Choosing a singular real estate syndication deal out of the bouquet of investment opportunities at your fingertips is no small feat. Attending an investor webinar during your evaluation process can be one of the smartest moves on your part, giving you insight as to whether the deal will be successful or a flop.
In this Ultimate Guide to Investor Webinars, you’ll find out what to expect, why webinars are valuable toward your investment decision, when they take place, and questions you should ask.
What Is an Investor Webinar?
First thing’s first. What on Earth is an Investor Webinar?
It’s a conference call-style presentation where members of the sponsor team talk through the investment summary. They may discuss the deal structure, business plan, market comps, and highlight their own successful track record.
The thing to remember here is that not all opportunities offer an Investor Webinar and whether or not one is offered is no indication of how the deal might pan out. Opportunities without a webinar offered aren’t automatically duds, and opportunities with a webinar aren’t automatically home runs.
Webinars can be held over Zoom or Google Hangouts, may be recorded, and may be hosted by a panel or a single person. Typically sponsors want to host webinars so investors have an opportunity to “meet” and get comfortable in the partnership. It’s during the Investor Webinar that 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 So Valuable
Whether you’re an investing newbie or you’ve invested with this same sponsor multiple 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 property, where they believe the opportunity is, and what challenges they expect to face.
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.
The Investor webinars are almost always recorded and then emailed out to interested investors, so it’s not critical for you to attend, but you will miss the opportunity to ask your questions live.
An investment opportunity often fills up shortly after the investor webinar since many investors rely on the webinar event as the final indicator in their decision-making process. Since most opportunities are first-come, first-served basis, make sure to watch the recorded webinar ASAP if you don’t attend live.
Investor Webinar Questions to Ask
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 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
It takes guts 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. We will have a catch-up on the preferred returns and anticipate that the preferred return will be shored up by the 18-month mark. In addition, remember, we don’t get paid on asset management fees until the asset is generating returns above eight percent. This ensures our interests are aligned with our investors.”
Wow. Although 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 within the first six months and why quarterly distributions are a good idea. I can already feel their integrity seeping through the screen, can’t you?
Other example questions whose printed answers are in the investment summary, but you may want to ask to get more perspective:
What are the acquisition and asset management fees? 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 toss around theoretical scenarios, doomsday events, and natural disaster curveballs. Probably the sponsor’s favorites, right? Ha ha.
These types of questions ensure the team has thought through multiple potential outcomes, exit strategies, and backup plans “just in case”.
Some examples of What If Questions include: What if we the property went into foreclosure? What if we hit a downturn?
What if the vacancy rate hits 25%? What if renovations take longer?
# 3 – Why ?
I’m going to give you a pass here to pretend you’re in pre-school again and you get to tug on mom or dad’s pant leg asking why incessantly.
Asking why allows you to approach the investment opportunity with wonder and curiosity. Maybe you understand the concept of hold time and you see it’s 5 years, according to the investment summary. But why five years? Why not 6 or 4? Is it just 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 appreciation and distribution frequency. A good sponsor team will exhibit patience and confidence, whereas any sign of defensiveness should be a red flag to investors.
Some great Why example questions are:
Why is the exit cap rate projected to be 6.5%?
Why is the first-year return significantly lower than those following? Why is the plan to only renovate 75% of the units?
#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 or the asset class that’s not included in the investment summary.
The Investor Webinar is a great place to share this information in an attempt 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 potential 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. Have you found that to be true in the property improvement records? And if so, what’s the plan to replace it?
#5 – Logistics & coordination details, please.
Maybe the property is in a great submarket, your due-diligence research turned up great results, and the investment summary looks great, but you’re needing details about how, what, when, and where.
You’re wanting to know how you’ll receive distribution checks, when the PPM (private placement memorandum) will be available, and when you’ll receive periodic communication about the progress on the asset.
Remember, it’s not the actual answer that counts as much, but HOW they answer it. Some great logistics questions may be:
When is the target close 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, either because your concern was addressed in the presentation or because another investor beat you to the punch. Either way, you can cross those off with satisfaction and ask the rest.
Summary
No matter if you attend just to listen or with the intention of getting several tough questions answered, you’ll likely glean loads of insight just from attending the call.
During your next evaluation process, keep in mind these 5 most commonly asked question types:
- Questions about things already in the investment summary
- Questions that ask what if
- Questions that ask why
- Questions about things from your own research
- Questions about logistics
This common phrase rings true – There are no dumb questions. Your questions are especially valid considering the large amount of money you’re deciding to invest based on how the sponsors made you feel when presenting and answering your questions.
