Real estate closing is not a daily thing. Domestic wires, money orders, and powerful check writing can be first-time investors’ milestones. 

Domestic wires are not done with a credit card or personal statement. It is best practice to send domestic transfers directly from your bank account. In a real estate syndication, no one wants to call banks to cancel checks that went missing.

While most homeowners have never sent a real estate investment in their life, many have never sent a significant transaction. 

The transactions vary depending on the overall market and the sense of urgency between brokers and buyers. Some transactions are faster or slower. Generally, the closing time ranges from 30 to 60 days.

Sending a large sum of money is always best done through electronic transfers. You always want to know the process and expected timelines of funding your investment funding. Hence, you are ready and set when the final stage of the closing date is near.

Will I have closing costs or a down payment if I invest in real estate syndication?

The beauty of syndications is that the general partners take care of all the headaches for the passive investor. The closing fees are all part of the business plan. Unlike when buying a new home or single-family investment property, you will not have to speak to any real estate agent, mortgage lender, closing agent, Escrow company, or title company. 

These kinds of real estate transactions require a lot more closing process. All of that is taken care of in syndication by a professional team for you. 

Also, the team will hire multiple professional vendors to do other deep-dive due diligence on the property and the macro and microenvironment of the investment property. 

The team will make sure to use their existing relationships with the real estate broker and the closing attorney to keep the investment compliant and efficient. Hence, it is hands-off for you as a passive investor.

What should you expect from your general partners?

The general partners should ensure they get the best possible deals for the loan amount to avoid higher interest rates than necessary to ensure you have a profitable investment with a sufficient margin for error in case the market shifts. 

On this scale, a real estate purchase comes with a lot of fine print, even for a passive investor. Familiarize yourself with the documents, such as the PPM (Private Placement Memorandum), on pages underlining how you might lose your money with his standard legal language. 

You also have this when you invest in stocks or mutual funds. Usually, those are just conveniently clicked away while proceeding with the online purchase of your investment. 

It is good to get the first margin for error if the market shifts the set of papers before engaging with your first deal. Hence, you understand the general language of these agreements as a first-time investor. 

These might be somewhat overwhelming at first sight. Your general partner should always be there to answer your questions. 

If in doubt, you can also check with another lawyer on your end. Usually, the drafts are best practice, and an agreement will not be amended for the concern of a single investor.

How to wire the closing funds

The preferred method for the money transfer is a wire transfer from your bank account. You can do it through your online banking. The general partner will instruct you on how and when to send the funds. He will send you additional information so you can issue the transfer in time. 

Ensure to expect a call from your banks and have your account holder information, social security number, and bank account number handy to confirm the wire transfer instructions. 

Banks want to verify all your data and the recipient’s name of the wire instructions and confirm the exact amount you plan to transfer. It is simply to protect you from sending the money to the wrong recipient or any wire transfer fraud once moved. You will have a hard time getting those funds back.

How do I get my cash flow from the bottom line of our deal?

The general partner will send you the contributions whenever the investment allows. Ideally, you are set up for ACH, so again no checks get lost in the mail while you travel the world enjoying the fruits of your investments. It is an excellent option to use the existing investor portal to keep your bank information up to date. 

You can also use the portal to keep an eye on reporting and performance of the investment, which is an important thing you want to keep an eye on. Also, the portal will show you future upcoming investment opportunities with your syndication team. 

This way, you can keep your finger on the market’s pulse. Invest more capital in recession resilient assets like multifamily real estate whenever you are ready.

Best practices for bringing in foreign currency funds

Suppose your money is sitting in a foreign currency and you are an overseas investor. You have to communicate with your local and overseas banks and ensure you have sufficient proof of the origin of the funding. 

It is generally best practice to reach out to your banks in advance since large sums of money as an international transaction tend to get flagged or frozen to verify that they comply with the Money Laundering Act.

When it is time to get to the closing table, you do not want to receive a call from your bank that you need to show further proof of the origin of your funds. The deal can not proceed as there might not be enough money. 

You also want to make sure you use efficient trading platforms to avoid multiple business days and higher fee transfers to be ready to go at closing. 

A bank wire transfer with a foreign exchange might rather be costly. You want to use a financial technology company that can reduce the fees you will pay and speed up the transfer. 

But you have to make sure you are setting up an account ahead of time and send the funds as early as possible to make sure they are in local history when needed to close your investment.

Recommended Video: How to Get Into Multifamily Investment: Tips for New Investors

Related: Multifamily Real Estate Investments: Easy Guide to New Investments

Are you interested to invest in private multifamily real estate? Visit Wellthy Capital website and explore on quality real estate deals and investment opportunities.