The Ultimate Walkthrough of Limited Partner Investing: From Acquisition to Sale

Once you’ve established an SEC qualifying relationship with a deal sponsor, you can get on their investor lists. This relationship requirement is usually fulfilled with a 30 minute call where you discuss your goals and experience.

When you get the deals, you’re going to see investor interest buttons. At the beginning of my investing career, I would fill these out. It caused me a lot of stress when I would find deals I liked better. It was like a was going against my commitment. I learned to not take the situation so seriously and take those investor interest forms as what they are; interest, not obligation. Still, only fill them out of there is a decent chance of you investing. To put a number to it, maybe a 50% chance.

The subscription process (when they start raising money) usually starts after they do the webinar. You’ll received a recording of the webinar and the slide deck either that night or the next day. When you decide to do the deal, most reputable deal sponsors have an investing portal. You sign up for their portal which takes about 2 minutes. You can then access the documents for the deal either through the portal or from the link they email to you. The documents will include PPM, Investing Circular, …..Read through the contracts and fill out your information and sign. Immediately this will be sent to the sponsor once completed. Some sponsors review the paperwork to qualify the investors, and others you can immediately wire the funds afterward.

When you complete the contract signatures, there will be wiring instructions in the investor portal. You take those wiring instructions to your bank and wire the funds. Some sponsors will request you call to verify the instructions before wiring. In this case, you’ll call the number provided. Most times, you just wire the funds with the instructions. One out of nine of my deals requested I called first. The sponsor will then email you verification when the funds are received.

Congratulations, you’re now invested in a deal! You can expect to get monthly reports starting the first of the next month of ownership and reports monthly going forward. These reports will include a summary of how the deal is doing, income statements, rent roll and other relevant documents. Distributions on most deals start after 6 months of ownership, but this will depend on the business plan and the economic environment.

When the deal goes under contract to sell, you will be notified when the offer comes in and will receive a projected closing date. They will probably include projected returns upon the sale as well. Once the sale closes, it usually takes 1-2 weeks for you to receive your funds. However, I have heard of sponsors accelerating this process to just a few days. When I got my sale distributions from the 630 Fairview deal, one distribution was my initial $25,000 returned. The other was the profit. Example shown below.

120 days later, the property was “trued up” and I received another small distribution of $578.85.

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