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What to Look for in a Real Estate Investment Platform

September 26th, 2016
 

We are currently experiencing a growing trend in emerging real estate digital investment platforms. The market for such internet based platforms has evolved significantly with increased competition and abundant opportunities, however it is important to know what to look for when reviewing the options of which company to run your real estate investments with. Not all investment companies are created equally and may not be as polished as the competition, so therefore keep in mind the following seven points when evaluating the platforms that you wish to utilize for your portfolio.
#1 EXPERIENCE
Choose your investment partners according to their real estate experience and proven track record. The team behind the venture should be headed by proficient and highly reputed individuals with a strong local market understanding. Proof of successfully funded projects should also be made available on the website to allow you to assess the team's diversity and success ratio. In addition, the real estate investment platform should have information regarding sponsors and strategic partners which will add clout to the overall makeup of the platform's prowess. Big players who back and collaborate with the company are a positive sign.
#2 TRUST
Look for a stand-up firm with a substantial investment volume that can be a source to be trusted. Check out the company's rating and reviews from previous interaction with other investors to see whether there is a high level of transparency and integrity relating to the operation of the platform. Information regarding the various investment opportunities should provide clarity and a wealth of relevant insights surrounding the platform's investment activities. A credible platform will also provide you with up to date information relating to the market and trends. This data should be made easily available within the portal. To enter a real estate investment without all the relevant information would be a mistake. Furthermore, a comprehensive reporting process on investments should be available throughout the progression of the project timeline.
#3 DUE DILIGENCE
Discern the depth and professionalism of the due diligence process conducted by the real estate investment platform's team. Each deal has to go through a rigorous and methodological multi-tiered evaluation process. The underlying make-up of the real estate deals should be fully documented and provided post evaluation in addition to being easily accessible in detail on the online platform.
#4 INVESTMENT OPPORTUNITIES
Evaluate whether the company is placing volume targets as a priority over a superior quality deal flow, or whether they are rigorously evaluating only prime deals and placing their reputation on the line with each listing. Nevertheless, there needs to be a healthy deal flow available for a variety of investment opportunities to enable a diversification strategy across asset classes. There should also be a possibility to choose the optional time for exiting investments.
#5 SOCIAL NETWORK
The possibility to collaborate through syndicate investing and build relationships with likeminded accredited investors in a professional network will provide you with a high level of value. Real time information sharing and the harvesting of knowledge are beneficial to your efforts in building your real estate portfolio. Identifying leading investors and following their investments provides new investors with a positive signal in relation to specific deals. The amount of activity in a social network and the number of registered users will also convey the legitimacy of the specific platform.
#6 MINIMUM INVESTMENT REQUIREMENT
Real estate platforms make it possible to incur only a fraction of the overall investment cost of a project in return for a piece of equity. This opens up opportunities for investors to put down smaller amounts of capital than they would have to allocate under different circumstances. Review the minimum investment requirement prior to signing up with the platform to see that it does not pose as a barrier to entry. High minimums will make portfolio diversification quite difficult for the majority of investors. It is also recommended to go with platforms that have limited obligations and do not charge for sign up, registration and management fees. Watch out for hidden fees.
#7 PLATFORM FUNCTIONALITY
Make sure that the platform you intend to use is safe and secure, and that it is a genuine platform and not an old school real estate broker in disguise. Take a look to see that all of the investment opportunities are US based as foreign markets are more difficult to assess for US based investors. In addition, check to see that the website is fully operational and that the queries sent to the moderators are answered in a reasonable amount of time. Do you own due diligence and search for positive investor feedback online to match cutting edge technology.

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