Multifamily Investment Sponsor Characteristics and Considerations

If you are developing equity for a project, the points raised in the partner considerations should guide how you assemble the equity. Providing the prospective partners this information and the described structure is critical for the outside investor to agree to place cash with your project. (Note: in all cases, investors should be qualified accredited investors.)

After seeing to these considerations, your investment is likely to come from:

- Personal cash,
- Friends and family,
- Other individuals

However, if your network of contacts allows, consider:

- Investment funds,
- Angel Groups,
- Doctors and Lawyers,
- Institutional sources, and
- Businesses (especially likely potential partners)

Also, developing a group that will steadily expose groups or individuals to your project is a critical component to developing the needed investors. The success of your projects and the effective management and operation of those projects from the investors’ perspective is a major factor in growing your investor potential if you intend to expand beyond your initial project.

However, when considering investors, I would advise that spending more time developing a plan that will support and attract larger investors is a better use of time than rushing to complete the investment with a large number of not especially well resourced investors.

Next, taking the time to develop a few very significant investors that can not only fund the project, but if necessary can provide additional funds if they are deemed necessary is one of the very most useful activities the project lead can take.

Having completed and addressed the above items, developing a prospective investor into an investor requires achieving several items:

- Showing the investor a thorough and reasonable plan,
- Providing evidence of the physical and management resources to complete the plan,
- Providing evidence of the financial resources to complete the plan,
- Developing the trust and confidence of the investor.

The first three of these are really basic performance level items. The last, developing the trust and confidence of the investor requires spending enough time and effort with the investor for them to develop a relationship between you and them. For the investor, the likely success or failure of a project will come down to not only performance, but communications, openness and trust with the project lead.