Tilden Moschetti: So you think it's time to sell? Well, if you
structured your syndication the way that I normally do, you
know, I like to give investors the right to decide whether or
not it's time to sell the property or the investment. That
way, they feel like they are a part of the action, a lot of
syndicators don't. And I think that's a mistake, because it
brings that decision making process to the investor at
exactly the right time, when they're going to be thinking
about what they are going to do with the money that you're about
to give them in that final distribution. Now, maybe they'll
decide to do another syndication with you, maybe the next one
that you're working on, it makes a difference between being a one
hit wonder, and being a serial syndicator doing deal after deal
making everyone money. But in either case, you may very well
need to take a vote, maybe in selling maybe in something else.
And in this module, I'll show you just how to do it.
Alright, so voting, we're gonna walk through the process here
about what I do in my communications, when I think a
vote needs to be taken. Now, most of the time in your
operating agreement, a member or a body of members can call a
vote, the manager almost always has that right to do. And a lot
of times members have that right as well. So the first thing you
need to do is first determine if a vote is needed. And if it is
needed, that's one thing, if it's not needed, it doesn't mean
you can't actually ask for a vote. If it's a power that the
manager has, then you can decide what those rules are still, and
still ask for the vote, but still make the determination at
the end of the day. Just know that if everybody votes a
different way than you were gonna go, that's gonna bite you.
So determine if a vote is needed. Now, the next thing you
want to do is look through your operating agreement and
determine if votes are based on a per investor basis, or a pro
rata by ownership basis. Most of the time, there'll be pro rata,
but occasionally I will see it as per investor. You also want
to know, like, what percentage is needed? In order to be
successful? Sometimes it'll be a majority. Sometimes it'll be a
supermajority. And what's that definition of supermajority? I
haven't seen it be unanimous, but it could be unanimous as
well. You'll also want to look at things like well, what is do
they have the proxy? I mean, in other words, if somebody doesn't
vote, do you get to vote for them? Most of the time, that is
the way that I set it up, that you'll want to know what
constitutes a quorum, if you are the only person voting and no
one else shows up, does that still count? Is there a quorum
that is needed? So you just want to know those things, because
those are the formalities that you want to make sure that you
hit. They're in your operating agreement. And so you want to
make sure that you do it, right. So because at the end of the
day, you don't want an investor coming back saying you did
something you weren't supposed to do it says in the operating
agreement, you can't do it that way, then you're in trouble. So
let's go through exactly how I know I now know how to vote. And
I now know what percentages I need and who votes and all that.
So how do I actually ask for that vote. So I send it note,
typically in an email, and I want to make sure that people
get it. And so I normally will ask them at some point to to at
least respond to me in some manner. Or if I have some sort
of mail tracking, I'll do that just to make sure that they got
it. Because I don't I want everyone to have an opportunity
to get to vote. So first thing I do is I thank them, I thank them
for being an investor with me, thank them for trusting me with
their money. And give them hopefully the good news about
where things are at. I then summarize exactly where we're
at. So I like to start at the beginning. You know what
assumptions we made going into this property, how long we
thought the hold period would be? What our projections were
based on how much money we thought we'd make everybody. I
like to kind of reiterate that in a nice summary fashion. Then
I like to go through the situation of where we're at
today. You know, where are we at in the market? Where are we at?
Exactly what what are these properties like this generally
trading for right now? It's important in this summary
section to be Very, very objective, this is not
persuasive writing section, you do not want to do that you want
to be seen as being very, very objective. These are facts, this
isn't the time to be persuading. So once I'm done with the
summary section, I go to the financial impact sector. In
financial impact, I'm talking about if, if we sell now, what
do we project like sales price will do and things like that.
But also, what's that effect on their investment as a whole?
What's the IRR impact? What's the ROI? What is that going to
look like, on the performance if we do this now, so that way,
they can compare based on what they thought the investment
would do, versus what they think it may do, if they hold on to
it, it gives them sort of the real numbers in order for them
to think about. Now, the next section is your recommendation.
Now, this is the place to be persuasive, I wouldn't be overly
persuasive, I wouldn't say anybody is an idiot if they
don't vote for this. But it is a place to be persuasive. Let them
know why you think it's such a good time to sell right now,
there is an inherent conflict of interest, a lot of times for the
syndicator to sell at any specific point, shorter term
holds they will generally make is when they will make most
amount of money in their pocket. And so there is this kind of
conflict that's there. So you do want to be persuasive. But don't
be so persuasive that it suddenly calls into question of
why does this person care that much? Doesn't it sound like
hyperbole? Okay, so now the next section is we call the vote. And
how do we do that? So I like to start out with some thing like
subject to paragraph 10.2 of the operating agreement. The manager
is entitled to call the vote, call a vote on questions on
liquidation of assets, or something like that, just I like
to give the the actual basis in the operating agreement for why
I can call the vote, then I like to say what percentage of the
vote is needed. So there, I might say it's subject to
paragraph 10.7 of the operating agreement, the we would need a a
majority vote in order to liquidate assets, then I like to
put a very, very clear. So this is in a separate section that
says, you know, you could title it whatever you want. But
something like vote in favor of this means. So it's clear if
they vote in favor of it, it means we are going to put this
property on the market and hopefully sell it within the
next whatever, then you want to put a what does this vote
opposed to this mean? A vote opposed to this means that we
will not put the property on the market, we will continue to hold
it for an indefinite period of time, until such time as another
call for a vote on the issue of liquidating the asset that's
been has been put forward. That way that's very clear about this
is what you mean if you say yes, this is what you've been, if you
say no. Lastly, you tell them how to vote. So send me an
email, give me a call, whatever it is, if you have an online
form, swell, what whatever it is, just let them know how to
vote. And once you've done that, it's really tallying the votes.
Now I don't let I don't communicate exactly who's voting
in which way or how a vote is necessarily looking. Because you
may get those questions as things go on. Certainly, if you
call people to remind them to vote that you haven't received
their vote yet, they may very well ask you how the vote is
going. I try to keep that kind of quiet because I value the
confidentiality of, of my investors. And I just don't
think it's appropriate that that everybody know how things are
going. If it's not going my way, that's fine. If it is going my
way, that's fine. I don't I try not to tip it off either way,
and i i on when I'm having those conversations, I really don't
try and be persuasive there either. I don't want to be seen
as like influencing the vote too much. So I have this section in
my email where I've called the vote. That's my opportunity to
be persuasive. And that's the only time I act persuasively
about whether or not it's time to sell now, if they say, Yeah,
I think it's really great time to sell to then, you know, sure
have that conversation. So yeah, I mean, I That's why I wrote
that in the in the section on what my recommendation is. So
That is how we do a vote specifically how we do a vote to
sell now as attached in your module is also a spreadsheet.
It's just the spreadsheet that I use that calculates basically
how I count the votes. So that way you can see you know the way
I do it and it may be useful for you. So in the next module, we
are going to show you how to make that final distribution
once you do sell it.