For many people, investing in multifamily properties is a great option for achieving better cash flow and returns. Beyond that, people are also looking at multifamily investing to secure an extra source of passive income. What most people don’t know, however, is that it’s highly important to be an active syndicator; one who takes action and manages every aspect of the investment.
Come to think of it, forming multifamily syndications would still require a lot of hard work. I have already closed 26 syndications. And I will tell you right away that you need to oversee every detail of your operation. This ensures that your investments are properly generating income and guarantees investors that they’re getting their share of the equity.
If you think being an active syndicator is difficult, I am here to tell you that it’s not. You only need to know the simple steps in taking a more active role in managing your properties.
1. Form a solid management team
Your management team is crucial to the success of your multifamily syndication. At most times, you would want to manage the property yourself, so it’s important to have the right people on board to help you in this aspect. It’s also important to find the right property management companies that won’t charge you much for repairs and maintenance and won’t spend your money recklessly.
2. Ask the right questions
When I started my multifamily syndication company, we weren’t able to find property managers who are trustworthy. In fact, we have had a bad experience with a property management company that spent money like crazy! It was not until we were receiving negative cash flow that we had to step in and investigate.
Don’t wait for your revenue to go downhill in order to take action. You will need to talk to your property managers every two weeks or so and ask them about how much they spent for repairs, how much rent they collected, and other questions that give you a good view of your cash flow performance. You can also ask them to prepare weekly and quarterly reports that contain a lot of details.
3. Visit the property
Another great way to actively take part in the management of your multifamily assets is when you visit the properties and meet with tenants (or residents, as we would like to call them in my company, The Moneil Investing Group).
You can do this every week, or every month, as long as you have enough time to actually go over to these assets and see how it has performed since acquiring them. This also gives you the opportunity to validate the reports prepared by your property managers.
It’s always important to remember that multifamily syndications are anchored on trust. You need to show your investors that the money they have placed on the assets is properly spent.
So, feel free to review the books and documents, and talk to your people on the ground so you can have full control of what’s happening throughout.