“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”
-Franklin D. Roosevelt
Although there are numerous benefits to the lucrative commercial real estate investment class, there are also some challenges that investors should know prior to investing. The following are some of the challenges of commercial real estate investing and how RealCrowd helps overcome them...
- Specialized Acquisition Knowledge - Generally, it takes years of being entrenched in the industry to acquire the knowledge and experience required to select and purchase quality investment properties. RealCrowd allows investors with little to no experience to pair up with expert real estate operators in the industry. Our requirements for operators include a strong track record of returns, quality investment deal flow, and the ability to maximize asset performance with their management team.
- Large Initial Capital Requirements - Most commercial real estate investments require a down payment of 25% at a minimum (many investments require closer to 35-40%). As an example, a $5 million investment property could require a $1.25M down payment or more, prohibiting investors from diversifying or even participating in this investment class. RealCrowd allows people to pool their money with other like-minded investors, allowing the initial capital required to be significantly lower. Minimum investments can be as low as $5,000 per asset, allowing investors to participate in this lucrative asset class and diversify across multiple property types and locations.
- Ability to Manage and Maintain the Physical Asset - Energy and skill are required to successfully manage and maintain a property. If something within the property is not optimal, the owner may be responsible and could get a call from a tenant. The real estate operators that partner with RealCrowd are responsible for maintaining the asset to its most optimal level. Letting investors partner with operators allows them to enjoy real estate investing without the "hands on" headaches of direct real estate ownership.
- Ability to Identify and Maintain a Quality Income Stream - In an investment property that produces rental income secured by tenant leases, the creditworthiness of the tenant is of great importance. Although the majority of tenants in any given market occupy properties through their scheduled lease term, the potential of vacancy is a risk that needs to be considered. The operators will be responsible for identifying assets with quality tenancy and maintaining the strength of the rent roll through the lifetime of the investment opportunity.
All of these characteristics contribute to the success or failure of a project. Each requires skill in its respective field which is why RealCrowd exists; to provide investors the tools necessary to benefit from the many advantages of real estate investing. Investors are encouraged to take these factors into consideration prior to making any investment decision.