Ah, investment summaries. They’re the all-in-one marketing package / business plan / underwriting explainer / photo gallery / why-you-should-invest-in-this-deal packet for every commercial real estate syndication deal that everyone loves and hates.
Often, when deal sponsors are raising money for their deals, they’ll put together investment summaries to explain to potential investors why the deal is so great, what they plan to do with it, and how much the investors stand to gain from participating in the investment.
Investment summaries are like snowflakes. No two are the same.
Some investment summaries consist of gorgeous graphics and iconography, professional photos, and clear tables. Others are written like textbooks and include haphazard low-resolution phone pictures someone probably threw in at the last minute. Sigh.
But here’s the thing. Regardless of what an investment summary looks like, you have to be able to swallow your initial impressions (good or bad) and look at the numbers and business plan for what they really are.
If you decide to invest because the investment summary looks pretty, you may be putting yourself at risk, if you haven’t done proper due diligence on the deal and the team.
Likewise, if you write off a deal because the investment summary looks like your Aunt Ida’s tax returns from last year and causes your eyes to glaze over, you might be missing out on a great opportunity.
So what exactly should you look for? Good question.
Let’s take a look at a sample investment summary. I’ll walk through my thought process when I first look through an investment summary, so you’ll know what to look for the next time one lands in your inbox.
Please note: For simplicity’s sake, I’m using a one-page executive summary for this example, rather than a full-blown investment summary, which could be dozens of pages long.
Investment Summary At A Glance
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
In a one-page executive summary, you get bits and pieces of each of these elements, though you would need the full investment summary to get all the details.
If this executive summary landed in my inbox, here’s what I would do. I’d start by skimming through the whole thing.
In skimming this executive summary, here are the things that would jump out at me: