How do you vet a real estate deal? Most investors already know the basic calculations and fundamentals behind doing their own deals, but what happens when you’re investing in someone else’s deal? Maybe you’re partnering in an LLC, signing a joint venture lending agreement, or investing in a real estate syndication. Now, instead of having control over the financing, budgeting, construction, and rent prices, you’re giving someone else full control of the deal. How do you know they’ll do a good job? Whether you’re lending private money or becoming a partner in a deal, taking a backseat can feel a little strange. That’s why you need to do as good a job as possible making sure that the real estate operator you’re trusting can come through on the deal as promised. I know how confusing this can be for new hands-off investors, and that’s why I’m here to give you five crucial things to know about your operator before you invest. Make no mistake—real estate deals go wrong. But, making sure that your operator is experienced, financially sound, and has all their legal ducks in a row can be the difference between a handsome return and walking away with a loss on your next deal.
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