HomeVestors Warns Investors To Be Weary Of Crowd Funding Real Estate Deals


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The new craze in real estate involves investing through crowd funding, but investors should completely understand it before committing to it. 

Dallas, Texas HomeVestors is the nation’s number one home buying franchise and has helped real estate investors purchase 50,000 properties over the years.  The company knows that investors who are thinking about getting involved with crowd funding real estate need to be aware of all the negative factors attributed to it.  While crowd funding real estate has grown in popularity in 2013, one needs to understand the investment in its entirety before committing capital to the pursuit.

While the concept of crowd funding real estate deals is appealing and has a certain attraction to it, the truth is that many of these deals end up failing.  The reason for this is because many of these deals are high risk and managed by amateurs.  This is because professional real estate investors generally don’t have to use crowd funding to support their business ventures.  In fact, the majority of investors who use crowd funding to purchase an investment are either broke or don’t know the ins and outs of the real estate business.

Another reason that investors should be weary of crowd funding real estate deals is because there are generally fees associated with them.  Before getting involved in one of these deals, make sure that all fees are stated up front and ask about any hidden fees that aren’t immediately transparent.

When considering a crowd funding real estate deal, take a large number of factors into account and perform the necessary due diligence.  Research the sponsor investor who is advertising this investment.  Before working with this sponsor investor, first find out how much equity this individual has in the investment.  Those sponsor investors who don’t have any skin in the game should be avoided.

The next factor to check when considering a crowd funding real estate deal is whether or not there is a proper analysis of how the deal will make money and a timeline for each various goal.  An analysis that doesn’t seem to be logical should be avoided or an investor should ask more questions regarding the deal.

When analyzing a sponsor investor who is trying to get the capital for a crowd funding real estate deal, always check their references.  Consider running a credit check on the individual and get the necessary information to determine their character.

Only investors who thoroughly understand crowd funding real estate deals should get involved with them.

About HomeVestors of America Inc.

Dallas-based HomeVestors of America, Inc. is the largest buyer of houses in the U.S., with 50,000 houses bought since 1996. HomeVestors trains and supports its independently owned and operated franchisees that specialize in buying and rehabbing residential properties.  Most commonly known as the “We Buy Ugly Houses®” company, HomeVestors strives to make a positive impact in each community.  In 2012, for the seventh consecutive year, HomeVestors was among the prestigious Franchise Business Review’s “Top 50 Franchises,” a distinction awarded to franchisors with the highest level of franchisee satisfaction.  For more information, visit www.HomeVestors.com.

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