Everyone knows commercial real estate is a great investment opportunity right now, more frequently than not providing a securer, steadier cash flow. Crowd funding helps utilize social platforms to ‘pool’ funds together from various sources. Mix both together, and you’ll find the recipe for Class-A property investments is much sweeter since management fees are discarded.
High Income Real Estate, for one, instantly connects accredited investors to class-A commercial real estate and provides free one-on-one investor assistance, giving proprietary access to properties previously unavailable or unknown to laymen. As the real estate investing industry is big, your reputation is everything and once you ruin it, it is ruined forever. Do the right things and invest where you know the transaction – and property – will bring your goals to fruition.
Real estate crowdfunding, from an investor’s perspective, is an excellent method for growing commercial property investment portfolios by leveraging the supremacy of privileged information. Both property owners and investors are married through the power of High Income Real Estate’s expansive reach and breadth of accurate information.
Why real estate investing yields better returns
When shooting for an all-out commercial property purchase, the process isn’t what you’d call ‘simplified’ by any means. You already know lenders require property appraisals before the underwriting ever begins, which most likely the loan amount is subject to, which is normally paid for by the buyer. You can’t take for granted that
You need to continually be on guard as to what information is being given to you and its validity, because the end result is once you own the property, it’s your problem to deal with. Make sure you’re verifying information and are comfortable with your findings. In other words, caveat emptor applies to all facets of commercial property investing. Underwriting is an ongoing process during your due diligence and beyond, until closing. Even then, you’ll be looking back to see how accurate your analysis was during the time you own the property.
Who has time for theatrics? You want to invest, and want returns nearly immediately.
Investors want their equity from properties for one or more reasons, including: using it to buy another property, paying out a joint venture partner or secondary loan, or funding renovations that will increase the property’s value. Class-A buildings provide nearly instant equity which can be used to purchase more properties, the reason real estate crowdfunding is working out perfectly. Returns are too appealing for many investors to shy too far away from crowdfunding.
Sure, accredited investors still must meet the $200,000 income or $1M asset restrictions to be called ‘accredited’, but the properties offered at crowdfunding sites like High Income Real Estate are laser targeted so investors aren’t responsible for direct upkeep as opposed to other sites that want you to purchase, protect and pamper your property. Consider these sites a higher class Kickstarter funding schema without unnecessary interruptions or complimentary updates often given by project owners once funded.
Borrowing to invest vs. investing in upscale developments
Investors’ situations radically differ from case to case. Many have careers, some are harboring credit issues, while even more simply haven’t been educated on the necessities behind real estate participation altogether. Moreover, if you are applying for all-out financing for multimillion dollar investments, your personal situation, lending guidelines and the property valuation often drives the approval favorably or unfavorably. Again, few savvy investors want the rigmarole that comes with arranging liquidity to afford investment properties.
If you are looking to purchase or refinance a commercial property that is valued at $1 million or more, everything that we discussed so far applies, with the exception of Loan to Value. Remember that borrowing monies for investment properties with an incredibly high valuation will tend to have lower LTV’s. When investing in upscale developments, you only need to worry about earning returns up to 7% while leaving the legwork to professionals specializing in increasing your ROI.
In addition to understanding the rules of the commercial property investment game, knowing the common financing gaffes investors make that take them off course is equally important. Does your crowdfunding site offer 1 on 1 investor assistance? This and so many more reasons exemplify why people are turning to real estate crowd funding sites as opposed to investing in smaller commercial projects which require tons of time and attention.