The costly lessons of the Great Recession continue to influence cautious bank lending policies in commercial real estate. Expanded regulation and increasing rates and fees have taken the banking sector’s conservative underwriting of real estate financing to an unprecedented level. With tight lending criteria of conventional lenders in the real estate market, investors are actively seek alternative financing, such as real estate crowdfunding, for real estate development.
Origins of Alternative Real Estate Financing
Although many alternative financial services are centuries old, the recession formed the modern and now popular concept of alternative real estate financing. A host of big banks created a ‘capital vacuum’ through their restrictive lending resulting in certain markets and project types being underserved. Due to the gaps created by these traditional lenders, alternative finance has risen to provide additional funding opportunities to underserved real estate developers.
There are some critical spectators who hold the position that the tighter regulations are needed in the real estate investment space especially after the Great Recession, and those spectators are correct. Serious alternative real estate lenders are not looking to fund loans that will increase their risk intake with little to no chances of a successful payoff. The key difference between traditional banks and alternative/private sources of funding is the way in which the loans are underwritten, the speed of the transaction, and the adaptability of the lender. Sharestates, for example, uses a 34-point risk matrix in addition to following all regulatory standards but can still fund the loan in less than half the time it will take a traditional bank. To learn more about what Sharestates considers during the underwriting process, click here.
Essential Alternative Financial Models in Commercial Real Estate
As banking lending has increasingly become more time consuming and generally less favorable to real estate developers, alternative financial services are consistently providing these developers with more efficient funding. Some of these essential funding alternatives in commercial real estate development include:
- Bridge loans. Interim loans used to fund short-term construction or note transfer;
- Mezzanine loans. Characteristically larger commercial real estate loans comprised of debt and equity financing that grant lenders the right to convert liability to an equity interest in a company in case of default;
- Hard money. Short-term loans offered by private investors that typically carry a high-interest rate and can be utilized for acquisition and construction.
Real Estate Crowdfunding – Where the Whole is Greater Than the Sum of its Parts
With a history dating back to when customers saved the Bank of England in the 1730s, and when 160,000 people raised $101,091 for the base of Statue of Liberty in 1884, crowdfunding (in the modern interpretation) is the practice of pooling small funds from numerous individuals to fund a venture. Although this form of fund aggregation occurs on different platforms, the Internet is the primary medium of crowdfunding in recent years. The user-friendly innovation of real estate crowdfunding simplifies and streamlines the qualification process for crowdfunders and real estate developers. Product innovations such as one-click closing and auto-invest are just two examples of this innovation, and the benefits of crowdfunding are clear:
- Access to capital with fewer upfront costs;
- Viable alternative to bank loans or traditional funding; and
- Sharing an idea on crowdsourcing platforms is an effective form of marketing.
Alternative Funding: Finance Industry Evolution
As conventional lender conservatism and underwriting policies intended to avoid a repeat of the recent economic downturn have restricted growth in commercial real estate, developers are more motivated to pursue progressive and alternative means of funding for project execution. More importantly, securing a funding source less reliant on traditional lending sources offers real estate developers greater opportunities and access to capital, with less associated risk.
Alternative financing (also known as marketplace lending) is a formative factor in how the US real estate market has evolved since the great financial meltdown of 2008. Real estate construction activity in the country has seen yearly growth since 2009 (US Census Bureau) with alternative financing contributing to the expansion.
Nonetheless, alternative financing remains a new concept to many real estate developers who haven’t been exposed to its benefits. The following are some of the more common questions about alternative financing, bridge loans, hard money, and mezzanine loans.
Why do I need Alternative Financing for my Real Estate Development Project?
You may need alternative financing for your real estate development project for a wide variety of reasons. These reasons revolve around the limitations of conventional financing and the advantages of alternative funding options. Consider the following.
- Time-Consuming Approval Process: The approval process for conventional financing is very time-consuming compared to alternative financing. Approvals and the time it takes to close are fast by comparison.
- Loan-to-Value Ratios: The Loan-to-Value (LTV) ratio you’ll get with conventional financing will only go as high as about 60-70 percent. This means that you’ll have to spend more out of your own pocket to realize your real estate development objectives. Alternative financing allows LTV ratios of up to 80 percent.
- Timing and Prepayments: Conventional financing is inherently long-term in nature. Most conventional lenders will discourage you from closing out the loan early by way of prepayment penalties. Those prepayments could be 1-5 years worth of interest payments depending on the remaining lifetime of the loan. There are shorter prepayment penalties in alternative financing due to the short-term nature of the loans. If the alternative lender does require prepayment penalties, they will typically range from 3-6 months worth of interest payments.
- Flexibility: Alternative financing institutions are generally more accommodating and adaptive than conventional financing institutions. This means that alternative financiers may be more versatile with regard to terms and conditions of the financing agreement.
How do I Find Trustworthy Sources of Alternative Financing as a Real Estate Developer?
Alternative financing is a booming sector within the real estate financing industry. There are a plethora of marketplace lending platforms to choose from. Some of the things you should look for in a trustworthy lender include:
- Track record of success: The best way to analyze an alternative financing institution is to see how long they have been in business and their rate of success is financing new deals through the years. This sector is fairly volatile. This means that unreliable stakeholders tend to fade away sooner rather than later.
- Borrower Assessment Systems: The most reliable sources of alternative financing will have in-depth borrower assessment systems that are comparable to conventional financing evaluation models. Simultaneously, you also want to see quick turnaround times as it demonstrates the maturity of operations.
- Loan Underwriting Prerequisites: Loan underwriting is another area you should evaluate. What kind of a project review process do they have in place? Do they check aspects such as architectural plans, zoning laws, budgetary constraints, project timelines, projected values, and demographical details of the market? You will want to know what will be required to process your loan before you select a marketplace lending platform as each platform has varying requirements.
- Experienced Management and Staff: Investigate the experience of the fund’s leadership. If the alternative financing source has experienced leadership in the real estate industry, you can be sure of their reliability and trustworthiness.
At What Point in the Real Estate Development Process Should we Seek a Bridge Loan?
Bridge loans are most useful at the very beginning of a real estate development project. You take bridge loans when you’re expecting some funds to become available but need to start a real estate development project immediately.
For example, if you’ve applied for conventional financing and are waiting to get approval, then you can use bridge loans up until those funds get released. Similarly, if you have funds that are occupied in another project, then you can take a bridge loan up until those funds become available. There are many online marketplace lending platforms that offer short-term bridge loans to meet this specific need.
Is a Hard Money Loan a bad Idea for my Real Estate Development Business?
No, hard money loans are designed for real estate development projects that conventional financing institutions not fund. Most hard money lenders will fund real estate projects on overly distressed assets or assets that have varying market conditions that make them less appealing to a conventional lender. It is important to note that due to the convenience, and speed of a hard money loan, interest rates are usually much higher than a longer-term conventional loan.
You can use hard money loans to start work on your asset. Once your work on the real estate asset has made it viable enough for conventional financing institutions to back you, you can exit the hard money loan. If done right, this method will still leave you with sufficient working capital.
What is a Mezzanine Loan and how do I Find a Lender?
Mezzanine loans are a mix of equity-based financing and loans. Essentially, when you take out a mezzanine loan, you’re giving the lender the right to convert some or all of the loan value into equity in your business. The lender can exercise that right only when you default on your payments of the loan. Mezzanine lenders tend to look for high-worth borrowers or borrowers with significant assets. There are dedicated mezzanine lenders in the US in the form of traditional funding sources, such as banks, and alternative sources, such as marketplace lending platforms.
What Steps Should I Take to Prepare to Apply for Alternative Financing?
The qualification criteria and the approval process for alternative financing varies. Here are some of the requirements to consider.
- Collect The Right Documents: Even though alternative financing is easier than conventional financing, you’re going to need the right documents for approval. You should prepare ownership/entity documents of your business, your entity balance sheets, along with the relevant plans and proof of liquidity.
- Create A Project Plan: You will need to have an effective and approved loan exit strategy as well as renovation/conversion plan in order to secure funding.
- Present A Memorandum Or Pitch Deck: You may have a face-to-face meeting with the lender where you’ll have to present your project plan. Creating a memorandum or a pitch deck will make this meeting more productive.
- Focus on Your Staff: Like conventional financing institutions, alternative financing institutions also get swayed by the quality of your workforce. The talent and experience of your staff and vendors speak to your commitment to your business. Building a strong team that will attract and build investor confidence.
What are the Disadvantages of Conventional Commercial Real Estate Financing?
Conventional commercial real estate financing is governed by stringent regulations. Between heavy demand for financing in the growing US commercial real estate market and tougher regulations, conventional financing institutions are under pressure. The following disadvantages are the consequence of these factors.
- The conventional commercial real estate financing has to conform to the High Volatility Commercial Real Estate (HVCRE) regulations. This is why the qualification criteria for conventional commercial real estate financing is particularly stringent. As a result, only larger players with heavy-duty balance sheets and long-standing track records in the market are able to get approval.
- Conventional commercial real estate lenders give preference to bigger players and don’t entertain newer entrants as frequently.
- The approval process for conventional financing is time-consuming and the requisite documentation is stringent.
- Conventional commercial real estate financing offers a lower Loan-to-Value ratio of up to 70%.
Insufficient Working Capital Will Never Hold You Back Again
Whether you’re a new stakeholder in the market or a seasoned commercial real estate developer, it is likely that you’ve struggled with access to funding. It is likely that you’ve also faced challenges in securing the working capital necessary to maintain brisk growth. Alternative financing through marketplace lending has the potential to resolve such issues and facilitate growth for your real estate business. You can acquire the capital needed to seize on fleeting commercial real estate development opportunities quickly.
Sharestates has closed over $1 Billion across 1,000+ real estate loans since 2015 – making it one of the largest alternative sources of financing in the real estate space. To speak to a Sharestates loan specialist, submit your contact information today!
Sustainability refers to practices and concepts that support the environment, health, and the economy. For accredited investors this means improved property values, tenant demand, lower expenses, and improved tenant satisfaction. This is a popular topic with the growing awareness and demand for green building products and technologies. To help answer your questions and give you a little more insight on green building practices, we isolated 7 questions that are commonly posed regarding sustainability and investments in real estate.
How do sustainable practices reduce operational expenses?
A primary way that sustainable design practices reduce expenses is by minimizing energy consumption. They also diminish water usage by employing native vegetation, low-flow fixtures, and water reuse technologies. When applied to the operations of your business, it can help eliminate paper waste, excess energy use, and fuel consumption. Over the course of weeks, months, and years, the cost savings from efficient materials and equipment can be substantial.
Does it cost more to go green?
No, it does not cost more to go green. This is especially true when green design is implemented early in the integrative design process. Integrative design encourages collaboration and incorporates sustainable design as an early strategic consideration. Fortunately, most materials on the market are already green due to regional and local building codes and laws. Compared to a decade ago, green materials are much lower cost with much greater variety and availability. Whenever there is an additional cost for more efficient and sustainable items, the initial cost is offset by long-term savings in energy use and durability of materials.
Why is durability important and how does it affect maintenance expenses?
Durability is important because it determines how much wear and tear a material can withstand. Durability has a direct impact on the amount and frequency of maintenance expenses. Durable products also tend to be higher quality and more appealing, a particularly important consideration in light of the damage that tenants can cause to flooring, walls, counters, and nearly everything else. When it comes time to resell the property, or prepare for new tenants, renovation costs will be significantly lower.
Where is the best place to build, new or existing developments?
The best places to build are existing developments in active urban communities. Existing developments eliminate the need to build new infrastructure and utilize raw materials. This reduces the carbon footprint by limiting unnecessary production and waste, as well as the cost, pollution, waste, and environmental impact created by constructing in undeveloped areas. Building new water, energy, and communications infrastructure is risky, expensive, and has the potential to negatively affect native species and hydrological features. Infill developments are another sustainable option. These are lots located within urban boundaries that are undeveloped or have been developed in the past but are currently vacant or underutilized.
How does sustainability support human health?
Sustainability supports human health by consider the physiological and psychological needs of building occupants and transitive users. Considerations include indoor air quality (IAQ), indoor environment quality (IEQ), walkability, and access to public transportation. IAQ is affected by the presence of obsolete toxic building materials, HVAC ventilation and filtration equipment, and byproducts of the construction process. IEQ is supported by designing for ergonomics, implementing zoned temperature controls, proper workspace lighting, and providing natural views. These measures increase tenant appeal, satisfaction, and contribute to user health. Walkability and transportation offer exercise opportunities and reduce the carbon footprint and air pollution within the community.
How important is Green Certification?
Green certification serves as marketable proof that a property is sustainable in terms of energy usage, water consumption, and human and environment impacts. According to the National Association of Realtors, properties with these certifications have been proven to sell for more 5-9% more than conventional properties. The competitive environment in the real estate market and the demand for green properties are making green certifications such as LEED and Energy Star more feasible and relevant.
What is Greenwashing?
Greenwashing is a common strategy used by marketers to make products appear to be more sustainable than they actually are. This is typically achieved by emphasizing features that may legitimately be green, while ignoring the larger picture behind the production and distribution of the product. Brokers and building owners are sometimes guilty of this as well. This is part of the value in obtaining green certifications for your projects or asking about them when ‘green’ claims are made in connection with a building you’re considering for acquisition.
More to Green
Sustainability is a deep topic with many facets that can take broad reading and study to unravel. Going green will reduce your operations and maintenance costs, contributing to greater positive cash flow and long-term portfolio growth. If you have more questions or need help evaluating a potential acquisition, reach out to us and we’ll work with you to move your investing goals further.
In most cities around the world, abandoned buildings are regarded with distaste. This is true for NYC abandoned homes, factories, and buildings too. Abandoned buildings are eyesores, but for some investors, they can also be an incredible opportunity to bring something new to the New York City landscape. By renovating an abandoned home or building, some developers can open themselves up to incredible sources of revenue.
Renovated Abandoned Buildings
Because there’s so little space in NYC to create new developments from scratch, most real estate investors need to look to renovations and redevelopments as a way of making their mark on the map. The following example
1. The American Brewery
Located in Baltimore, the American Brewery was once one of the largest buildings of its kind in Maryland. However, production only lasted until 1920, until the operations were shut down. The building eventually was abandoned, but it’s historical significance allowed it to achieve a placement on the national register of historic places. The building was restored in 2012 and won an award for adaptive reuse and compatible design.
2. The World Trade Center
Ever since the attacks on September 11, New York has been looking for ways to redevelop the 16-acre site where the Twin Towers once stood. In January 2017, 1 World Trade Center, otherwise known as the Freedom Tower, was built, along with a transit hub, a memorial, a park, a mall, and a museum. There’s more to come by 2020 too, including a small church and performing arts center.
3. The Cast-Iron Building
The Architectural design firm WORKac recently completed the renovation of a section of NYC abandoned homes in the form of the cast-iron façade building in New York City. The space has been transformed into a serious of modern apartments, with a rooftop addition that was deemed reasonable because it was invisible from street level.
4. Pacific Park
Otherwise known as Atlantic Yards, the Pacific Park project costing $6 billion is now set to bring a range of 6,430 new apartments and shops into the Prospect Heights area of Brooklyn. Previously full of abandoned industrial buildings, the site now boasts the tallest modular apartment building in the world, and the full development is set to be finished by 2025.
5. Hudson Yards
Finally, Hudson Yards is the 28-acre mega development that contains around 33 smaller projects in total. The neighborhood is set to be completed in 2024, and should be filled with retail units, residential units, restaurants, a public square and a range of office buildings. The estimated cost for the NYC abandoned homes redevelopment is around $20 billion.
Currently, the overhauled area is set to be one of the most expensive developments in real estate in the history of America. Previously, the neighborhood was simply a largely abandoned area that included an old rail yard and an offloading space. Now, thanks to new development teams, it will soon become one of the most sought-after locations in New York.
New York City is a city that’s always struggling for space. For real estate investors, there’s almost never an opportunity to build something new, or create a space from scratch. This means that organizations need to take another approach if they want to make their mark on the development map.
CRE Conversions in NYC have become the most common way to make the most of the space that already exists in the form of foreclosed or abandoned buildings. Here, we’re going to look at just some of the CRE conversion projects and CRE investment trends that are happening in New York City.
New NYC Housing Opportunities
One of the most compelling uses of old and abandoned buildings is to transform them into low to moderate and middle-income housing opportunities, designed to bring in floods of residents who can’t afford to live in the pricier areas of the city. For instance, Essex Crossing has been the center of a new housing design for more than half a decade now.
The 1.1-billion-dollar development is intended to include plenty of delightful features including homes, bowling alleys, and a movie theater. The once abandoned site was previously home to mostly parking lots and old industrial buildings.
Academic Facilities and Schools
Another opportunity for these large and unused spaces comes in the form of attractive new schools and educational facilities for higher education. For instance, the Ivy League School in Ithaca New York, Cornell, recently built a brand-new campus to make up most of the NYC Roosevelt Island space.
This high-tech space took over buildings previously abandoned to create a powerful new property that not only includes classrooms and offices, but also dorm rooms, a hotel, and restaurants for students to explore too. The campus opened in 2017 and it cost around $2 billion to build.
Mega Development Housing
While standard housing projects are often quite appealing when it comes to CRE investment trends, some real estate investors are looking for bigger and better solutions in the form of “mega-developments”. For instance, Hunters Point South, is the mega-development project in Long Island City designed to prioritize affordable housing.
The space is the largest development of its kind since the 1970s, and over half of the Hunter Point units will be offered at a rate below market value. Apparently, 93,000 people already applied for space during 2015. The site is predicted to include a range of different amenities, including retail parks, restaurants, schools, and its own waterfront park.
New Startup Spaces
Finally, while many of today’s startups seem to start in home offices or shared space, there are still plenty of companies out there looking for chances to make their mark in the office world. Some of the CRE conversion projects in NYC are set to address this trend by offering more affordable and supportive redevelopments in office space.
The expansion plan includes options for a hotel, various office buildings for tech startups, and stores too. Although there’s a lot of development still to go in this area, construction began on the multi-billion-dollar project back in 2012, and it’s still under way today. The major redevelopment project is designed to give the industrial complex a much-needed makeover and hopefully drive new business to the area.
At Sharestates, we have committed a focus to our “bread and butter” hard money fix and flip loans along the East Coast. As the company and client base has grown, we have expanded that focus to meet the unique needs that come across our desks daily.
To date, Sharestates is licensed to lend in 46 states nationwide and has closed over 950 loans. To learn more about our team of real estate experts click here. To see more our our key performance metrics over time, check out our statistics page!
Below is a breakdown of some of our most fundamental program types. Do you have a real estate project and require financing? Contact our experienced real estate lending teams today!
Fix and Flip Lending Program
Ground up and Heavy Rehab Program
Any property owner ready to sell their home should at least think about the benefits of real estate staging before they call their real-estate agent. Often, the keys to selling a fix and flip property for a real-estate investor is finding a way to present their recently-refurbished structure in a way that inspires and delights potential buyers.
Real estate décor and staging is all about transforming the interior narrative of your property, to appeal to as many buyers as possible. With the right designs and trends, home sellers can close sales faster and make bigger profits. With that in mind, here are just some of the real estate staging trends emerging for spring 2018.
1. Contemporary Pieces Combined with Comfort
Today’s homeowners are looking for the perfect blend of modern sophistication and classic comfort. While it’s important for a room to be stylish it should also have plenty of comfortable elements within it that convince a buyer to imagine themselves lounging in front of the television or enjoying some relaxing moments with friends and family. This living room space is the ideal for family life.
2. Industrial Warmth
Industrial elements have made their way more frequently into the real estate décor catalog lately. However, it’s important for sellers to make sure that their industrial elements don’t make the space seem less welcoming than it is. The living space to the right combines attractive and warm elements with steel accents to achieve the perfect loft look.
3. Velvet Comfort
Across the world today, real estate staging has begun to take on a brand-new texture in the form of beautiful, luxurious velvet. In fact, many interior designers have begun to suggest that velvet could be the material of the year for 2018. The key to selling a fix and flip quickly is making sure that borrowers don’t go over the top with their velvet choices. Ideally, cushions and the occasional statement piece should be used to add a sense of indulgence to a space, like in the living room to the left.
4. Dramatic Statement Walls
Statement walls are a great opportunity for fix and flip investors who want to give their rooms a focal point without using too much color. Too many shades and patterns can make a room feel cluttered, but a dramatic wall can help to tie the space together and give it a sense of modern charm. Richer wall colors could be one of the trending features in real estate décor that help to enhance the appearance of other bold statement pieces. The living room design to the right would be ideal for a period-style room.
5. Statement Pieces
Finally, statement pieces in real-estate staging can help to give life to a room without giving the house too much personality. The key to selling quickly is convincing buyers to imagine themselves within a new property, rather than connecting a home to a family that might have lived there before hand. Metallic pieces are still very popular today, which is why the mirror and table combination to the left could be great for 2018 real estate décor.
There’s no one-size-fits-all solution to creating the perfect staged property but keeping on top of the current real estate trends can be a great way for fix and flip investors to close sales faster in this agile market.
If you’re an active or accredited investor, you may already be very familiar with the concept of cap rate and internal rate of return (IRR), but it’s always good to review the concept no matter what stage of your investment career you’re in. These financial metrics are some of the most commonly used in the commercial real estate investment business. They help measure the profitability of current and potential investments. This article will discuss the nature and value of these concepts in helping you select only the most appropriate, and profitable investments.
What is Cap Rate as it Applies to Accredited Investors?
The capitalization rate at its core is a simple tool to measure the profitability of an investment. It does this by dividing the Annual Net Operating Income (NOI) by the price or value of the property. Cap rates give us an objective measure by which to compare multiple investments. If you’re considering several properties in a particular geographic or class-based market, you can research what is typical and customary. This raises the question: what is typical? The best way to determine the appropriate cap rate is by researching what other investors will accept for a given type of investment. To accomplish this, locate sold and active comparables similar to the project you’re considering and calculate the cap rate. The primary factor that influences the prevailing cap rate is risk. Risk evaluation is a fundamental aspect of investment, real estate, or otherwise.
In general, the greater the risk, the higher the cap rate investors will demand before contributing their capital. Risk factors for real estate investment include property condition, class, vacancy rates, sponsor experience, and market conditions. This is not unique to the investment business, but also an important factor in insurance and lending. Elevated risk doesn’t necessarily mean that an investment isn’t a good choice. Depending on the risk tolerance of the investor, riskier investments can mean higher returns and faster portfolio growth. Risk tolerance varies with the experience of the investor and the amount of liquid capital on hand.
How is IRR Important to Determining Profitability?
IRR is another important metric for comparing investment opportunities. This metric requires a more sophisticated calculation that considers the time value of money and the rate of return the investment provides over the projected term of the investment. The calculated IRR for an investment is the discount rate that brings the net present value to zero. This is abstract but helps determine the overall growth rate that the project is likely to provide considering the capital invested, the number of time periods, and the amount of cash flow during each period.
The advantage of IRR, or its usefulness as a supplement to the cap rate, is that it incorporates the term of the investment and allows you to anticipate the overall rate of return. This is important when you’re evaluating short-term investments, or those that have a fixed period and projected exit strategy. For smaller residential investments and those held indefinitely, the cap rate may suffice. Where you know the amount of capital invested, and the income is projected to change over the term of the investment, IRR is beneficial to calculate. In addition, the due-diligence effort provides greater confidence in selecting a high-value investment.
Why internal, and not external rate of return? The ‘internal’ refers to the fact that this metric doesn’t consider external factors such as the rate of capital reinvestment and the cost of funds. For more accurate measurements that include these factors, the modified internal rate of return (MIRR) is useful. The MIRR accounts for the fact that capital is typically not reinvested at the project’s rate of return. To provide a more accurate idea of the return, the MIRR uses the cost of capital as the rate of reinvestment.
Considering Risk in Determining a Cap Rate and IRR
It’s a bad idea to put money into any investment, regardless of risk, if losing the funds will have a negative effect on your solvency. This is why the SEC insists that only accredited investors participate in certain types of investments. Another thing to consider are your overall objectives as an investor. Are you investing to generate dividends and cash flow to earn a living? To build your portfolio to provide enhanced net worth and cash flow for retirement? How close are you to retirement? If you’re looking to make a living off your investments, and you have sufficient liquidity, you can pursue a riskier strategy in short-term projects that will generate higher return. When you’re investing for the long-term, low risk, stable investments can be a better option.
Gauging the risk associated with high-value investments can be a daunting task, but when you have a team of experienced professionals supporting you, calculating and evaluating IRR and cap rates is much simpler. Connect with us to learn more about how we can help you in finding only the most suitable investment opportunities. Partnering in crowdfunding projects offers the lowest risk profile and the highest potential returns, as well as the least stress.
Online Real Estate Investment Tools to Manage Your Portfolio
It can take tremendous effort to balance your investment activities with your career, business, and personal life. Fortunately, the modern online real estate investment field offers many tools to help you coordinate your tasks. As an accredited investor, it’s vital to track projects, monitor performance, and manage employees and stakeholders. This guide will discuss a variety of options to reduce your workload and keep your efforts focused.
Market Data Tools for Online Real Estate Investment
When is the best time to exit an investment? What is the prevailing cap rate? What is the direction of the labor market, and how will interest rates affect the value of your project?
The only reliable way to determine the answers to these questions is by conducting your own due diligence. Researching potential acquisitions and optimizing your current online real estate investment projects can also take a fair amount time. Thankfully, there are many online publications that specialize in the commercial real estate market. There are also niche media outlets in most medium to large metropolitan markets that will provide data regarding the performance of various industries. This includes labor market statistics, population growth, lease rates, and regulatory factors specific to the market.
Another option are online data providers that aggregate real estate data and allow you to run reports on various statistics the get a better picture of the direction of the market, and the value of specific properties. Even if you’re utilizing data provided by a project sponsor or investment platform, it’s best to confirm conclusions with your own independent research. Always question the source of data and look for any underlying bias that could skew the assertions. We don’t endorse any particular provider; however, you can do a simple search or ask other investors and real estate professionals for reliable data sources.
CRM and EAS
Customer relationship management (CRM) and enterprise application software (EAS) are digital solutions that can allow you to manage all aspects of your operation. When your portfolio is well diversified though online real estate investment, it can be difficult to keep track of the many properties and processes associated with each. A well-designed CRM helps you categorize and maintain detailed records for each of your prospects, clients, and associates. In the fast-paced online real estate investment business, it pays handsome dividends to have the information you need readily available.
As an example, when the closing of a profitable deal is imminent, and last-minute funding or other help is needed, a CRM will provide the contact information and data you need to find the people to help get it done. In addition, if you’re working with numerous prospects for acquisition, your CRM will help by providing timely reminders. They can also promptly deliver key information required to get contracts signed. Follow-up is typically the greatest challenge in the investment business. Correspondingly, CRMs help bridge that operational weakness.
Enterprise Application Software is a broad category of applications that support all the functional areas of business. This includes CRM, accounting, human resources, inventory, production, legal, marketing, analysis, and more. EAS allows you to view your entire operation from a dashboard. From there you can view key metrics to monitor and evaluate the performance of your business. For online real estate investment operations, this can mean improved efficiency, less wasted labor, and faster processes. The key result being improvements in your bottom-line and amount of free time for personal and family goals.
Integrated Online Real Estate Investment Management
Depending on what online real estate investment platform you invest with, there may be much less management responsibility required. For both new and experienced accredited investors, it is more efficient to focus on researching projects and making contributions. Directly managing investment properties and dealing with property management can be very time consuming and stressful. Part of the appeal of online real estate investment, especially crowdfunding, is that it allows investors to pass management responsibility to dedicated professionals that take pride in optimizing investment properties and ensuring appropriate returns.
With the right online platform, you can view all your investments in one place, as well as monitor your earnings and the performance of each property. Another important aspect of crowdfunding is that platforms will typically conduct due diligence tasks for you. The will provide all the necessary documentation to make an informed and confident decision. Acquisitions specialist review potential projects and vet them based on comprehensive criteria. A reputable investment organization will only present the most viable investment opportunities. As previous mentioned, be sure to verify with your own market and property research.
Wealth Building Strategy
In summary, online real estate investment is an excellent option for busy accredited investors. For those that want to participate more in the investment process, there are numerous tools available. Taking advantage of these will allow you to improve the efficiency of investment operations. Whichever route you take in your investment journey, partnering with investment professionals in developing your wealth building strategy is a wise decision. Contact us at Sharestates to talk more about your investment objectives and what tools and strategies will best support your goals.
Real estate investing is a complex, and time-consuming process. If you want to make sure that you get the most out of your money, you need to be prepared to take your business with you wherever you go. The right real estate app on your smartphone can help you to better assess the properties you’re buying and prepare for a more successful sale.
Whether it’s an app that helps you to calculate return on investment or a smartphone solution that makes it easier for you to plan your renovations, here are just 5 of the tech solutions you should consider using in 2018.
1. The Property Fixer App
The Property Fixer App from MLS LLC is a great opportunity for real estate investors who frequently flip properties. This smartphone app helps you to analyze the potential ROI on a property that you intend to “flip” to a buyer. When you enter your property details, you can see a Flip analysis that demonstrates your profit for that flip. This real estate app also helps you to track monthly expenses and potential improvement costs, which is perfect for when you want to keep on top of your taxes.
2. Ten-X Commercial App
The Ten-X Commercial App is great for real estate brokers and investors alike. It’s designed to help you find the most appealing real estate deals available on the commercial market, review your due diligence and even submit orders from your smartphone. The app also ensures that you’ll get alerts sent straight to you as soon as a new property becomes available on the marketplace.
3. Zillow Mobile App
The Zillow Mobile app is a great solution that allows you to view properties available within a Multiple Listings Service. This information is very useful for catching up on listings in a short space of time, and it can make it easier to research regional home values from your smartphone too, so you can calculate your potential ROI on any real estate investing opportunity.
4. 10BII Calculator App
Keeping on top of your finances is particularly difficult as a real estate investor, which is why the 10BII Calc Financial Calculator app could help you to minimize your number-based headaches. This real-estate app is available on a range of different devices, including the Windows app store, Android, and iPhone. You can use it to calculate your returns by factoring in interest rates, monthly payments, and more. The app even helps you to check out cash flow diagrams, so you can see what you can expect in the months ahead.
5. Magic Plan App
Finally, if you’re interested in getting involved with property flipping, then this real estate app could be perfect for you. The Magic Plan smartphone app is one of the most popular investment solutions because it allows you to take pictures, measurements, and floor plans all with your phone, saving you money and time. Users can add annotations, attributes, and objects to generate reports and estimates for turn-around profits within a matter of seconds, and you can store your floor plans in the cloud.
This is a great way to share floor plans and estimates with any investing team or partners you might have, and it can even help you to show your designs to home inspectors, architects, and craftsmen too.