David Meilan, Director of Investor Relations at Nighthawk Equity is frequently asked how passive investors can prepare themselves to work with a syndicate.
We asked him to share the first steps that a passive investor needs to take when they're thinking about investing with a syndicate so they can be prepared as possible.
Now, in general, the best thing a prospective investor can do when they're researching a syndicator is just that, conduct thorough research on the syndicator.
Make sure that you know what's going on with your money.
That you know exactly what the investment looks like, as well as the history of the syndicator.
So what's the best way to do that?
The best way to conduct research is to simply book a call.
Hop on the phone with a thorough list of questions that you've compiled.
Those questions can be about anything that you want to know about them.
Some of the best questions we get from our daily intake calls are:
- those about our full-cycle deals
- questions about our underwriting style
- requests for an overview of our business strategies
When we get questions like that we know the investor came into the call prepared, and they're ready to learn more about Nighthawk.
The way these calls typically work is you ask the questions that are important to you and all the answers are shared with you.
They might also follow up by sending you a list of materials. If they don't, go ahead and ask for those.
The materials they give you are important for your next step.
You want to be able to review those materials, the prior offerings from that syndicator, executive summaries, ppms, financials, as well as webinar replays if that is something they provide.
This way you can see exactly what the GP has to say about the deal. Listen to how they talk about the underwriting as well as the market, and the projected returns.
This will give you all of the information you need to know about the investment.
Asking for materials is key.
From there, you will have a further understanding of the syndicator's track record, as well as their business overview as well.
Other than that, perhaps most importantly, after you do all these things, is simply making sure your funds are in a movable position.
What this means is oftentimes when there's very high demand for these deals, they close up very quickly. So if your funds are not in a movable position within a matter of days, it could cause you to miss out on the investment.
What does making sure they're in a movable position mean?
If you're investing through a self-directed IRA, you want to make sure that first of all, the IRA IS self-directed. Oftentimes, it's just an IRA, it's not set up in a self-directed account yet.
That process can take two to three, sometimes upwards of four weeks.
Additionally, many investors come to us saying “Hey, I want to invest using an LLC how can I get started on that?”
You want to get started immediately on setting up that LLC because again, that process can take a couple of weeks.
It's not simple matter of transferring your funds there, you have to go through the legal paperwork of setting up the entity and that can take quite a while.
Other than that a lot of investors have their cash tied up in stocks.
You want to make sure those are liquidated and ready to go by the time the investment process opens up because again, that could take 48-72 hours.
If these things aren't prepared ahead of time, you might miss out on the investment.
This is some general advice on how to approach a new syndicator. Make sure that you're comfortable with them.
As far as Nighthawk Equity goes specifically, what you're going to want to do if you haven't already is to schedule a call at Nighthawkequity.com/join.
You can use those steps outlined above in terms of asking questions to get materials from us.
We are more than happy to send over our materials, ppms, executive summaries financials, and deals that we've done in the past just so you get a good understanding of Nighthawk's track record.
One thing to keep in mind with Nighthawk specifically is that we have a high demand for our deals.
We've had deals close up within 48 hours. We bring investors on, on a first come, first serve basis so there isn't really a hard deadline. It just depends on when we fill up!
If you've done all those steps you should be in a pretty good position to not only be prepared for the syndication but to come in with as much knowledge as possible to make sure that you're making the right investment for yourself.
Don't forget to schedule your call with us before our next deal arrives —> www.NighthawkEquity.com/join