: completed


As you can see, the monthly emails are mostly anecdotal and include a quick, high-level overview of multiple initiatives occurring at the property. More details are provided in quarterly financial reports.


Quarterly


Each quarter, or every 3 months after investing in a real estate syndication, you should expect to receive a detailed financial report. This report is much more detailed than the monthly emails and typically include information on the rent roll, profit and loss statements, and additional metrics on exactly how the asset is doing.


While the quarterly reports might not be the most fun thing to look at, especially if you’re not a spreadsheets nerd, but you should definitely take a closer look. Even a quick flip through the pages will provide you great insight as to the ongoing progress on site and the overall performance of your investment.


Annually


Each year during tax season, you should be on the lookout for a Schedule K-1. This tax document gets issued for partnership-type investments, like real estate syndications, and reports your share of the income, deductions, and credits.

A separate K-1 is issued for every investor in the deal and is typically available around the same time as 1099s, serving a similar purpose for tax reporting.


Recap


Your active participation in a real estate syndication is complete once you’ve reviewed the investment summary, signed the PPM (private placement memorandum), and sent in your funds.


Once all investor funds have been submitted and the deal closes, the sponsor team begins executing the business plan through renovations, property improvements, and increasing rent and occupation rates among other things.


From closing through sale, you can expect the following:

  • Investor Guide – upon closing

  • Progress updates – monthly

  • Cash flow distributions – either monthly or quarterly

  • Financial reports – quarterly

  • Schedule K-1 – annually

Similar to how a child’s sponsor receives regular updates about their life from afar, these key communications help keep you in the loop throughout the lifecycle of your real estate syndication investment.


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Under no circumstances should any material at this site be used or considered as an offer to sell or a solicitation of any offer to buy an interest in any investment. Any such offer or solicitation will be made only by means of the Confidential Private Offering Memorandum relating to the particular investment. Access to information about the investments are limited to investors who either qualify as accredited investors within the meaning of the Securities Act of 1933, as amended, or those investors who generally are sophisticated in financial matters, such that they are capable of evaluating the merits and risks of prospective investments. You should always consult certified professionals before making decisions regarding your individual financial situation. Josh Plave is not a financial or tax professional, and Wall to Main is not a brokerage, dealer, or SEC-registered investment advisory firm.