The not-so-far-fetched science-fiction series, Wisdom of the Crowd exploits the most sensational benefits of real-time crowdsourcing platforms like RealtyeVest and draws parallels to the ridiculous, cringe-worthy fantasy world of The Circle, starring Tom Hanks and Emma Watson. In an industry like online real estate crowdfunding, where privacy can cost thousands upon thousands of dollars, the notion of people willingly relinquishing their data to go wild goose chasing and risking their lives seems contradictory of the ongoing battle for online privacy battles fought by men like Edward Snowden and backed by the majority of the nation. (And, frankly, the idea sounds a bit reminiscent of a little 2016 fad known as Pokémon Go, which seemingly dropped off the face of the earth as quickly as it appeared.)
Investing in real estate through a crowdfunding platform can be an exciting and lucrative endeavor. This is especially true for investors who are new to the real estate investing industry. Since the crowdfunding platform is new and unique to real estate, there are pitfalls in which investors should avoid when attempting to invest in a crowdfunding opportunity for the first time. These are the top items investors should consider before investing in a crowdfunding opportunity.
1. Experienced Real Estate Underwriters
As a real estate investor, knowing that a company has knowledgeable real estate underwriters helps ease the burden of wondering if this deal is real or even profitable. The real estate underwriter’s primary focus is to analyze the deal, identify the risks involved, determine how to eliminate as much risk as possible and structure a deal that results in the best possible outcome. This process will ensure that deals are worthy of investing in. The main focus of an underwriter is in the financial portion of the deal, it is imperative that the underwriter carefully assess all assumptions to ensure that profitability is achievable and that investors will earn a generous return on their investment.
2. Investment Returns
As a rule of thumb, if you have extra money sitting around in a retirement account or savings account earning less than 10%, it would be wise to consider real estate to help grow your retirement nest egg. Crowdfunding platforms can offer exciting opportunities to new investors that were not available to them even a few short years ago. Most crowdfunding platforms offer an annualized 10% yield per deal and some crowdfunding companies offer profit participation as an additional upside to investing in a particular deal.
3. Quality of Sponsor
Having a strong and experienced sponsor is one of the best ways to mitigate risk. A strong sponsor will understand how to value the property in the initial acquisition phase. Successful sponsors understand what it takes to run a property through the investment cycle from the acquisition, managing the asset during the holding period, then timing the correct moment for selling the asset at its most profitable. Having a sponsor that can demonstrate the qualities will help ensure that the investment is profitable.
4. Quality of Asset
A strong real estate asset is a key to profitability. Depending on the asset class, being located in a highly desirable market contributes greatly to the asset as a whole. In addition to the market, the asset’s quality can also be determined by trailing financials or rent rolls for example.
5. Cost of Entry
The minimal investment may not be important to some, but others, who just want to test the waters would likely not want to shell out, for example, $25,000 on their very first investment. Lower minimal investments allow new investors to get a feel for crowdfunding especially if they are new to the platform or crowdfunding as a whole. Ultimately, smaller minimal investments give investors a chance to find out if real estate crowdfunding is for them in the future.
In addition to having professional real estate underwriters analyze the deal, the information or data from the underwriter should be easy to follow and make sense. An investor should be able to determine if a particular deal is worthwhile or not; simply by the way the information is presented on the offering page. Advance jargon is sometimes confusing for a novice real estate investor. Real estate investing through crowdfunding should be easy and seamless, and not require an advanced degree of any kind.
7. Getting Paid and How Often
Getting paid should not be a mystery, it should be clearly stated somewhere within the deal. If you cannot find how often or when you are paid, then likely you should find another deal in invest in all together; because making money is the reason you’re investing in real estate in the first place, right?
8. Exit Strategy
Knowing how and when the investor will get their money back is imperative to any investment opportunity. A crowdfunding deal should have a clear exit strategy listed within the deal that clearly tells investors how the sponsor intends to repay the initial capital investment; best if in a sequence of easy to follow steps. If the exit is not listed, you should be able to find out relatively easy from the platform’s customer service team.
9. Crowdfunding Platform
A real estate crowdfunding platform should be easy to navigate. The platforms should be secured and offer an investor every tool they will need to make an informed decision of whether to invest in a deal or not.
A real estate crowdfunding platform is best when they do not charge the investors fees for investing. It seems kind of silly that an investor who is lending their money should pay to play twice. There are more than enough deals on different platforms that do not charge the investor asset manager or accounting fees. It would be wise to seek those out first, then fall back on investor fee-based platforms when they have an irresistible deal that would be worth paying the fee to invest in that particular deal.
As you can see, there’s a lot that goes into investing in a crowdfunded real estate deal. Following these tips will help investors land the perfect deal on any platform regardless of how the platform structures the deal.
When you are ready to invest, go through t this list to ensure that everything meets your standards as a real estate investor.
The post 10 Things to Consider When Investing in a Real Estate Crowdfunding Deal appeared first on RealtyeVest Crowdfunding News.
REALTYeVEST INTRODUCES EXCLUSIVE SINGLE FAMILY NO-LOAD PLEDGE FUND
Offers Investors Unique Opportunities in High-Performing SFR Asset Class
Jacksonville, FL, June 15, 2017 — RealtyeVest seeks accredited investors to create an exclusive $1M Single Family No-Load (1) Pledge Fund for the fast financing of highly opportunistic off-market Single Family Residential (SFRs) deals in North Florida’s profitable SFR buy-renovate-sell market. Investors in this eFund strategy will have a strategic advantage over competing non-fund investors.
“Given the number of Funds seeking capital in today’s private equity market, emerging managers often run into difficulty finding investors willing to fully commit their capital for 10 to 12 years in a traditional blind-pool private equity fund structure,” said Daniel Summers, CEO of RealtyeVest. “As a result, our clients have increasingly asked us about short-term, No-Load alternatives to the traditional private equity/debt Fund model.”
What is a Pledge Fund
A Pledge Fund is an arrangement where investors pledge a predetermined dollar amount into an investment pool with pre-disclosed parameters. Sponsors (real estate operators) have access to the pledge fund for fast financing of attractive deals, enabling them to almost always edge out the competition. Details of every investment opportunity are completely transparent, providing investors the choice, on a deal-by-deal basis, whether to participate in an investment.
Hottest Market Opportunities
North Florida is the hottest real estate market in the United States according to Forbes. Single family properties are increasingly in high-demand and selling quickly in the Greater Jacksonville area. Real estate investors who have their financing secured ahead of time stand the best chance of acquiring the hottest properties normally without layers of brokerage fees, and earning aggressive financial returns on their investment.
Pledge Fund Property Distinctions
- Located in Duval, St. Johns, Clay, and Nassau Counties
- Single Family Residences
- No Mobile or Manufactured Homes
- No Rural Areas, Located in Up-Trending Neighborhoods
- ARV (After Repair Value) Generally Between $100k – $300k
Pledge Fund Financial Overview
- $1,000,000.00 Pre-Pledged Fund
- Interest Only Loan (2)
- 10% Interest Paid Monthly
- 10% Profit Participation From Net Profits (5)
- Secured By a 1st Mortgage with 1st Lien Position (3)
- Pre-Paid Interest Will Be Held in Escrow and Drawn Upon For The Length of Term
- Loan to Verifiable ARV (4) Not to Exceed 70%
- Normal term is 6-9 months
- No-Load Fund – A no-load fund means you can invest in shares of the fund at any time without a commission or sales charge.
Interest-Only Loan – A non-amortizing loan in which the lender receives interest during the term of the loan and principal is repaid in a lump sum at maturity.
- 1st Lien Position – A lender or creditor in a first lien position has priority in case a debtor defaults and collateral has to be liquefied to settle the debt. For example, mortgage lenders are usually in a first lien position; if a borrower defaults on his payments, the mortgage lender is the first creditor to receive remuneration from the sale of the property.
- ARV – ARV stands for After Repair Value. This is an estimated value of a property after it has been completely renovated. This is a crucial number for those flipping homes and allows you to calculate the spread between what you should purchase it for and the price you can expect to resell it for.
- Net Profits – defined as Gross sales price less any and all acquisition costs, holding costs, rehab costs, closing costs including but not limited to liens, commissions, title charges, etc.
Because RealtyeVest’s Single-Family No-Load Pledge Fund is financing properties exclusively in America’s hottest real estate market, the Pledge Fund will quickly reach it’s $1M funding goal. Accredited investors are encouraged to immediately express their interest in pledging to the fund in order to seize their spot in this unique, high-yield investment opportunity.
The post Press Release: Introducing Exclusive No-Load Pledge Fund appeared first on RealtyeVest Crowdfunding News.
It’s a challenging environment for fund managers. Investors want more control over their investment decisions and to “know” exactly what they are investing in. Investors also want good overall returns while maintaining some control over what they are investing in. For these and other reasons, the Pledge Fund is exploding in popularity over the more traditional Blind Pool Fund.
Old concepts become new again, particularly in the investment world. Pledge Funds are an old concept that is finding increased usage in the real estate investment world. Investors are embracing the control and power that Pledge Funds give them over Blind Pool Funds. To understand just why they are becoming more popular, it’s important to know what they are and the advantages they have over Blind Pool Funds.
Pledge Funds Defined
Pledge Funds are private equity/debt funds that are set up to invest in projects within a very limited set of parameters. The managers of the Fund find projects to invest in that meet the pre-determined set of parameters. Investors are given information on the project and its expected returns. Projects are funded on an individual per deal basis. If an investor doesn’t want to fund a deal, they don’t have to, even if every other investor in the fund invests in the project.
VIEW THE PLEDGE FUND!
Login to view details about the ReV Single-Family Pledge Fund!
Pledge funds are seemingly a 21st-century investment vehicle, but a form of the pledge fund has existed for centuries. In fact, the railroads were built with a form of this fund. It was only recently that investors chose to turn over all investment authority over to fund managers.
It’s clear that Pledge Funds offer advantages when it comes to making investment decisions. These advantages are becoming even more pronounced in industries like real estate. Pledge Funds put decisions in the hands of individual investors, but the actual managing of the investment stays with the fund managers. It’s a powerful advantage for those who want an active role in their investments without the day-to-day management work.
Blind Pool Funds Defined
Blind Pools Funds are a type of private equity/debt fund where investors invest in the Fund and a fund manager has wide latitude in determining what investments are made and when they are made. Investors in the blind pool fund do not green light or red light investments as these decisions are made solely by the fund managers.
Blind Pool Funds became popular in the 1980’s and 1990’s with the rise of venture capital and angel investors. While they are still quite popular, some investors began to shy away from them after the dot-com bust. Many Blind Pool Funds had made investments in ideas that were never destined to earn money and some investors lost heavily. A good example is the spectacularly famous flop that was Pets.com.
The obvious advantage of Blind Pool Funds is that decisions are made by the fund managers. The fund managers know that they can throw the weight of the fund behind any project they feel should be backed. Investors don’t need to worry about investment decisions because they are made by skilled fund managers.
Pledge Funds vs. Blind Pool Funds
Pledge Funds have the distinct advantage of putting investment decisions in the hands of the individual investors. They are not bound to invest in what the majority of the investors in the fund want to invest in. If the majority of the investors want to invest in a new shopping mall, those investors who feel there is a shopping mall surplus can choose to abstain for investing in the project.
Pledge Funds can easily limit themselves to certain real estate sectors, like single-family real estate, making the investment parameters naturally narrow. Individual investors understand what the projects are doing and what the expected returns are. They know whether an investment is a good choice or not and can choose to pledge their funds accordingly.
VIEW THE PLEDGE FUND!
Login to view details about the ReV Single-Family Pledge Fund!
Investors without the time to manage or determine what investments to make are a good candidate for a Blind Pool Fund. It’s a set it and forget it method of investing that can solely focus on fund returns. Investors may also fall into this category if they don’t have access to investment information or support.
It is possible for Pledge Funds to provide the right kind of investment information support to these investors so that they feel more comfortable pledging or not pledging an investment. Just because a fund allows an investor to make a choice, it doesn’t mean they are forced to make a choice. The fund manager can give advice on real estate investments. It’s this flexibility that is making pledge funds a popular choice.
As the real estate investment market continues to change, investors should definitely look at the Pledge Fund as a popular alternative to the traditional blind pool fund. It may provide just what investors want and need when taking control of their investment choices. With the right kind of management, they can produce above average returns while providing investors with a good choice of real estate investment vehicles.
This is why RealtyeVest has chosen to focus its first ReV Pledge Fund on single-family homes in the hottest real estate markets in the United States. In the right market, single-family investments are predictable and offer returns ranging from 10% – 14% annualized yield. The ReV Single-Family Pledge Fund focuses on debt investments with limited up-side profits participation in Northeast Florida that are secured with a 1st lien mortgage. This short-term investment fund allows investors to pre-fund quality investments, securing their position in Northeast Florida’s highly competitive real estate market. The ReV Pledge Fund was designed for both novice real estate investors looking for a simple and seamless way to invest in single-family buy-and-sell projects as well as accredited investors searching for a great starting place with quick turn arounds. If you fall into either of these categories, the ReV Single-Family Pledge Fund is a great solution for you!
The post Why Pledge Funds Are Becoming More Popular Than Blind Pool Funds appeared first on RealtyeVest Crowdfunding News.