Real estate funds and syndications are a popular investment vehicle for those looking to gain exposure to the real estate market without having to purchase individual properties. However, like any investment, real estate funds come with their own set of risks and potential pitfalls.
One trap that investors must avoid when investing in a real estate fund is blindly trusting the fund manager’s projections and promises. Another trap is the foreclosure risk. What happens if the fund’s properties fluctuate due to changes in the real estate market, market volatility, economic conditions, and other factors?
What are the questions to ask a Fund Manager?
• What is the investment strategy and how is it different from other real estate funds?
• What is the process for evaluating potential investments?
• What are the fees of a fund?
• When is the distribution and is there a lockup period?
• How are the fund performances communicated?
