Most things in this world can be both gained and lost. From tangible items, like money, to non-tangible concepts, like trust, we usually have the benefit of learning from past mistakes and then course-correcting to make up the difference the next time around. The same goes for real estate funding. Here at Luxe Crowdfunding, we are one of the best real estate investment companies that will make sure you are protected. We are available to everyone in the United States. 

 

It’s Time To Learn The Basics

There have been rising cases of fraudsters trying to take advantage of Crowdfunding platforms to con people out of their hard-earned cash. Fraudsters have become more aware of the opportunity to raise capital through Crowdfunding sites and then never fulfill their promises. They will launch a campaign, promote it, take money, and never deliver what they promised or they make deliveries of very inferior quality products to the investors. The challenge is that a lot of investors do not take the time to verify the ideas or projects promoted online. This is because: 

  1. A lot of donors are just average people. They are not subject matter experts and might be ignorant about the processes that go into various projects. 
  2. Since the companies are small and private, or probably not even registered, then audited company accounts, as well as business plans, may not be available to allow them to find out more about the company.
  3. Crowd-funders give small dollar amounts and thus are not particularly bothered by the returns; they write it off as soon as they provide the money.
  4. There is a free-rider problem where everyone thinks that others have carried out due diligence while in essence, no one has. It is your prerogative as the backer to perform due diligence before giving your money. 

 

Ways To Verify Projects In Real Estate Funding

  • Always check for current or previous lawsuits against the company or the directors. This is information that is available in public records so it should be easy to find something if there is anything fishy to find.
  • Check their office location and see if they have frequently changed their location. If they keep moving around, it is because they are probably trying to hide something. However, remember to ask them why their office location has been changed too many times; they might have a valid reason. This will give you an opportunity to interact with them.
  • Ask for a list of referees who you must also verify and evaluate. What quality are the references provided? Are they industry players or just random people or relatives? Bad quality of referees or someone who only has family members vouching for them is a red flag.
  • Try to reach the company’s employees and engage them in conversation. Are they accessible? Do they speak in English? If it is impossible to get an employee to talk about the project then you should be very cautious. Also, if it is a company whose employees speak no English and they are in an English speaking country that is a good reason to be suspicious. That is a definite sign that something is not right.
  • Use LinkedIn to track down former associates of the founders and see what they have to say. LinkedIn is a powerful tool to be able to access someone’s character from professionals who have interacted with them in the past. Do not be afraid to use it. Try digging up opinions about the directors from credible sources, 1st or 2nd connections are best.
  • Ask to see their tax returns. Fake companies do not file tax returns. You are also most likely to be swindled by a real company that doesn’t pay taxes. They are already robbing the government, which will keep them from robbing you.
  • If they are in your neighborhood or city, ask to meet them. If they are apprehensive about a physical meeting, then they are definitely not being forthright. Drop by their office randomly. Do this to verify their location. Try seeing what they do there and see how you get treated by the employees. If you are not well treated then you have a reason to take your money elsewhere.
  • Listen to your gut. Your instincts are almost always right. If you think a company is shady then it most probably is.

 

Call One of the Best Real Estate Investment Companies

We are the ones to turn to when it comes to real estate funding and due diligence. If you are interested in learning about real estate crowdfunding or even some more details about real estate investment companies, be sure to call us today! We are one of the best real estate crowdfunding sites. Here at Luxe Crowdfunding, we are entirely here for you. Our investing experts have the best expertise in the United States. We endeavor to excel in every service we provide, adding value for our investors wherever possible, and thereby succeeding nationally in the construction industry. We offer the best commercial real estate crowdfunding services.