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Investing online in commercial real estate debt

9/17/2016 | Real Estate Blog

Philadelphia residents who want fixed-income investments with high yields and greater security may want to look at loans collateralized by commercial real estate. Online lenders have helped fill in the gaps so that people can have greater access to these types of investments. However, before evaluating these opportunities, it is important that investors consider several factors regarding these online lenders.

Investors who are considering fixed-income commercial real estate investments by using an online marketplace lender have a number of factors to consider to make a prudent investment. One of the important factors to consider is the expertise that the lender has with commercial real estate. Even if the online lender uses technology to isolate particular opportunities and statistical details, it is important that it is equipped to use effective, traditional methods to help close deals. Underwriting personnel should be available to provide in-depth reviews and analyze particular risk factors when crafting loan options.

Another important consideration is how the online lender uses technology to assist in the funding process. Often, online lenders make it possible for investors to see a number of opportunities regarding commercial real estate on one platform. Additionally, these platforms may provide a way for investors to track the status. The platform may also provide information regarding different rates of return and risk so that the investor can make an informed decision regarding which opportunity to take advantage of. Some platforms also allow the investor to diversify funds into different development projects.

Investors who would like to invest in commercial real estate debt may want to have legal assistance during the process. These types of loans are not without risks, and an attorney can often analyze the underlying collateral to see how much of a cushion there is in the event of a default.