Close Popup Icon
New Minimum: Begin Investing With Just $500. Get Started Now!New $500 Minimum. Invest Now!
https://diversyfund.com/compliance-irrelevant-if-deal-isnt-good/
Advanced Investing

Is Compliance Irrelevant if the Real Estate Deal Isn’t Good?

complianceSo, you’re wondering if compliance is totally irrelevant if the real estate deal is no good. Well, long story short, not necessarily. For investment firms, this can only be true if there’s an assumption that regulatory paperwork, processing, and reporting is compliant. That being said, compliance is what makes a company sustainably viable as well as trustworthy. There is no discounting it. However, compliance can help protect the investor, to a certain degree, if a deal goes sour.

How do you know if the Real Estate Deal is good?

Product and Market Knowledge can, naturally, give you the confidence and understanding of where to look. Even more so, it can show you what key factors make a good investment from any real estate deal you vet. As long as you know where to look, you can make informed decisions based on whether the investment aligns with your portfolio and retirement goals.

Understanding the Operator’s Purpose is one of the most important elements in knowing if the deal is good or not. What are they planning to do with the investment? Volume, track record, time & quality, and liquidity are amongst the major key points to consider.

How Do You Know if The Asset Manager is Good?

As an investor who has a successful track record in investing in real estate, sometimes getting to know the Asset Manager may not be their highest priority when vetting deals. If they plan to overlook the importance of an Asset Manager, their ability to adapt to market fluctuations is this particular investor’s biggest asset.

On the other hand, an investor who lacks product and market knowledge will either need to take time to learn the products or rely on knowledge from the Asset Manager. The only downside to learning on your own, is that you may lose out on opportunities available in the current day’s market. Seeking knowledge from an Asset Manager will allow you to bypass potential market shifts.

Asset Managers expertise and experiences provide real-life examples of how investments are sourced and managed. A vast network of strategic partnerships to get great deals are the x-factor that separates them from the crowd. Firms that show solid deal flow could mean one of two things. First, that they are passing every deal through the pipeline with minimal due diligence. Or that they have strategic partnerships with industry-leading Operators to create a true and strong pipeline.

At the end of the day, any investor strives to yield a return on their investment. Anything shy of a positive return is simply a loss. Whether it be no interest earned or a deal gone sour, compliance is like insurance in that it can only cover you up to a certain point. Seeking an Operator or investment firm that you like and trust is truly the only way to avoid it. Due diligence on the Operator and investment firm is in many cases more important than the deal itself.

Related Articles

An Investor’s Guide: Alternative Investments Explained
  • Advanced Investing

An Investor’s Guide: Alternative Investments Explained

Most of us are familiar with the stock market. But have you ever wondered what the institutions and high net worth individuals are investing in? Alternatives. We’re here to break the news to everyday investors—stocks and bonds are not the only investment vehicles out there! From art to coins, farmland to venture capital, natural gas…

Sourcing Direct Multifamily CRE Investments: A Guide For Individual Investors
  • Advanced Investing

Sourcing Direct Multifamily CRE Investments: A Guide For Individual Investors

With all the different types of real estate to choose from, investors are often left wondering where to start. We explain the step by step process that goes into finding and acquiring high-potential real estate and best practices for investors to source real estate opportunities to add to their portfolio. Types of Multifamily Real Estate…

Your Ultimate Guide to Finding the Perfect Real Estate Investment Property
  • Advanced Investing

Your Ultimate Guide to Finding the Perfect Real Estate Investment Property

Investing in real estate is a great way to increase personal wealth. That’s why a majority of America’s wealthiest individuals have a substantial amount of their portfolio in real estate. Many investors turn to single-family housing to start making money right away. However, this short-term strategy may not play out as well in the long…