How to Maximize Multifamily Syndication Investing Success
GP How-tos
Bottom Line: Relationships > Assets
When it comes to multifamily syndication investing, there’s more to success than simply generating returns on your assets. Remember, as a GP, your investors are more likely investing in you rather than the multifamily deal itself. It’s important that you demonstrate value to your investors to build confidence, grow trust, and create opportunities for both your firm and the investor.
The reasons for this are clear: investors that have rock-solid confidence and trust in their GP partners are more likely to invest in future deals — and with multifamily syndication deals on the rise thanks to their profitability and resilience, it’s critical that relationship-building takes priority. This enables you to grow your firm while also empowering that investor to achieve their financial goals in working with you.
Whether you’re new to multifamily syndication asset management or already have a number of multifamily assets under management, it’s worth revisiting core steps that should be taken in order to build that trust with investors and put your firm in the best possible position for growth and success. We’ll take the approach of a deal starting from scratch and what should be done in order to maximize value for your multifamily investors.
Steps to Maximize Success in Multifamily Syndication Investing
- Set up the asset according to the deal terms — Multifamily syndication investing can take a number of forms, but what matters most here is that you have a system in place that allows you to manage the syndication (along with the broader capital stack) to ensure nothing slips through the cracks and all terms of the deal are tracked. Consider platforms that allow you to build and manage complex deals, particularly syndications and those with waterfall structures.
- Gather all investor information — Depending on the asset, you could be coordinating with a large number of investors. While you could use a CRM for communications, how much better would it be if investors’ information was tied to an asset, all related accounts, documentation, and more in an actual system designed for commercial real estate firms? Look for solutions that integrate all of these into a single platform so you can engage with investors meaningfully from a single tool.
- Market the property and get commitments — As you reach out to syndicate members and other parties for funding to purchase the asset, two things become critical. First, it’s important to market the deal in the best light possible. Second, you need to be able to gauge investor interest. Explore technology solutions that allow you to seamlessly market new deals with your investor base while also measuring their engagement and level of commitment. This will allow you to prioritize your time in the best possible places.
- Gather investor accounts for distributions — As you collect funds and begin to make distributions to investors post-close, you’ll definitely want a consolidated solution for issuing payments and making related transactions. Tools that allow you to manage funds tied to assets (as opposed to regular bank accounts) and be able to track/filter those transactions later will be extremely helpful. Your team won’t have to manage countless accounts for multiple investors, which creates risk. Instead, they’ll be able to issue distributions and other payments in a matter of clicks.
- Centralize all asset documentation — Every asset is bound to have a wealth of documentation, financial reports, and other resources tied to it that need to be available to investors. Rather than your team shouldering this administrative burden, consider using a solution that brings all of this together in one place, ties it to assets/investors, and otherwise makes it more readily available. The time savings for your team will be significant.
- Generate reports — As time passes and you firm generates revenue from the multifamily asset, it’ll be important to keep investors informed on how the asset itself is doing and how their individual investments have been performing. Again, doing this manually is tedious, and you might have a large number of investors to do this for on a regular basis. Using a platform that provides this analysis on the schedule you set will go a long way in keeping investors informed and your team free from administrative burdens.
- Analyze investors for future opportunities — As with many other industries, commercial real estate is currently experiencing a rise in AI capabilities. As you research tools that help you integrate this technology into your firm, consider how it can add value for your future operations. As an example, being able to analyze investors and their past investments will help you prioritize them for future opportunities. Consider tools that enable you to do this proactively.
Set Your Next Multifamily Syndication Investing Opportunity Up for Success with Covercy
As the first real estate syndication platform where banking meets investment management, Covercy combines everything GPs need to maximize multifamily syndication investing into a single platform. With capabilities spanning fundraising, capital calls, investor management, reporting, distributions, payments, and much more, everything you need to make your firm more efficient — and your investors satisfied — is at your fingertips.
