What To Expect After You Invest In a Real Estate Syndication
Woohoo!! You did it! You have successfully chosen an opportunity, taken action and made an investment as a passive, limited partner in an apartment syndication. Now what? Every syndication is different, but here are some of the things you can expect from the Key Stream Capital team when you invest alongside us.
Typical Real Estate Syndication Communications and Touchpoints
There are 4 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:
- Progress updates – monthly
- Cash flow distributions – either quarterly
- Financial reports – quarterly
- Schedule K-1 – annually
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:
- Progress updates – monthly
- Cash flow distributions – either monthly or quarterly
- Financial reports – quarterly
- Schedule K-1 – annually
These key communications help keep you in the loop throughout the lifecycle of your real estate syndication investment. If you have any questions, you can always contact us via email, phone or text.
Do you want to invest with us? Check out our invest with us application and join our free Key Stream Capital Investor Club. We can set up a quick call and see if we are a good fit.