Investing Passively In Real Estate Syndications have become an attractive avenue for passive investors, including busy sales professionals, by offering the potential for lucrative returns without the hassle of direct property management. However, for sales professionals looking to diversify their portfolios, here are three common mistakes that can lead to costly errors and missed opportunities:

1. Over Reliance on Influence:

One of the most significant pitfalls for sales professionals is succumbing to the allure of a charismatic syndicator. It’s all too easy to fall into the trap of hastily investing a substantial sum of money (many months worth of commission checks) into a deal simply because an influencer syndicator sounded convincing in a YouTube video. Sales professionals, driven by their goal-oriented nature, may be particularly susceptible to this mistake. Their inclination to achieve results quickly can override the need for proper due diligence and thorough analysis. Sales executives must recognize their personality weaknesses in attention to detail and propensity for goal attainment over relationship-building. Understanding these tendencies is crucial in avoiding impulsive investments based solely on surface-level presentations. Instead, you should take the time to scrutinize potential deals, thoroughly vetting syndicators and their track records. 

2. Insufficient Due Diligence on General Partners:

Another common misstep is the failure to adequately vet the general partners (GPs) managing the real estate investment syndication. Despite their skill in building relationships with clients, sales professionals may overlook the importance of conducting thorough background checks on the GPs. This oversight can lead to entrusting funds with inexperienced or unscrupulous individuals. 

Sales professionals should also prioritize obtaining investor references and actively following up on them like they would a target lead in their sales funnel. Additionally, they must familiarize themselves with the deal’s financial waterfall structure and understand how returns are distributed to limited partners. Relying solely on “gut instincts” when assessing GPs is risky; instead, one should ask probing questions during interviews and rely on data-driven assessments and track record.

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By Andrew Keel

3. Lack of Monitoring and Analysis:

Lastly, sales professionals often neglect to monitor the performance of their real estate syndication investments adequately. They may fail to maintain accurate financial records or overlook the importance of reviewing quarterly reports. Without proper tracking mechanisms in place, they risk missing crucial insights into the success or failure of their investments. 

To avoid this mistake, sales executives must prioritize maintaining thorough financial records and regularly reviewing performance metrics. This includes diligently reading quarterly reports and actively seeking clarification on any discrepancies with distributions. By staying informed about the progress of their investments, sales professionals throughout corporate America can make more informed decisions about whether to stay the course or exit underperforming real estate investment syndication deals. 

Conclusion

Sales professionals investing passively In Real Estate Syndications must be vigilant in avoiding these three common mistakes. By resisting the temptation of quick-fix investments, conducting thorough due diligence on general partners (deal sponsors), and maintaining diligent monitoring practices, sales professionals can mitigate risks and maximize their chances of success in this lucrative investment avenue. One recommendation would be to join a team of passive investors, like the Left Field Investors group to get better educated on real estate syndication investing prior to taking the leap into these alternative investment options. 

At Keel Team Mobile Home Park Investments, our commitment extends beyond mere investment. We strive to improve the quality of life in our mobile home communities while simultaneously delivering substantial returns to our limited partner investors. For more information on our investment strategy or to learn more, please feel free to contact us using the provided details below.

Disclaimer:

The information provided is for informational purposes only and should not be considered investment advice, nor a guarantee of any kind. There are no guarantees of profitability, and all investment decisions should be made based on individual research and consultation with registered financial and legal professionals. We are not registered financial or legal professionals and do not provide personalized investment recommendations