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Investigating Your Investment: Crowdfunded Real Estate

August 6, 2014

Joining the crowd for your next real estate investment may make sense, as long as you do your due diligence.

Zoning and Other Legal Concerns

Oftentimes a vision for a real estate project will involve converting the property into something it is not.  Turning a warehouse into a paintball facility is all well and good as long as you’ve delved into the zoning laws and other legal concerns. If you aren’t researching what the local zoning laws actually allow you to do with your new property, the vision can turn to ash pretty quickly.


The LA Times piece also encourages potential investors to research current and future tenants.  In real estate investment, your tenant is your customer and their ability to pay and pay reliably is the most important factor in whether or not your investment becomes profitable.  If the area of the building you are investing in has a history of tenants being evicted, paying rent late, poor credit reports, or lack of references you should think long and hard before putting any money on the table.  In any business, you need to find qualified leads and if the area in which your property is located can’t attract them, your investment may be in trouble.  It’s easy to run a marketing campaign to attract customers to your pizza place in a so so area, it will prove much more difficult to attract high quality tenants to spend half of their lives there.

The Market

This might seem like a simple one, but you should do some serious into the market in which you are planning to invest.  There are hundreds of factors which can affect whether or not a real estate investment is successful but there are two you need to consider before even thinking about moving forward.  The first is the condition of the property itself.  The second?  The market, of course.  Put simply and eloquently by the Lew Sichelman of the LA Times, a bad property in a good market is almost always a better investment than a good property in a bad market.  Why?  Because you have direct control over the quality of your property.  You can renovate and market the property and the neighborhood.  In short, there are a lot of ways you can turn a bad property in a good market into a good property in a good market.  If you’re trying to turn a good property in a bad market into a good property in a good market, you might want to save your energy.

There is a lot to know about a particular real estate market but there are a few simple things you should pay attention to when it comes to analyzing a market’s strength or weakness.  Manshoory encourages investors doing research to look into the demographics of the area, population growth, employment/unemployment rate.

If you have the luxury, you should visit the neighborhood yourself to get a feel for the vibe there.  Talk to the locals residents and see what kind of properties have been popping up of late.  If you’re investing in a strip mall in an area that values its mom and pop shops and boutiques, that might give you pause.

via Gary Richetelli


From → Gary Richetelli

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