Real Estate Crowdfunding by Adam Gower

Author:Adam Gower
Language: eng
Format: epub
Publisher: CRC Press
Published: 2020-01-15T00:00:00+00:00

Finance drives everything

Over the course of my career, I have learned that that there are actually only two things that you really need to grasp in order to be able to understand any business or profession: the economics of the business and the legal contracts that business uses. This applies equally to real estate. In fact, I have learned about many businesses within real estate, from how to finance and develop multifamily housing developments to how to build large-scale entertainment complexes, to the ins and outs of ground up construction and renovation projects.

Even today I learn something new from my clients every day about the asset types they are involved in, like the economics and operations of downtown skyrise office buildings, creative solutions to workforce housing projects, and even how to operate a real estate crowdfunding platform. This new knowledge complements my past experience.

And I have come to realize that with enough dedication and focus, you can learn 90 percent of everything that you need to know about a new sector of real estate (or a new business) within three months, but it will take the rest of your life to learn the remaining 10 percent.

Although there are eight phases of development in real estate, as a passive investor you only need to really understand how the financial concepts influence, and are influenced by, a project and be able to unwrap the legal relationship between yourself and the sponsor through understanding the offering documents.

Once you understand the key financial concepts, you can review all phases of a project through the lens of the deal’s finances. Regardless of what kind of real estate you’re considering, you only need to understand the key financial terms to be able to look critically at any deal. It doesn’t even matter which of the five types of real estate you choose. The specific development strategy doesn’t really matter either. If you can master the key financial concepts of a real estate project, you’ll be able to understand every deal you look at, and if you can read between the lines of the contracts, you’ll be better able to protect your own interests.

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