Projecting real estate equity investment returns is tricky, at least relative to being a lender, where the returns are stated contractual amounts. Equity investment involves targeting certain levels of return on capital, but certainly not guaranteeing the achievement of those levels of return. Equity ownership is the residual interest in a real estate transaction, meaning it gets the “residue”, or what’s left over, after all obligations senior to equity are met (i.e., repayment of debt).
Crowdfunding platforms are faced with the challenge of telling a clear story to potential investors regarding what their returns might be. Unfortunately, many platforms are just using illustrative amounts, such as a $10,000 or $50,000 investment, to show what dollar returns will be.
This falls short for many investors, who don’t want to have to do math to back into their own projected returns amounts if their intended investment amount doesn’t match the example provided by the platform.
Crowdfunding platforms who want to provide a truly custom experience to their prospective investors can benefit from Valuate’s API integration capabilities. More information can be found below, and also through contacting us at firstname.lastname@example.org or 703-577-4110.
I hope to see this functionality included on all CRE Crowdfunding sites soon. Investors need to see downsides and understand what happens to their investment in the worst case scenario. If you’re a non-real estate professional, make sure you understand the mechanics of the cash-flow splits and how it impacts your investment returns. You also need to understand if the projected cash returns are project-level or investor-level.
A tool like Valuate will empower even the most novice real estate investor.
Hi Joe, all great ponits. Valuate’s API is starting to get noticed by some very prominent platforms. Stay tuned for announcements.