When raising capital for the first time, establishing trust and credibility with investors is paramount - but it can also be a challenge. To provide expert guidance, we spoke with Amish Munshi, a seasoned real estate operator, realtor, and customizable fund manager of Munshi.biz, who shared his valuable insights on how he built trust with investors and the strategies he used to achieve it. For more information, visit: https://munshi.biz/investing/
[Amish is a seasoned real estate operator and fund manager with a background in the tech industry, where he spent over 15 years. Transitioning into real estate full-time, he quickly expanded his portfolio across residential, commercial, student housing, and short-term rentals. Now, as the manager of a successful debt fund, Amish leverages his expertise to help investors navigate the complexities of capital raising and due diligence.]
According to Amish, the foundation of trust is built on transparency. “Trust grows with time,” he notes, but gaining investor confidence early on requires clear and open communication.
A key lesson from his experience as a realtor is the importance of full disclosure. “Disclose, disclose, disclose. If you know something, tell the client 10 times. Don’t hold anything back.”
For fund managers, transparency means sharing all relevant details about the deal with potential investors. This approach helps build credibility, especially when investors may have experienced both gains and losses in the past. However, Amish emphasizes the importance of simplicity in communication, particularly when dealing with complex financial terms. While full disclosure is essential, overwhelming investors with intricate details can be counterproductive.
“Simplify rather than over disclose,” he advises, noting that too much complexity can leave investors feeling confused. By maintaining transparency, offering regular updates, and staying committed to honesty, fund managers can build long-term trust with their investors.
Key Due Diligence Factors for Single-Family and Multi-Family Property Purchases
When conducting due diligence on single-family and multi-family properties, Amish stresses the importance of thoroughly investigating anything that seems unusual. He recalls a real-life example where a property that had sold for $780,000 the previous year was now listed for $1.2 million, without any significant improvements.
“If something feels too good to be true, it probably is,” he explains. After further investigation, Amish decided not to move forward with the deal, highlighting the necessity of digging deeper when discrepancies arise.
This experience underscores a crucial point: always assume that anything that can go wrong will go wrong. Fund managers must be diligent in their due diligence process, paying attention to even the smallest red flags.
“Due diligence should be as exhaustive as possible,” Amish advises. From reviewing financials to assessing the track record of the seller or borrower, every step is critical. When lending money, for instance, Amish evaluates the borrower’s track record to ensure they’ve successfully completed similar projects.
Understanding their credibility among peers is another essential consideration.
Personal Approach to Due Diligence
Amish’s personal approach to due diligence varies depending on the type of investment, but his guiding principle is fairness. He recounts a deal where he could have made a 50% return but realized the borrower would be left with little to no profit.
“That doesn’t make sense,” he says, emphasizing that a balanced deal benefits both parties in the long run. “I’d rather make 25% twice and help the borrower succeed than make 50% once and end the relationship.”
In addition to fairness, Amish emphasizes the importance of conducting a "sensitivity test"—anticipating potential issues and preparing accordingly. This proactive approach ensures that both he and his investors are protected, allowing for smoother transactions and long-term success.
Building trust with investors through transparency, conducting thorough due diligence, and ensuring fairness in every deal are key strategies for fund managers. These practices not only safeguard investments but also foster lasting relationships with investors.
Ready to Start Your Capital Raising Journey?
If you’re ready to start your own fund, Avestor is here to support you every step of the way. From offering resources to helping you launch your fund, Avestor can help you navigate the process with ease.
Schedule a demo with us today at Avestor Demo to learn how you can begin your capital-raising journey.
