Let’s take a stroll down memory lane for a minute. How did you hear about real estate syndications? What piqued your interest about real estate syndications? Most likely, it was the potential to put your hard-earned money to work for you to create a steady return and grow your wealth over time.
We know because the questions we get the most from potential investors considering investing in a real estate syndication with us revolve around returns, stability, and preserving capital. They want to know, if they were to invest $100,000, how much money they could stand to make.
And believe us, we love good returns, and helping investors like you achieve great returns is a big part of why we do what we do. However, while returns are certainly important, there’s an even more important aspect that we focus on when evaluating potential deals - something that’s been impressed upon us by generations of Colombians.
We’ll give you a hint. It’s not nearly as exciting as passive income and double-digit returns. In fact, it’s even more boring than taxes and K-1’s.
The most important thing we focus on in a real estate syndication is capital preservation. In other words, we focus on making sure that the deal has multiple plans in place to protect from any loss of investor capital. Our number one priority is to preserve the wealth invested, as boring as that might sound.
Why It’s Important to Talk About Capital Preservation
Sure, capital preservation isn’t the most exciting part of investing in real estate syndications, but it is one of the most critical pieces. Real estate is well-known as a safer, tangible investment, so let’s keep it that way!
It’s easy to just focus on flashy things like cash flow returns, potential earnings, and brightly colored marketing packages, but when an unexpected situation arises, you’ll be thankful (for this article and) for a sponsor team that gives capital preservation the attention it deserves.
Capital preservation is all about mitigating risk, and as Warren Buffett puts it, there are two rules to investing:
No matter what you invest in or who you invest with, you should know what to ask and what to look for so you can invest confidently with a team that holds your best interest.
5 Capital Preservations Pillars
At the core of every investment in which we participate, capital preservation is our number one priority. As an investor, you expect to invest your hard-earned money with confidence, and while there’s risk in all investments, we as syndicators pledge to do everything possible so your capital is secure. There are 5 building blocks that make up our capital preservation strategy.
1 – Raise money to cover capital expenditures up front
2 – Purchase cash-flowing properties
3 – Stress test every investment
4 – Have multiple exit strategies in place
5 – Put together an experienced team that values capital preservation
Conclusion
While capital preservation may not be very exciting, it certainly is one of the most critical building blocks of a solid deal. Every decision and initiative by the sponsor/operator team should be rooted in mitigating risk and preserving investor capital so that you can live your vibrant life and celebrate your financial freedom with confidence.
The five capital preservation pillars used in real estate syndication deals we do include:
Raise money to cover capital expenditures upfront
Purchase cash-flowing properties
Stress test every investment
Have multiple exit strategies in place
Put together an experienced team that values capital preservation
By putting these five pillars in place, we minimize risk as much as possible and ensure that every decision we make around the property stems from making sure that we are protecting your money, first and foremost.
So if you’re interested in seeing more data on actual deals and gaining access to upcoming opportunities, you’re invited to join the [Fincapital Investor Club]. We’d love to walk you through our experiences and share more about our wealth-preservation strategies using past syndication investments as examples. It’s important to us that we answer all your questions, giving you the confidence to invest alongside us!
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