At Walnut Street Finance, we take our due diligence seriously. One of the most important aspects of any real estate investment plan is to ensure that the type of property you’re planning to develop – whether it’s being built from the ground up or renovated – fits the market in which it's located. Unfortunately, this aspect of planning can be overlooked by developers who are in a rush, have a “signature style,” or who simply don’t know the market well enough – and that can be bad news for their investors, who may not see the returns they would ordinarily expect.
Due to the nature of passive investing, when you’re investing your funds with a real estate investment firm you may not have any idea as to what the proposed design is or what impact it may have on the building’s potential returns. In fact, you may not know anything about the specific properties that are being developed, period.
When you’re working with Walnut Street Finance, however, we do our due diligence from start to finish on the whole project to make sure that your investment is going to fund projects with a high likelihood of success.
So, what are the steps Walnut Street Finance takes to ensure we’re doing our due diligence? It begins with reviewing the proposal from the developer to see what property they’re interested in purchasing and what they plan on doing with it. Because Walnut Street Finance is so in-tune with the local market and have been working in the Washington, D.C. area for over 20 years, we know the ins and outs of each neighborhood and development. We’ll know just by looking at the neighborhood in which the property is situated whether the developer’s plans are likely to align with the existing properties and whether their plans will increase or decrease property value.
For example, it’s reasonable to watch popular design shows on TV and think “an open floor plan with an all-white kitchen will have awesome resale value,” and while that may be true in many markets and newer construction, if the home that’s being renovated is located in a historic neighborhood full of homes with mahogany wood and traditional design features (such as formal dining rooms and butlers’ pantries) the current trends in home design may not be the best choice. In fact, since those trends wouldn’t be in tune with the other homes in the neighborhood – things that attract prospective buyers to a specific area in the first place – a developer may spend time and money knocking down walls, putting in support beams, and taking out original features and ultimately hurting the resale value. Yikes!
If we feel that the proposal isn’t likely to yield a high return, we don’t invest – plain and simple. With these factors in mind, you can rest assured that your funds will always be working hard on projects that are likely to produce high returns.
Now that you know more about Walnut Street Finance and our due diligence process, get in touch to learn more about how to put your money to work by investing with us.