Safer Way to Invest in Real Estate
Courtesy: Matthew Milner
Pop Quiz: When a company is about to go public, why does it lobby so ferociously to get a top-tier bank like Goldman Sachs or JP Morgan to manage its IPO?

Depending on how much you know about IPOs, the answer might surprise you:
It’s not just that the banks have the firepower to sell the company’s shares to the public.
It ‘s the best way to get it.
If you are looking for a way to manage your business, then you need to know how to do it Step up and buy the shares itself.
For a company that’s about to go public, that’s a major selling point …
And for folks like us who are thinking about buying the company’s shares, the fact that Goldman is risking its own capital is a huge vote of confidence.
So, when we discovered it, we were able to do it.
Crowdfunding for Real Estate
Basically here I usually show you from my studies and personally investing for our company and also for myself how to invest in private start-ups to earn big capital gains.
In private real estate deals, however, it is not the case.
If you are looking for a real estate investment, then you need to look for a real estate investment.
From a financial standpoint, these private opportunities can be more appealing than REITs,
Minimum investments are relatively low-as low as $ 5,000 …
And yields can range anywhere from 10% to 15%.
These financial benefits might help explain why private real estate investing has been turned into a massive industry:
In 2014, ordinary investors just like you put about $ 1 billion into these high-yielding investments-and this year, that number is set to reach $ 2.5 billion.
But here’s the thing:
Not all real estate is created equal …
And if you do not know exactly what you’re doing, you’re putting yourself at financial risk.
Thankfully, it’s an easy way to make sure you’re looking at the best-quality deals.
“Pre-Funded” Real Estate Deals
If you are looking for a Goldman or JP Morgan Goldman or JP Morgan,
The official term for deals of this nature is “pre-funded.”
In a pre-funded deal, a portal puts up 100% of the capital for a project before offering the investment to folks like you.
If the deal does not get sold, the portal will end up owning the real estate itself.
And since it has been in the game, you’d better believe it’s going to be some serious due diligence before committing.
But not all investment opportunities are pre-funded …
Some are sold on what’s called a “best efforts” basis.
With a best efforts deal, the portal makes money when it helps sell a deal, but it’s not on the hook for any unsold shares. Basically, it just acts as a middleman.
It is not a good idea, but it is not a good idea.
I do not know about you, but all things are the same, I would prefer to invest in deals that are pre-funded deals.
It’s a safer way to invest.
Pre-Funders
There are dozens of real estate portals-from RealtyMogul and RealCrowd .
Many of these portals occasionally offer a pre-funded deal …
But three of them- Patch of land, Fundrise, and Acquire Real Estate-provide pre-funding for every investment.
Why do not all the portals do pre-funding?
Because it’s incredibly expensive and time-consuming.
Let’s look at it.
Before Pre-Funding Happens
As an example of the in-depth research a portal will undertake prior to pre-funding a deal, here’s the official due diligence process for Fundrise:
150 hours of due diligence
100-page underwriting memo
10-person committee review
2 in-person site visits
It even does a “flyover” of any property with a drone, to ensure that it has an understanding of the property’s exterior and surrounding areas.
Now that’s diligence.
Winning Strategy For All
Pre-funding is a winning strategy:
For you, it provides access to safer investments.
And for the portals, it gives you the best deal.
So as you’re dipping your toe into real estate crowdfunding, for a safer way to invest, remember to stick with pre-funded opportunities
Happy Investing
Dumitrescu
