You’ve decided you want to diversify your portfolio with commercial real estate. Next, you need to figure out where to source commercial real estate development opportunities. Finally, before you entrust an investment company with your funds, you want to make an informed decision. Here, we will talk about what qualities to look for in a real estate investment company to make sure you can feel confident with your choice.
1. Expertise Across the Stages of Development
Commercial real estate development involves a multi-stage process, sometimes taking several years. From selecting the right location and conducting feasibility studies, to the completion of construction and rental of the space, each stage requires specific expertise. The required skills will depend on the type of project, and how early in the process you’re being invited to invest. For early stage investing, look for a company with experience with site selection, architecture and design, property acquisition, entitlements, building codes, and project management.
2. Ability to Mitigate Risk
When a development company has many of the qualities listed above, they’re positioned to give you the best opportunity for returns with the least risk — which, of course, is never zero. Look for a company able to mitigate risk on entitlements, construction, and every stage of the project. Confirm that they know how to select the right contractor for the job. Find out how they report along the way so you can stay informed of the status of your investment.
3. The Developer’s Accessibility
While online crowdsourcing platforms have become a popular way to invest in real estate, they lack personal interaction. When you choose a real estate investment company, look for one where the owner — or at least the person in charge of your project — is readily accessible. You should feel comfortable reaching out to that person and asking any questions about development management. Ideally, you will get a sense that he or she is honest, trustworthy, and easy to work with.
4. Knowledge of the Local Market
Despite many commonalities, no two commercial real estate markets are the same. Even within one city, from neighborhood to neighborhood, market conditions vary. For the greatest chance at success with a real estate project, the developer should know the area extremely well, including the types of projects that work best, the trends, and the demand. Local expertise will also include relationships with the best contractors in the area.
5. Strong Investor References
Possibly, you found your investment opportunity through a referral. Even if that’s the case, ask the developer for references. References can confirm many of the points above, including the developer’s expertise, accessibility, and trustworthiness. Ask questions about other investors’ experiences and outcomes.
6. Values that Align with Yours
More and more, investors say that they want more than just financial gains — they also want their money to make a difference, giving rise to the trend of impact investing. Find out what the development company wants to accomplish from a big picture perspective. Are they just trying to make money, or do they also want to improve their community? If you’re going to put your personal resources into a project, you should have the peace of mind knowing that you’re doing good with it.
Invest with Beach City Capital
Get to know Beach City Capital, and you’ll see that we embody all of the important qualities listed here. We aim to provide affordable multifamily housing along the high-demand, high-barrier to entry coastal communities of Los Angeles. We develop mid-market, multifamily and coworking rental properties in A+ locations in Southern California. We design our communities from the ground up to maximize living, leisure, and working spaces for our residents.