If your syndication team or investment fund team has more than just you working in it, it’s probably helpful to think about roles and responsibilities, who should be doing what to make sure that there’s not some problem down the road that ultimately is probably going to impact your investors. If you guys can’t get along, the sponsors and the managers can’t figure it out, then it’s going to trickle down. And there’s going to be problems for your investors, which could make your whole situation a lot worse. So why not deal with those things upfront?
In this video, we’re going to go through the seven different main categories of roles and the responsibilities of them to give you a place to start thinking about them, to give you a place to say, “Okay, well, maybe this person should be responsible for this, or this person should be responsible for that.”
My name is Tilden Moschetti. I am a syndication attorney. I help a bunch of syndicators and investment funds put together their legal documents and form their investments, right? So, put together those syndications and those funds. As I go along the way, I see a lot of different teams come together—teams of two, teams of five, teams of ten. When I see more than one person, I immediately think we might want to identify the roles and responsibilities early so that the syndicators can do their job better, making them more confident in what they’re supposed to be doing, so that nobody gets mad at them, right?
I mean, at the end of the day, we just all want to do the best we can. We want to make the most amount of money for ourselves and certainly make the most amount of money for our investors so we keep getting investments from them and we make more money for ourselves. We can help that process by identifying what the roles and responsibilities are between the team members.
I’ve done a number of syndications for myself and worked with a number of teams. Let me tell you, the teams I’ve been in where we did not define a clear set of roles and responsibilities, something always happened—something where people felt like they were being taken advantage of or people were not doing the right job, or whatever it was. Setting those things up early is what I do now all the time if I’m going to be in a team, and you should think about that too.
So let’s go through exactly what kinds of categories I think are useful for you. When you’re setting up a team, there are seven of them.
One such role and responsibility that I think is useful to go through is investment and finance. This is a syndication or investment fund, so obviously finance and investments are very closely coupled with exactly what you’re doing. In this category, what we’re thinking about are things like acquisitions—how are you going to determine if something is a good buy or not? Due diligence—how are we going to make sure that it’s a good buy so that something doesn’t fall through the cracks, ensuring what we’re buying is actually what we’re buying? Looking at the portfolio as a whole—if you’re buying an investment fund and everything’s identical, you’re not getting the benefits of diversity, which could lead to better results with lower risk.
Acting as the Chief Financial Officer—the one who really is in control of the money—also goes into this category. Also in this category is risk management, like identifying what risks there are to the investment. It’s not always things that come out of due diligence; it might be governmental issues or things happening locally. If it’s a real estate deal, maybe it’s something that’s happening on the property itself, and you need to get insurance for it to cover that risk. And lastly, there’s exit planning—who is going to make the determination that maybe it’s time for us to make the sale, when we can make the maximum amount of profit for our investors and ultimately for ourselves.
The second category is investor relations. Investor relations not only involve talking to investors but also acting as a point person for investors to come to. Most of the time, this person is also involved in the sales process. They are the ones actually raising the capital, making sure that those investors are there, and there might be multiple people on your team who do this role. At the end of the day, I would recommend that you also have one person who is the key contact. This is the key person investors can ask questions to if they have them. They may be responsible for communication to investors, writing out those quarterly emails to update them, which invites more people to communicate back. I think it’s helpful for investors to know, “Okay, if there’s a problem, I talk to this person.” So the investor relations role is pretty wide but also critical. Not only is it capital raising—that’s absolutely fundamental—but it’s also those other things, making sure you have that key contact person.
Another key role that’s in a lot of syndication and investment fund teams is operational and project management. If you’re doing anything more than just buying specific properties and selling specific properties, something is probably going on with the assets that need coordination and work. If not, there’s definitely still some things that happen with your team. Part of your operations might be the portal software that you’re using, making sure every investor can log in, making sure all those things are there. Also, on the project management side—long ago, I had a project management background and was a certified project manager. It’s a fundamental way to ensure projects follow through specific steps. I would suggest that you adopt that same kind of methodology built into project management to make sure your projects go as planned. That project might be rehab on a building, the M&A on the purchase of a business or something like that, or it might be as simple as ensuring the marketing communication for the sale goes out because we decided we want to do a vote. So there are multiple pieces and different kinds of ways this comes into play. The focus of this role is operational and project management.
Another function that’s useful and may not be a whole person—it might be delegated to another team member—is compliance and legal. As a lawyer, I care a great deal about this. It’s making sure those blue sky filings are getting served, that the documents prepared by your syndication attorney are correct and useful, and reporting is done timely. They may also be interested in when tax filings are due and when the K-1 is due. They may work with the finance person to ensure taxes are done on time. The compliance piece ensures the team does everything necessary to be compliant. Often, you’ll bring in outside counsel like a syndication attorney to ensure these things happen. I also coordinate with an accountant who specializes in syndications, investment funds, real estate, or what have you.
Another key role is accounting and bookkeeping. This role is critical to a syndication. Picture this: you have an investor who gave you a large amount of money—$100,000, $200,000, $300,000, or even a million dollars. They need to know their money is being handled properly, and the books are kept right. You should be able to get a call from an investor requesting a copy of the general ledger and send it to them right away. This builds trust, making them more likely to invest again because they see you’re doing everything by the book and are responsive, caring about their money and its custody.
One role that’s often overlooked is tenant relations, which you can think of as a human resources role. Human resources involve ensuring everyone on the team is working effectively, that contractors and employees are treated properly, onboarded, and offboarded correctly, and paid appropriately. However, tenant relations are also crucial in real estate syndications. Good tenant relations build trust and loyalty, the lifeblood of your fund if it’s not development. The person responsible for tenant relations should be distinct from the person handling investor relations to avoid conflicts of interest.
These seven key roles and responsibilities are critical: investment and finance, investor relations, operations and project management, compliance and legal, accounting and bookkeeping, tenant relations, and marketing and communications. Each category applies in every syndication, so think through them and decide how to address each and who will be responsible.
If you’re working by yourself, you’ll handle all of these roles. If you’re working with a team, clearly assign tasks to avoid missed responsibilities and ensure everyone feels valued.
I’ve been talking a lot about feelings in this video. While it’s essential to be logical, we are emotional creatures. Feeling slighted or unappreciated can hinder performance, affecting everyone involved.
My name is Tilden Moschetti. I am a syndication attorney. I have the experience of doing deals, working in teams, and handling the arguments over roles and responsibilities. If you’re putting a Regulation D offering together under Rule 506(b) or 506(c), I welcome your call. Let’s talk about your project and see how I can assist you.