Although web technology makes life easier for a passive real estate investor, there’s no such thing as a simple real estate deal. In any real estate project there are a number of moving parts, many of which are critical to the successful, profitable outcome of the project.
Most passive real estate investors do not have the time, patience or experience to properly evaluate those risks when looking to invest in a real estate project. That is why investors should always look at the experience and expertise of the real estate team behind the crowdfunding platform and the projects that they offer to potential investors.
Questions an investor should ask include how rigorous is the underwriting process? Is the proposed deal in the team’s wheelhouse or are they straying into unfamiliar territory? Is the deal analysis based on local knowledge or a high-level, analyst report that won’t pick up the local nuances. Does the team behind the portal have any involvement in the management of the project once it has been funded?
At Crowdventure, we chose to joint venture with the team at Equipoise Capital Partners to ensure we could rely on a solid base of real estate expertise going back three decades. The Equipoise team has been around the block and has seen a number of real estate cycles – good and bad.
Investors should also look for platforms whose team can demonstrate an ongoing project management involvement to ensure potential problems can be headed off at the pass.
As an investor considering projects offered on the Crowdventure platform, it’s also good to know that they have all been through a rigorous vetting and underwriting process by an experienced real estate team. Many of the projects that we offer have been pre-funded by Crowdventure and its partners, so investors can be assured that we have only listed projects where we are happy to invest ourselves.
It’s our view that only when industry-specific skills, expertise, experience and processes are in place can a real estate crowdfunding platform claim to offer solid opportunities for investors looking for passive income.
For the investor, the recent swathe of new real estate crowdfunding platforms may look great on the surface. Like most things, it’s what’s underneath that counts.
Image by Shutterstock