Choosing one real estate syndication deal to invest in out of several of them being offered at the same time can be daunting. But attending an investor webinar during your evaluation process can give you insight on whether the deal is likely to be a success or a bust.
In this article, you’ll find out what to expect, why webinars are valuable toward your investment decision, when they take place, and what questions you might ask.
What’s an Investor Webinar?
Let’s start things off by answering the question, “what in the world is an
investor webinar?”
An investor webinar is a conference call-style presentation where members of a syndication deal’s sponsor team talk through the investment summary. They may discuss the deal structure, business plan, market comps, and highlight their own successful track record.
An important note here is that not all opportunities offer an investor webinar, and if a particular deal does, it’s not an indication of whether the deal will be successful or not. Opportunities without a webinar offered aren’t automatically duds, and opportunities with a webinar aren’t automatically winners.
Webinars can be held over Zoom, GoTo Meeting, or similar software, they might be recorded, and they might be hosted by a panel or a single person. They can even be live in person, but those are less common these days because of modern videoconferencing.
Typically, sponsors want to host webinars so investors have an opportunity to “meet” and get comfortable in the partnership. During the investor webinar, investors get a chance to get to know the team who will be handling the day-to-day operations, communications, and project budget/timeline.
Why Investor Webinars Are Valuable
Whether you’re a new investor or you’ve invested with this same sponsor several times before, attending an investor webinar gives you a chance to hear directly from the sponsors themselves. You get a chance to have a (virtual) face-to-face meeting and learn why they chose this particular property, where they believe the opportunity is, what challenges they expect to face, and how well they’ve thought through the business plan.
This is one of the few times you’ll get to ask them on-the-spot questions and gain understanding and perspective from other investors in attendance, as well as from the sponsor team.
When Investor Webinars Take Place
When a new deal is announced, an investment summary is made available for all potential investors, and then usually the sponsor team will offer a webinar. This usually takes place around the time the sponsors finish due diligence on the property.
The webinars are almost always recorded and emailed out to interested investors. So while it’s not critical for to attend live, you’ll miss the opportunity to ask your questions and get answers live if you watch the recording. Some sponsors may choose to create a pre-recorded webinar instead of having a live one. In that case, they usually have some other way to ask and get answers to your questions.
Many investment opportunities fill up shortly after the investor webinar, since many investors rely on the webinar as the final indicator in their decision-making process. Since most opportunities are first-come, first-served, make sure to watch the recorded webinar ASAP if you don’t attend live.
Related article: How to Review a New Investment Opportunity in Less than 10 Minutes
Investor Webinar FAQ Types
I already mentioned that attending
the investor webinar provides you the opportunity to ask questions directly
to the sponsor team. But what should you ask?
To answer this, we can look at a few commonly asked question types and example questions.
Most questions asked during an investment webinar have to do with things that
are already in the investment summary, what if-type questions, questions that
ask why or why not, questions about investors’ own research findings, and
logistics questions.
#1 – Questions about things that are already in the investment summary
Some people might hesitate to ask a question you know is explicitly answered in the investment summary. But why would you ask something you already know the answer to or could find yourself?
Seeing and hearing HOW the sponsors respond to the question and what they share about their thought process in arriving at that answer is just as important as the technical answer itself.
An example investor question, in this case, might be: “What is the frequency of distributions?”
The investment summary might explicitly read, “Quarterly, starting six months after closing.” But the sponsor might answer something like this:
“Thanks for asking. The distributions will begin six months after closing, and each quarter thereafter. This allows us time to stabilize the property and begin renovations. It also allows us to find out how the market reacts to our first few renovated units, how likely we are to reach our pro forma rents during the first year, and where our actual operating expenses are coming in compared to our budget.”
Big difference, huh? While the straight-forward answer is clearly printed in the investment summary, the sponsors’ answer provided much more detail as to what they plan on doing.
Other example questions where the answers might be in the investment summary, but you may want to ask to get more perspective, include the following:
What is the asset management fee?
Is there an acquisition fee or disposition fee, and if so, how much are they?
What’s the projected hold time?
What’s the renovation budget per unit?
The biggest indicator here is not that they give you the plain answer, but HOW they answer the question and what additional details or insight they provide while answering.
#2 – What if ________?
What-if questions are the ones that discuss theoretical scenarios, rainy day (or even doomsday) events, and potential natural disasters. Just what everyone’s thinking about, right?
These types of questions ensure the team has thought through multiple potential events, exit strategies, and backup plans “just in case.”
Some examples of what-if questions include:
What if we hit an economic downturn?
What if the vacancy rate hits 25%?
What if the interest rates rise?
What if renovations take longer than expected?
# 3 – Why ______?
Here’s a free pass to pretend you’re 5 years old again and get to tug on mom’s or dad’s pant leg asking why incessantly.
Asking why is to approach the investment opportunity with curiosity. Maybe you understand the concept of hold time and you see the investment summary says it’s 5 years. But why five? Why not 7 or 4? Is it simply a default number they select for all their projects? Are they building in a buffer to allow for market fluctuations?
Finding out the reasons why the sponsor team made certain choices or structured the deal a particular way is just as important as the expected cash flow and distribution frequency. A good sponsor team will exhibit patience and confidence; signs of defensiveness should be a red flag to investors.
A few great example why questions are:
Why is the plan to only renovate 50% of the units?
Why is the exit cap rate projected to be 5.25%?
Why is the first-year return significantly lower than the years following?
Related article: What You Should Know About Cap Rates as a Passive Investor
#4 – In your own research you found…
A large component of being a savvy investor is performing your own due diligence. Through this process, you’ll likely uncover some information about the market or the property that isn’t included in the investment summary.
The investor webinar is a great place to share this information to try to contribute to the project and ask the sponsor team what they think about your findings.
Some great research-based webinar questions might be:
I saw there’s a new development planned for across the street from this property. How will that impact the investment?
According to reviews of the property, tenants have complained about poor outdoor lighting. What does the renovation plan include to address these complaints and improve the safety of the community?
From Google Maps, it appears that the roof on one building is much older than the others. Did you find that to be true during due diligence? And if so, what’s the plan to take care of it?
#5 – Logistics & coordination details
Maybe the property is in a great submarket, your due diligence research turned up positive information, and the investment summary looks great, but you’re looking for details about how, what, when, and where.
For example, how you’ll receive distribution checks, when the PPM (private placement memorandum) will be available, and how frequently you’ll receive updates about the progress on the asset.
Remember, it’s not the actual answer that counts as much as HOW they answer it.
Some great logistics questions might be:
When is the target closing date?
Are you investing in this property personally?
What communications should I expect before and after the closing date?
Can I send in a check or are you accepting wires only?
Plan Ahead
Take some time prior to the investor webinar to complete your research and write down questions you have about the deal.
During the webinar, some of your questions may get answered during the presentation or because another investor asked first. Either way, you can cross those off with satisfaction and ask the rest. The point is to get a feel for how the sponsors are answering the questions, and you can do that based on other people’s questions, too.
Summary
No matter if you attend just to listen to the presentation, or with the intention of getting several tough questions answered, you’ll likely glean loads of insight just from attending the webinar.
During your next evaluation process, keep in mind these 5 most commonly asked types of question:
- Questions about things already in the investment summary
- Questions that ask what if
- Questions that ask why
- Questions about things you found in your own research
- Questions about logistics
There are no dumb questions. Your questions are valid, especially considering the large amount of money you’re deciding to invest based on how comfortable the sponsors made you when asking and answering your questions.
Further Reading: 5 Things You Should Do Before Investing in Your First Real Estate Syndication
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