For every potential real estate investor there’s a real estate investing company - but whether or not each company is a good fit for each specific investor remains to be seen. There are, however, some ways in which to decipher whether the company you’re looking at is the best fit for you, and vice versa.
Examine their credentials
This is probably the most important aspect. Unfortunately, these days there are a ton of companies masquerading as legitimate investment companies that simply aren’t. They’re set up to collect high initial fees from their investors and borrowers (application fees, initiation fees, etc.) and then they disappear - or they invest in shady deals. There’s no guarantee that your money will ever make its way back to you, even if you end up going after them with legal proceedings.
When you’re doing your research, make sure you take a look at the real estate investing company as a whole and how they’re set up - from the very basic “do they have a professional website” to the much more granular “can I speak with someone who has either borrowed or invested with them before as a reference.” A legitimate company will also be happy to show you their portfolio and explain their processes - on both the investing and borrowing side - so if you start to feel like you’re getting the run around, then you should be the one running.
Determine minimum investment amounts
This step is definitely an interesting one, as for different investors it can signify different things. If you’re a first-time investor you may be looking for a real estate investing company that allows you to make a relatively low initial investment. But if you’re a veteran investor, you may prefer that your investment company has high dollar minimum investment amounts in case you view low buy-in as a bit shady or diluting the investor pool. As you can see, the circumstances will be different for everyone, and finding a company that fits well with your initial investment strategy is key. You wouldn’t want to commit to investing with a company only to find out that your initial investment isn’t necessarily high enough to bring in a significant return, or that you’re investment is the largest of all their investors and your money is footing most of the bills - and therefore, the most at risk.
Take a look at their portfolio performance and diversity
As we mentioned above, a solid investment company isn’t going to shy away from showing you their portfolio and explaining their diversification process. If they’re a real estate investing company worth their salt they should be bragging about it! Take a good, long look at their portfolio, ask questions about the individual projects and the returns on each one, and check out the various ways they ensure your money is protected. Some investment companies may go all in on one very large project at a time, which can be very risky (although may yield large returns). Others, however, will take your investment and spread it out across a variety of projects, so that any negative return is absorbed by the success of the other projects.
You also want to make sure that the real estate investing company you’re looking at invests in an area that you feel confident in. If a company is investing in markets where the current property value is low and there isn’t an expectation that the neighborhood is “up and coming” you may want to look elsewhere.Still trying to decide which company is right for you? Let us tell you a bit more about ourselves!