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The apology call came before the K-1 did

I'm in one small fund, a modest position, mostly because I wanted to see how the other side works after years of owning land where nothing ever needs reporting to anyone.

First March, my phone rings. It's the investor relations person at the sponsor, calling to say the tax documents are going to be late, roughly three weeks, because one of the property partnerships hadn't closed its books. She said it before I asked. She gave a date. She hit the date.

I've been on the other side of enough bad news in my life to know how rare that call is. I told her thanks and she paused like she wasn't sure what to do with it. She said most of the calls she makes that week are people telling her they've already filed an extension and could she please just say when.

Year two, same fund, documents were late again. No call. Turned out she'd left in December and nobody had picked up the phone list. I found out from an email that went out nine days after the original date, and it started with the phrase due to circumstances.

Same fund. Same properties. Same numbers, more or less. Completely different feeling about the whole thing, and all that changed was one person leaving.

7 replies

Planning my first purchase and this is making me think about what I'd want if I were ever passive. Apparently the answer is a phone number that belongs to a specific person.

I keep a note on every sponsor I'm invested with listing who my actual contact is and the date I last heard from them by name. When the name changes I ask what happened. Twice it's been a normal hire, once it turned out three people had left in a quarter and that led me to some other questions I wouldn't have thought to ask.

Orchard, the due to circumstances email is a genre. I've got four of them saved.

Handoffs are where this breaks, at least in my experience managing people. When someone leaves, the deals get reassigned and the relationships don't, because the relationships aren't written down anywhere. Whoever inherits the list knows the deal numbers and doesn't know that you're the guy who always asks about the tax timing in February. That's a documentation failure with a human cost, and it's fixable for about the price of ten minutes per investor in the CRM.

@marlow it happens at the places that treat repeat money as the business. I've only got nine units and no investors, but the same logic runs my tenant side. The ones I know by name renew. The ones I only email don't.

The year two email is what would bother me. Nine days after the promised date is the tell, not the delay itself.

I've been circling passive positions for two years and mostly asking questions instead of committing, so this thread is useful to me in a specific way. I'd been evaluating sponsors on track record and structure. I hadn't thought to ask who does the investor communication and how long they've been there. Adding it. Orchard, did you say anything to the sponsor in year two, or just let it go?