What is a Commercial Real Estate Crowdfunding Sponsor?

Published on 2020-05-12 21:40:28
2 min read

Real estate investment provides a lot of opportunities for you, one, in particular, is the commercial real estate crowdfunding. Crowdfunding is the financing solution that helps you with your investments through funding. It usually involves a platform, an investor, and a sponsor.


Crowdfunding Sponsor 


A sponsor is a person or group of persons who acquires, maintains, manages, and sells the real estate you are investing in. It usually has three phases of a cycle, which are origination, operation, and liquidation. Origination is the phase for planning and acquiring property. It also includes completing the registration and satisfying disclosure rules and marketing. On the other hand, the operations will include how the sponsor will manage both the syndication and the real estate. Lastly, liquidation is the phase where the property will be sold.


What are the responsibilities of a sponsor?


Being a sponsor in commercial real estate crowdfunding will require you to do a lot of things. You will be responsible for the negotiation of the property since you need to help convince investors to agree with your deal. You are also in charge of asset due diligence and hiring contractors. You will also handle the daily management of the real estate and figure out the right time to sell the property. Those are just some of their tasks, but the bottom line is the sponsor will be the one bringing in their expertise when it comes to finding and managing all aspects of the property.  


How should you choose your sponsor?


Picking the right sponsor is not an easy feat. Crowdfunding is a high-risk investment. There would not be any guarantee that you’ll have greater returns as planned. That is why you need to know how to choose the right sponsor. You need someone competent, reliable, and experienced. They will be the ones who will manage your funds. 


Here are some things to keep in mind while you choose your sponsor:


Your sponsor should be an expert. It should be someone skilled in the industry. They should have enough experience, and they must also understand the geographic area well. Their knowledge and expertise are necessary in order to get the most out of the crowdfunded real estate deal.


You should know their track record. A good sponsor will have positive past performances. It is an indication that they know what they are doing. And because they are the ones who will mostly have control over managing the estate, you need to pick a sponsor who you’ll be able to trust.


You should choose someone with credibility. Your sponsor should have a strong reputation. Don’t pick someone with an uncertain background. Make sure to do a thorough research of them first before you commit to any kind of investment deal.


Your sponsor should know how to lessen the risks. Mitigating potential risks to your crowdfunded real estate should be something that they should be good at. When things might take a turn for the worse, they must have a strategy that’ll help you not lose too much profit.