Due Diligence for Crowdfunding

23 Replies

I'm considering using one of the crowdfunding sites to invest some of my money. I see regularly here and everywhere else, that before you start investing with a company, or choose a specific property, that you must do your 'due diligence'.

I understand the concept of due diligence: verify enough of the facts so you feel comfortable you are not getting into a scam. Verify enough of the numbers to make sure you are not being sold a 'bad deal'.

But what exactly would you verify, and how?

The crowdfunding sites are all pretty new, the websites look slick, they have pictures of properties with addresses. How do I determine that the site is not running a Ponzi scheme? Calling and talking to them seems silly, as I feel that I am no investigator/lie-detector. What sites or services would you use to check up on the people and their business.

Sometimes you hear that you should ask for references, but if so, any good Ponzi scheme would have a few shills, and, many Ponzi schemes have many happy early customers. So that seems like a total failure for due diligence.

Then how about the properties or loans/notes in question? I'm not a professional appraiser, how do I verify the ARV? I could look on Zillow, but that hardly seems like serious due-diligence as it is pretty seriously reviled here. Do I hire an appraiser? That would erode all the profit. I'm considering a 'get my feet wet' $10,000 investment. at 12 or 13% so assuming the loan term may only be six months, I'd be earning around $600 in interest, if I spend any money on the due diligence, I have completely eroded my return.

Thanks for any help. I have left out the name of the site on purpose, because I may end up using a few of them, and I don't want the site owners to feel attacked. I watch a lot of American Greed and when I think of signing up for these sites and ACH-ing $10,000, I picture them high-fiving and going off to put a downpayment on a corvette.

Sorry I put this in the wrong board, can someone move it to: Crowdfunding Real Estate ?

By no means am I an expert on this emerging concept but I have been following it a bit. It is important to understand there is still some issues with Crowdfunding that are slowly sorting themselves out.

The Crowdfunding sites like Kickstart and such are Donation Crowdfunding. That is, the injection of capital is not for a return or profit. You might get a gift from the sponsor, but you also may not at which time you are not entitled to such gift or equity or any other form of interest. In example of this, Oculus, a virtual reality device company is being purchase by Facebook for $2.0 Billion. This company raised $2.4 Million on Kickstart. NONE of those investors own any equity at all. Those investors do not gain from the acquisition in any manner, the funds they seeded through Kickstart are designated Donations and they will not get it back.

The other Crowdfunding is Equity/Debt for a profit. This deal type, per the proposed rule, can only go through an approved "Funding Portal" (all Crowdfunding websites are considered this, even the Donation ones) which is the FINRA/SEC designation or the company can be a licensed Broker/Dealer. So the company will eventually have to registered with SEC and FINRA, there are currently around 40 registered companies, so you can go to their site to check for that voluntary compliance. FINRA BROKER CHECK FINRA and SEC have stated Funding portal activities will be more limited than broker-dealers. For example, a funding portal may not:

  • solicit transactions for securities displayed on its website or portal
  • compensate anyone for soliciting investors or pay compensation based on the sale of securities on its website or portal
  • hold customer funds or securities
  • offer investment advice or recommendations

It is important to understand the Crowdfunding Rule is not finalized yet and they are slowly dealing with the rule by obtain public comment. CROWNFUNDING PROPOSED RULE I think folks are using the term and it seems to be fairly out of context compared to the guidance out so far. For instance, a Crowdfunding Portal may NOT solicit transactions. There is an advertisement in the marketplace here on BP (two I think) which just did that. Posted a solicitation for an investment under the guise of a Crowdfunding Portal. In addition, the CP can not allow its directors, officers or partners (or any person occupying a similar status or performing a similar function) to have a financial interest in any issuer using the services of the intermediary. So, this rule would be in stark contrast to a CP saying they have already invested money into the issue.

Does that mean they are breaking a law or committing fraud? I don't know, in general I think it is simply a miss use of the term Crowdfunding as it is being defined by SEC and FINRA and the public trying to jump on a bandwagon they do not fully understand and think it is simply a free pass to raise money from the public.

It is also important to understand the Federal Government is figuring this out and so are the state governments. Like most of the RE world, it is not too much of a stretch to expect the states to have some rules on top of the federal rules. Most states have some guidance posted on their Securities oversight agency already.

As far as other due diligence. The DD is falling onto the shoulders of the investor. So under that guise, if you can not warm up to the material provided by the Sponsor (not the CP) than walk from the investment. If the CP is violating any listed prohibited action, such as soliciting or taking an interest, you may want to walk since they are not in compliance and we don't yet know what that means or what penalties might come from such an event.

To the OP example of DD, the Sponsor should have industry standard documents to support their request for investors. Look for what you would regularly expect in a deal, which is full disclosure and documentation. Anything short of that should be a walk away event.

I do not think it will be crazy to expect regulators to roll out some more rules around some differences in raise debt and raising equity. I think equity raises tend to be simpler for the public to understand and for the Sponsor to put together. Debt, not so much. So, I personally am pretty skeptical of some of the debt structures that seem to popping up. They do not seem to be structurally sound and for an investor who is unfamiliar with some pitfalls in some of these situations, you may not figure out the structure problem until its too late.

Perhaps some of that will help level the heads and playing field. I think this is a good and important thread.

Good Morning Everyone,

As the COO of one of the more prominent "crowdfunding" real estate sites available right now, [REMOVED] , I'd like to take the opportunity to answer your questions in order.

@David C. , Concerns like yours are actually one of our major challenges in this new industry. We need to be able to provide a level of transparency, documentation and Due Diligence tools in order to make new clients feel comfortable enough be able to commit to funding a project perhaps in another state, and then fund the project via ACH over the internet. On our deals we provide third party appraisals, comps, construction estimates, property tax recordsbackground on our developer partner for the project, links to third party sites like Zillow/Trulia and a breakdown on the financials, including risks and mitigants. We also file a Form D with the SEC and the states that require it for that project.

We strongly encourage our clients to do their own due diligence. Like any investment there's always a risk that the project can head south and you could lose your investment. We work very hard to research each project and make sure the property and personal guarantees that are securing the loan to the developer are high value. One of our top priorities is to make sure potential clients such as yourself have all they information they need and feel comfortable with the project and with us as a portal. If we can't accomplish that then we haven't earned your business, but I promise you that we'll always work our hardest to do so.

@Dion DePaoli , There has been a lot of confusion lately about the difference between the proposed Title III regulations of the JOBS act, which as you note above do not yet exist formally, and the recently enacted Title II regulations which created Rule 506(c) of the Reg D private placement exemption which we are operating under along with other crowdfunding portals. We are still crowdfunding in that we are openly syndicating the deal to the "crowd". We are still limited to a "crowd" of accredited investors at this point however, at least until Title III or IV go live.

The requirements you have detailed above are related to Title III. We are keeping a very close eye on those proposed rules and subsequent regulatory vehicles such as Reg A+ that is expected with Title IV. They are intended to provide a mechanism for capital formation from UNaccredited investors and are sort of the "holy grail" of the crowdfunding industry. It remains to be seen whether or not the proposed rules will be too burdensome to work with, but we are certainly hoping not.

The underlying hope of the crowdfunding industry is that Title III can truly "democratize" capital formation and provide access to folks who are not yet already wealthy and accredited. Reg A+ in particular looks promising, but it will still require pre-approval from the SEC and has some very strong reporting requirements. As soon as the new rules come out in their final form, we will be working very hard to find a way we use them to work with unaccredited investors. We will absolutely be on the front lines of that push into the wider market. In fact, I was one of the original people helping to lobby with Congressman McHenry and Congressman Dold to include the crowdfunding exemptions in the 2012 JOBS act.

Today we are utilizing a Reg D, rule 506(c) exemption for each of our projects. This was enacted at the end of September last year and allows crowdfunding companies to raise funds through a private placement offering, and to generally solicit (advertise) where that has not been possible previously without full SEC filing such as an IPO. The caveat is that 506(c) issuers can no longer rely on investors to use "self accreditation". We have to use a reasonable method to verify accredited status through a third party. We use a firm called Veri-tax to automate the verification process in a way that is non-intrusive and simple for our clients. We are very careful to review our operations with our securities attorneys to make sure we are compliant.

Some of our competitors are still relying on 506(b) which doesn't allow advertising the fundraise, but instead still allows "self accreditation" by the investor. We feel that's too dangerous honestly. Whether informal and unintentional or not, projects are commonly discussed publicly in venues like this one, angel list, real estate conferences and more. Technically that's still general solicitation. I can predict the SEC stepping in and making an example of online portals who are a bit too free with their information to the public, but are still filing through a 506(b). Our top priority is to keep our investors, our developer partners, and our company as safe as possible. Self-accreditation is very tempting because it would literally multiply our investor base by a factor of 10 overnight, but it just isn't a good idea in our opinion, and possibly not an ethical one either as we could be fairly sure that a good number of those investors wouldn't actually be accredited.

I see your questions to our post in the marketplace and thank you for them! We will make sure to answer those today.

Thanks again everyone, and reach out anytime. I greatly appreciate your consideration.

Jason Fritton

@Jason Fritton

Thanks Jason, and maybe this sounds overly suspicious, but a 'bad actor' could get their hands on many false forms, right? I guess that is too much work for the average scam artist, as they normally declare their methods 'secret' to explain their lack of good documentation.

I could take your forms and then call the appraisal provider, and then look up information about them?

I could contact the SEC to verify your Form D?

My situation is this: I've only ever invested with very widely known national brokerage firms or mutual fund companies. I have never done any due diligence on The Vanguard Group, American Century Investments, TDWaterhouse, eTrade, etc... it seems like that is not necessary.

I have never done a note investment or any other financial interaction with smaller/private investments. So for me @Dion DePaoli I have no frame of reference for your recommendation to:

" Look for what you would regularly expect in a deal, which is full disclosure and documentation. Anything short of that should be a walk away event."

Having not done a 'deal' - I'm looking for more details on that I guess.

How would some more experienced investors deal with Jason's offer above:

1. take him up on it, get a shipment of documents to his email

2. For each document?

a. call the phone numbers, talk to the people? - easily faked

b. look for the people on linkedin? - easily faked

c. do criminal background checks on the people? - how? how expensive?

d. look on legal databases for legal actions for these people? - how? how expensive?

'Do enough research until you feel comfortable' is not really an answer? What would you do?

Thank you - I hope this discussion is good for BP, and not something that I should really go pay a guru to teach to me :)

@David C.

Hi David,

I completely agree with @Dion DePaoli regarding full disclosure. If a broker, site or developer isn't willing to get you verification of anything you ask for regarding the deal, you should stay far away from them.

In our case we could provide you with accession numbers of the SEC filing so you could look it up. We can show appraisals and applications, the underlying note and mortgage documents to the borrower, title documents, and as much background on the borrower as we can provide. I can send you some links to our press that discuss our company, in fact we just had a mention (and link) in the Wall Street Journal.

I could also put you in contact with the developer, broker or real estate attorneys in order to ask any questions you may have. Just let me know and I'll arrange it.

If you would like a copy of our business license or any other identifiable information I can make that available as well.

Please let me know if I can help at all!

Jason Fritton

I have spoken to many of the more prominent crowdfunding portals and we have deals listed on iFunding and ForeFund Capital. We are pretty close to listing some stuff on Fundrise as well and we may list other projects on GroundBreaker. I have also spoken to the companies that white label portal products and we are considering starting our own portal at some point.

From what I have seen first-hand the crowdfunding portals do pretty extensive diligence as a general rule. I would limit my investments to the more prominent portals and shy away from those that are struggling to gather deal flow, promoters, or investors. There are a handful of these I have listed in other BP threads.

Regarding diligence if I was to invest in projects these are the top things I would care about:

1. The experience of the promoter and whether or not the project they're presenting is something they are experts at

2. The market that the investment is in

3. Whether or not the portal is compliant with securities laws. This is pretty hard for someone that isn't an insider to know. Jason's threads above are a pretty nice overview of things, but there is a lot to it. The "reasonableness" checks for investors are pretty key here and it gets pretty technical quickly

4. If there is alignment between the promoter and their investors. Is the deal structured to where the promoter only makes money or benefits if they deliver value to the investors?

There is obviously more to it than that, but those are some of the big items I would look for first. Item 1 is pretty key for most private placements of funds. Item 4 is also big because alignment is key. Many of the portals are pushing debt-like products which often do not create proper alignment. They are then calling these "safe" because it is easier for the investors to understand them and not because they really ARE safe.

@David C.

The way I look at this from an investor standpoint is that much of it will sort itself out over the next months and years. Portals will establish (or not) a good track record with investors (particularly among sites like BP) and the bad apples will be exposed quickly. The cream will rise to the top.

Nice to see you here, @Jason Fritton !

@Andrew S. Hello Andrew! It's great to put a face with the name.

I completely agree with you regarding the importance of a track record and it's at the top of our mind everyday. In an early industry like this, the reputation of each business is absolutely paramount. That reputation is going to be based mostly on how well we treat our investors, in successfully making them a profit on their investments, as well as responsiveness and transparency.

We have a huge obligation to make sure *everything* is well researched and as much risk is mitigated as possible.

On top of that we have a huge obligation to keep our clients informed of everything. Whether there's any issues, or whether every project is running perfectly, investors need to have a full window into the project they are backing.

@David C. @Bryan Hancock @Gautam Venkatesan @Andrew S.

My two-cents -- Work with a crowdfunding company this is #1) Well-capitalized and #2) Works with a broker-dealer. Most crowdfunding companies cannot meet #1 or #2, let alone both.

Does not matter on the vertical (real estate, startups, etc.) not all of these crowdfunding companies will survive. They are expensive to run (I know, because I run one) and most of the CEOs do not come from financial services/regulatory backgrounds. The scariest thing is to have a CEO that comes from a marketing background. You can use broker-check from the SEC to do some diligence -- here is the link:


Look me up as an example....

If they are not on broker check, they are not running a compliant shop, IMHO.

I just wanted to put a quick thank you out to everyone who's responding here: Jilliene, Bryan, Jason, Andrew, Gautam and Dion.

I wanted to call out a few of Bryan's suggestions, and try to dig a little deeper:

1. The experience of the promoter and whether or not the project they're presenting is something they are experts at

How would you recommend validating this? Does a financing provider need to be a rehab expert? Or if they are selling debt, they need to be financing experts? that seems reasonable.

2. The market that the investment is in

How do you evaluate the markets? Maybe that's too much for this thread and I should just read the countless other threads on 'what's the best market for xyz?'

3. Whether or not the portal is compliant with securities laws. This is pretty hard for someone that isn't an insider to know. Jason's threads above are a pretty nice overview of things, but there is a lot to it. The "reasonableness" checks for investors are pretty key here and it gets pretty technical quickly

What are some actions I can take to check the compliance? Does the FINRA lookup help here? Since I am not investing in the CP itself, but in the underlying project, as long as I can prove to myself that I really am doing that, would the failure or censure of the CP really impact me? Is there a ratings company? something like Morningstar for mutual funds? A truly independent evaluation resource like that I believe helped the growth of the mutual fund industry, don't you think? Is there already one? or are there just 'promoter sites' that have conflicts of interest?

4. If there is alignment between the promoter and their investors. Is the deal structured to where the promoter only makes money or benefits if they deliver value to the investors?

How do I validate the structure? Is that tight of an alignment needed? mutual funds and brokers charge you management fees and transaction fees regardless of the performance of the underlying investment, why is that not OK in this space?


Am I the only person with these questions? have they been addressed elsewhere? I'm surprised that I'm getting heavy response from Crowdfunding providers, but no follow up questions from fellow potential investors?

@David C.

I've made about 8 Crowdfunding investments in the past 6 months.

For me, due diligence is a 4 step process.

1. Research the crowdfunding portals. The experience and background of the founders - google them, google their former companies or employers etc.

Their capital - Do they have venture capital backing? If they do have significant VC backing form established VC, then you know they are much less likely to be a scam and will have a least some staying power.

2. Research the fees the portal charges. Sometimes its easy to find, but a lot of the time you have to call to find all the fees. I ruled out a lot of portals because the fees are just too high.

3. How is the deal structured? Is there "middle man" risk? If the portal goes under, Is my investment still safe? This can get complicted. Some portals create LLC and they invest in the project. Other portals, allow you to invest directly with the developer.

4. Once you a discovered a portal you are comfortable with, then you have to do DD on the projects them selves. Again its the background and track record of the principles involved. The terms of the deal...are they taking too much? Look at the cycle of the underlying investment, ie multifamily etc.. Location of the investment, What's the market conditions at that location? Study the proforma's, do the assumptions for occupancy and growth past the smell test. Cash on cash return is the key for me. No one really knows what the property will sell for in 5-10 years. Its nice if you get that IRR bump, but rely on the cash on cash returns.

In the end, you may not find the perfect combination. There will be tradeoffs.


My investments

I like the background and fee structure of RealCrowd. (they only charge the developer a one time fee) I made 4 investments here.

I like the diverse deals from Realty Mogul. (strong cash on cash returns) They have great VC backing and should be around a while. I HATE their 2.25% annual fee on most deals. (it can eat 30% of the yearly cash on cash return... ) Sometimes its only 1%. I can understand some yearly fees since they do set up the LLC and have to do the yearly accounting. I made 2 investments here. The strong individual deals overruled my RM fee concerns. I would use RM much more if they lowered their yearly fees. (julian are you listening?)

I like Patch of Land. They are well capitalized. They have debt only investments and short term (less then a year) which reduces the "middle man" risk. There is still some risk, but its reduced. I like that the vet their deals and fund the deals in advance. The keep the up front origination fee and pass most if not all the interest to the investors. I made 2 investments here.

You will also find that the more DD you do, you will develop relationships that allow you to invest directly with developers etc.. and keep (save) some of the portal fees yourself.

Just my 2 cents worth


@Mark Robertson thanks for sharing these experiences. This is exactly what I was referring to in my post above. Over time the winners and losers will be identified (right here on BP).

I fully agree with your thoughts and I have also invested with Realty Mogul and Patch of Land.

@David C. Investing in Reg D deals have in the past been restricted to accredited and sophisticated investors partially because the level of due diligence the investor must/should perform is so high. Whether the deal is crowdfunded or raised in a traditional private placement, if an investor or their advisors are unable to perform the necessary due diligence it is an indication that this type of investment is not suitable.

If this is the case, there are other vehicles available where a good portion of the due diligence required is provided by other sources. Publicly traded REITs or Real Estate Investment Trusts are one category that may be more suitable, especially for those with previous experience in stocks, ETFs and mutual funds.

REITs tend to be run very professionally because of the extremely high level of disclosure and reporting required by public offerings and the associated costs. Note that most of this disclosure and reporting is avoided when a deal is registered under Reg D, which is an exemption from the public offering requirements.

More on REITs can be found at investor.gov: http://m.investor.gov/investing-basics/investment-products/real-estate-investment-trusts-reits Green Street has a list of publicly traded REITs which can be sorted by name, symbol or sector: http://www.greenstreetadvisors.com/about/page/coverage/?&f_sort=sector#!/america Note that as of Friday apartment REIT BRE Properties' shareholders voted to approve a merger with Essex Property Trust and the BRE symbol will stop trading April 1st.

For more on Reg D offerings and their requirements see BP's excellent two part interview with Gene Trowbridge who is a practicing attorney specializing these type of offerings. Part 1: http://www.biggerpockets.com/renewsblog/2013/10/04/private-money-gene-trowbridge/

Part 2: http://www.biggerpockets.com/renewsblog/2013/10/11/private-money-201-gene-trowbridge-interview-part-ii/

If you decide to plunge ahead definitely heed @Bryan Hancock , @Jilliene H. and @Mark Robertson 's advice.

Good hunting-

@Giovanni Isaksen

Investing in Reg D deals have in the past been restricted to accredited and sophisticated investors partially because the level of due diligence the investor must/should perform is so high. Whether the deal is crowdfunded or raised in a traditional private placement, if an investor or their advisors are unable to perform the necessary due diligence it is an indication that this type of investment is not suitable.

You make a very interesting point about accredited investors, due diligence, and the suitability of an investment. While I meet the 'accredited' investor criteria, I don't have a 'team of advisors' - I still do my own taxes.

I'm interesting in investing around 50,000 to 100,000 to represent at most 5% of my net worth, its a loss I can afford. The minimum investment in these deals is only 5,000, so I could diversify that $100,000 into 20 projects. I think the cost of using lawyers and accountants to vet 20 projects would be prohibitive vs. the 13,000/year income that 13% on 100,000 might produce.

Now If I were to put the 100,000 into a single project like a typical Reg D investment in the past, maybe hiring an accountant and a real-estate appraiser to help evaluate a single deal would make sense.

I guess my real question is: what are some free or low cost or DIY due diligence steps I can take to evaluate these newly available small dollar Reg D. investment opportunities?

I've recently attended a meeting sponsored by NY Law School, Center for Real Estate studies in NYC where the topic is Crowdfunding. I've also met with the Founders and CEO of iFunding & Prodigy Network who are both doing big development projects in the Financial District of NYC using CrowdFunding.

I would echo what Bryan Hancock said and stick to those that are well capitalized and know exactly the type of real estate they're investing in.

@David C. I spend a lot of time doing due diligence on properties and much of it is free, but it is a lot of time. Others have spoken about due diligence on the portals so I'll focus on the properties and the organizers.

The first thing I do when a property is found with numbers that look reasonable (in a market we're interested in) is research the property records with the county. What you can find and where to find it varies county to county, with some it's the Assessor's website, with others it's the Clerk's website, still others it's the county records division, sometimes there is a search function on the main county homepage, others have a separate property search page.

Once I locate the property records I look at the sales history to see the dates and prices of previous sales with a particular focus on how long the current owner has held the property. I make notes on all the other information available about the property as well and check to see if taxes are current. I also add the links into my notes so copies of the records can be added to the file later if we go further.

On some county sites you can search by owner and I will look to see what other properties they own and what the history is on these.

In some jurisdictions now you can search for building permit records as well as fire and health code inspections/violations. In some locations there are both city and county records and I will search both. I also get a preliminary title report.

Then I go to Bing, Google, Yahoo and search on everything, property name, address, parcel number, owner's name, owner's address (and combinations of these). If the owner is an LLC I go to the state records. I want to find out everything publicly available about the property and the seller.

If I were looking at someone else's syndication I would do this on both the property and the sponsor. If the deal was in a market I didn't have detailed knowledge of I would search for market and economic date on the area.

The large commercial brokerages and lenders publish that kind of information on the markets they cover and in addition there are a number of other good sources. There are property research companies both national and regional that cover most of the larger markets as well as real estate economists. Elliott D. Pollack in AZ and Matthew Gardner in the Seattle area are two that come to mind.

There are a number of universities with real estate departments that provide good market data. Texas A&M has a great deal of information available as does ASU's W.P. Carey School of Business in Phoenix.

Other great sources of market information is the local landlords association and local chapters of the ULI, BOMA and the NAIOP. Also citydata.com and the Census Department have population, age and employment data.

All these are sources of free* information which can take a lot of time to dig up but it's time well spent when money is on the line. *Of course many of the above offer more detailed and in depth data for a fee too.

Good hunting-

P.S. @Ali Boone just posted a great BP piece on her due diligence education here: http://www.biggerpockets.com/renewsblog/2014/03/29/dont-trust-anyone-in-rei/#comments

@Giovanni Isaksen thanks for your reply, and for the link to Ali Boone's article. Its a very good read and she makes a spectacular point that maybe I should focus on more myself:

Ali says: I know now, however, that it’s not the person pitching you something that you need to check out. It’s the investment opportunity itself that matters. It is the only thing that matters!

I need to focus on the investment more(nearly exclusively) and the CP less.

@David C. Agree, except in the cases where the portal forms the entity that holds the investor's interests. Then I'd want to make sure that the portal has the financial depth to remain in business for the duration of my investment and I would look very carefully at the terms under which management of the holding entity could be transferred or taken over by the investors.

great thread. thanks for sharing guys

@Mark Robertson  @Bryan Hancock   and all.. great info!  I was trying to figure out the best way to do DD on a Sponsor.. we know the platforms are more visible.. but with the sponsors, I feel it is more difficult since I'm not a R.E professional and don't know the probing questions to ask.  If the platforms are vetting the deals and only work with sponsors who have a proven track record and have skin in the game, I would feel more comfy investing in those deals.  I really like @Jilliene H.  's platform and have invested in a couple of deals there so far, but still don't know how to really do DD on a sponsor..  I will email them to see if they can put up each Q&A investors have asked each sponsor on the site..  maybe this will give a better understanding to those who are not sure what to ask.  

1. Google the sponsors and see what you can find.

2. Call the sponsor, ask for return numbers on their past 20+ deals

3. What investments have they lost money for their investors, ask for details on how and why.

4. How much skin do they have in each deal.

5. Whats their plan b if the market goes south at the projected end date of the investment

6.  Are there any loan convents?  such as hitting certain numbers or raise x amount  of equity by certain dates.  ( and if so what are the penalties )  FYI The answer to this question had not been disclosed on a portal listed project and after my conversation with the sponsor the deal was pulled from the portal.

7.  Get a clear understanding of all fees...is the preferred cumulative, do they have a catch up clause after preferred is paid etc..

8. Ask how long they have invested in the area of the project

9. How did they fare during the 2008-2010 downturn?

I am sure their are more but that's what popped in my dead for now.

Mark Robertson

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