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

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news [...]

The VergeNeill Blomkamp's Firebase crowdfunding campaign comes to an ...The VergeJust over a week after announcing its crowdfunding campaign to fund a sequel to its short concept film Firebase, Neill Blomkamp's Oats Studios has pulled the plug on the project, and says that i [...]

ForbesNeed To Fund Your Health Idea? How About Crowdfunding? - ForbesForbesGot an idea that you think will change the face of health or public health? Don't know where to go to get funding to launch the idea? Worried that you won't be able to convince one person or one organ [...]

Billy PennMore than in other cities, Philly families resort to crowdfunding for funeral costsBilly PennOf the top 45 crowdfunding campaigns in Philadelphia currently listed on the site, 25 are looking for help paying for memorials. GoFundMe recognizes the need, and even has a page ded [...]

Stuff.co.nzJeremy Elwood and Michele A'Court: Crowdfunding is like buskingStuff.co.nzStormy Daniels is currently raising US$75,000 a week through crowdfunding to cover her legal expenses against Donald Trump. OPINION: Husband-and-wife comedians and commentators Jeremy Elwood and [...]

WDJTWoman accused of stealing from crowdfunding account she set up for grieving familyWDJTMINNEAPOLIS (WCCO) — A 49-year-old Minnesota woman faces charges for allegedly stealing money from a crowdfunding account she set up for a family who suffered a loss, according to the Hennepin Co [...]

Joplin Globe'Grow with us': Empire Market launches crowdfunding effort ahead of openingJoplin GlobeTo help provide those amenities, Downtown Joplin has begun a crowdfunding effort ahead of the market's Saturday opening day. DJA was the only Joplin-based organization sel [...]

FierceBiotechCNS Pharma turns to crowdfunding to advance glioblastoma drugFierceBiotechCNS Pharma has launched a fundraising drive for a phase 2 study of a drug for glioblastoma, the form of brain cancer that has claimed the lives of Senator Ted Kennedy and Vice President Joe Biden [...]

Popular ScienceAnker's smart home brand is crowdfunding a new security systemPopular ScienceWe don't typically post about Kickstarter campaigns, but Eufy—like their parent company Anker—makes excellent products that are more reliable and interesting than the average crowdfun [...]

Crowdfund InsiderPremium Cider Brand Cranes Launches Second Equity Crowdfunding Campaign on SeedrsCrowdfund InsiderCranes, a UK-based premium cranberry cider brand, has launched its second equity crowdfunding campaign on Seedrs. The debut of the latest funding round comes less than tw [...]

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 |