Real Estate CrowdFunding Due Diligence ?

By Mark Robertson CrowdFundBeat  Sr. Contributing Editor. President at CrowdDD, LLC,

A member of our email real estate Crowdfunding email list Robert C, recently shared his list of due diligence tips investors should follow while evaluating real estate investments.  Most of this advice came from Jeremy R., a full time real estate investor. I strongly believe if you follow this advice, your chances of success  will increase.

download (22)

 

 

 

 

 

*Strong cash flow is key (vs. speculation development with no cash flow)

  • Min 9% cash on cash year 1 and 11% cash on cash over term
  • Don’t look at IRR, just gravy
  • Look closely at cap rates
  • JR only does 10 year opportunities (he thinks shorter term have too much recession risk at exit)
  • JR likes lower risk stabilized deals
  • Drill into the projections and assumptions in the proformas – you want conservative assumptions
  • New developments are higher risk
  • Drill into experience levels of sponsors – better if they are wealthier… JR even does a background check and meets them in person
  • Check the location closely (growing?  declining?)
  • Read the operating agreement for the LLC and PPM (cash calls?  etc…)
  • Likes at least a 7.5% cap trailing on B class (used to like min 8% a few years ago)
  • No % fee for assets under mgmt
  • Careful of shorter term opportunities in that they have enough runway to ensure EXIT doesn’t come during recession
  • Choose opportunities that make sense for where we are in the cycle
  • Buy at a price and cap rates closer to market trough than peak
  • He is currently (this summer when I last talked to him) looking for stuff that would do better in a downturn (MHP, self storage, retail with grocery and drug store anchors and recession proof tenants)
  • Drill deeply into what is the projects exit strategy if things go badly?  What is plan B and plan C and will you still easily get your principle

Jeremy uses these principles when picking his own investments and the investments he recommends to his group. I have invested in 7 deals Jeremy has recommended and each had a 10%+ cash on cash returns and are meeting or beating projections.  Investments include 3 self storage deals, 2 Mobile home park funds, a Houston retail center, and an Ohio industrial park. Unlike crowdfunding platforms, these investments do not have ongoing platforms fee that eat into your return.  If you would like to learn more Jeremy ‘s group and your accredited, please email me using our contact us link for an introduction.

Tags: , , , ,

HEADLINE NEWS

How Equity Crowdfunding is Different Than Buying StocksMotley FoolIn this clip from Industry Focus: Tech, Motley Fool analyst Dylan Lewis interviews Indiegogo founder Slava Rubin and MicroVentures founder Bill Clark -- about how investing in equity crowdfunding deals is different than [...]

VentureBeatFundThis creates a 'risk free' crowdfunding platformVentureBeatFundThis is launching a new “risk-free” crowdfunding platform to enable creators to raise money for new projects, ranging from fashion ideas to tech projects. The Boca Raton, Fla.-based company is also [...]

Fast CompanyCan crowdfunding save DIY music spaces post-Ghost Ship?Fast CompanyBrooklyn's Shea Stadium needs some cash. The eight-year-old underground music venue took to Kickstarter today to raise money for the renovations and local permits it needs to reopen as a legally legit [...]

Crowdfunding: Alternative source for SMEs financingVanguardIn Nigeria, there are no known laws that guide crowdfunding unlike in U.S, Canada, Turkey, United Kingdom and elsewhere in Europe where the practice is heavily guided by legislation. Though crowdfunding is yet to be fully embr [...]

Business InsiderRevolut is raising another £4 million through crowdfunding — but this time it's going for SeedrsBusiness InsiderThe reason Revolut is announcing the crowdfunding now even though it's not actually doing it is because it's using the announcement as a chanc [...]

Lexology (registration)Crowdfunding - UpdateLexology (registration)Since 1 February 2017 Crowdfunding finally has a legal framework, so, from now on, crowdfunding platforms must obtain permission from the FSMA. The Act of 18 December 2016 (hereinafter "The Act") regulating t [...]

DeadlineFan-Owned Legion M Launches New Crowdfunding Round | DeadlineDeadlineLegion M, which has had a hand in movies like the upcoming Colossal, has been approved to begin a Regulation A+ round of equity crowdfunding.Fan Funded Entertainment: Legion M Launches Qualified Reg A+ ...Cro [...]

Eater SeattleBlack and Tan Hall Making Final Push to Open With Crowdfunding ...Eater SeattleBlack and Tan Hall, an upcoming music venue/restaurant project in Hillman City that aims to unite the diverse neighborhood, is nearly open. The owners are ...and more » [...]

http://hamodia.comKnesset Approves Changes to Advance Crowdfundinghttp://hamodia.comYERUSHALAYIM - The Knesset Finance Committee has approved changes to existing statutes that will accommodate crowdfunding, allowing small companies and start-ups to issue prospectuses to potential inve [...]

Rentivo, a Vacation Rental Platform, Exceeds Crowdfunding Target by 36%Yahoo FinanceRentivo (rentivo.com), a vacation rental marketing/management software company, today announced it has successfully oversubscribed its CrowdCube.com crowdfunding campaign, raising £341K/$425K and excee [...]

CFB Finance

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |