No two-investment summaries are the same. Some will be a beautiful display of professional pictures, charts and graphs that expand 10-20 pages or more of information, while others will be a one-page summary of the offering with more information available upon request. Whatever you do, don’t allow the beauty of an investment summary camouflage what’s hidden within and be the determining factor of whether it is an opportunity worth diving into or not.

It is important to know what your investment goals are. You should have a predetermined set of guidelines and non-negotiable screening items laid out prior to reviewing any investment summary. This will keep you from being sucked into a deal that doesn’t meet your investment criteria. Even though every investment summary is different, there are some basic elements that are pretty common across all multifamily real estate syndication investment summaries:

• Project name (often the name of the apartment complex)

• Photos of the property and area

• Overview of the submarket

•Overview of the deal

• Details of the business plan

• Projected returns and exit strategies

• Detailed numbers and analyses

• Team bios

Let’s take a look at a sample one-page investment summary so you can see what I look for at first glance.

Here are the things that I notice at first glance:

Off market

When an asset is acquired off-market, it means that the seller chose not to list the asset publicly. Maybe the seller didn’t want the tenants to know that the building was being sold (this is quite common). Maybe the seller needed to sell within a set timeline. Or maybe the seller already had a buyer in mind.

Regardless, off-market is almost always a good thing. This means the deal sponsor team did not have to compete with other potential buyers on price. There’s a good chance that the purchase price is low, or at least very reasonable.

Value Add

A value-add investment is an asset that presents an opportunity to add value in some way. Maybe the rents are significantly below market rates because the previous owner hasn’t raised rents in 10 years. Maybe the kitchens are still from the ‘90s and could use some updating. Maybe there’s an opportunity to add some brand new additional units. Value-add means more control is in the hands of the deal sponsor team. Rather than relying solely on market appreciation, there are things they can do to create additional equity, even if the market stagnates.

Because there’s a chance to add value and improve the living conditions, as well as the returns for the investors, this is a true value-add. The team will go in, complete the renovations, and then rent out the updated units for $1,200 per month.

When you add up the $200 per month increases across all 250 units. That creates a ton of additional equity in the building, not to mention a ton of value for the residents who live there. Once residents see the updated spaces, they’re often happy to pay the higher rents and start to take more pride in their community.

Track Record of the Sponsor

They say here that they have done this before and are currently in the trenches with another asset nearby. I also see, that they’ve started implementing their business plan at Beta Apartments and that they’re surpassing their original projections. This tells me that their business plan is working and that they would likely be able to continue to strengthen their track record through Omega Apartments.

The fact that this is an off-market deal tells me that they’ve likely built up a strong reputation in the area, amongst brokers, property managers, and other apartment owners. Otherwise, they wouldn’t have been awarded this off-market deal.

Strong Submarket

I notice that this deal is in the “#1 fastest growing” submarket. I would then go to Google and research the market as well as the neighborhood the property is. Much of this will be in the full investment summary, but I always like to do a little research on my own as well.

Proven Model

According to the summary, ten units have already been updated and are achieving rent premiums of $150. This tells me that the rent increase following the value add is not only possible, but probable. Very good news!

Equity Multiple

In this case, the projected equity multiple is 2.1x. This means that during the life of this project, my money will be more than doubled. Therefore, for a $100,000 investment, I will receive $210,000 over the life of the investment. I typically look for an equity multiple of 2X. This one passes the test!

Unit Count

Because this deal has 205 units, means that the team would be able to take advantage of economies of scale (i.e., increasing efficiencies by leveraging shared resources across the many units). I will typically look at anything above 50 units. Ideally, to maximize economies of scale, I like to see over 100 units. It’s important to me that third-party professional property management manages the properties I invest in. You need a unit mix of close to 100 units to maximize the expense of on-site property management.

Next Steps

If I like what I see, I’ll request a copy of the full offering summary. In the mean time, I’ll do my research on the market, sponsors, etc. to insure that no red flags appear.

Once you are comfortable with an opportunity, it is important to jump fast! If it is a good deal, they go fast and are awarded on a first come, first serve basis. Be ready to make a soft commitment to reserve your spot. There is no shame in back out of a deal prior to signing the Offering Memorandum and wiring your funds should a red flag come up during that time. No question is a stupid question, so get all the answers you need to make an educated decision and then get in the deal!

👉Next: The Step-by-Step Process of a Syndicated Investment