deal by deal pitfalls

Six Pitfalls of Deal by Deal Real Estate Investments

One fund, one property, one deal. This is how the majority of real estate investments are made. Investors know the property, how much it costs and are able to see the income statement and balance sheet. While this may be the market norm and appears straight forward, it introduces unintended secondary reactions and hidden pitfalls not generally found in other real estate investment structures. Less Risk? By segregating investors into a single asset, the “upside” of this is that the investors know exactly what they are buying, but the knowns introduce more risk into the fund. The perceived safety is a myth is that investors perpetuate by applying home purchasing logic to commercial revenue generating assets. The thinking being “who would buy a house without seeing it first?”.  Meanwhile institutional investors and professional investors routinely and quietly go about getting the largest returns with the lowest risk because the structure and the perception framing is far different. These are the top Six Deal by Deal Pitfalls: 1. Misalignment to Market Realities Great real estate … Read more