AI is Here to Stay — Is Your Firm Putting It to Work?

Artificial intelligence has permeated every industry, and while it technically has already been in use for decades, the past few years have brought entirely new levels of innovation and application. AI in commercial real estate has already created a fundamental shift in how the industry thinks and operates, but experts believe we’ve yet to see its full potential.

That hasn’t stopped firms in the industry from getting on board, however — more than half of CRE firms in the U.S. are actively pursuing or integrating AI tools into their tech stacks or business processes, and just under half are in an exploration phase. It’s worth noting here that AI in commercial real estate stands to expand job opportunities as opposed to eliminating them: the World Economic Forum expects AI to displace around 85 million jobs over the next five years while simultaneously creating another 97 million.

Ultimately, as with any other automation initiative, the end goal is to streamline the repetitive and create opportunities for people to do what we do best — be creative, analytical, and innovative. This will enable the commercial real estate industry — and others — to achieve higher levels of problem solving, decision making, and creativity. Here, we’ll explore a few key areas where AI can help to simplify and automate many of the everyday aspects of commercial real estate.

Opportunities to Use AI in Commercial Real Estate

Productivity

Remember, the ultimate aim of using AI in commercial real estate should not necessarily be job replacement but rather job enhancement. While it’s clear that some roles may be eliminated as a result of AI implementation, consider what your team might be capable of if the many administrative or repetitive tasks that they deal with every day were automated intelligently. What would they be able to achieve or focus on? For example, a common use for AI in commercial real estate is market research and due diligence (verified by a person, of course). Additionally, managing documents, preparing a prospectus, and more.

Opportunity

Of course, leveraging AI in this industry isn’t just about managing existing assets — it’s also about identifying opportunities to take those assets to the next level. For example, experts envision AI adding value not just for firms but also for tenants. The concept of an “AI-ready” building could have significant appeal, much as opportunities arose with companies seeking office space in proximity to established tech giants. While much remains to be seen here, the idea is intriguing. And of course, additional opportunity-focused uses for AI include analyzing space to maximize revenue, understand leasing trends, and more.

Financial Performance

In addition to automating productivity within your firm and assisting with supporting deal opportunities, AI stands to streamline analyzing and processing financial data to help you and your team make more informed decisions. Examples include general data analysis, streamlining property searches, and predicting market trends. AI can be integrated with existing systems to assist with analyzing property revenues, identifying the best fundraising opportunities, and reviewing tenant trends that predict future leasing opportunities. (Important/obvious caveat: AI still makes mistakes and is still learning — financial information should always be reviewed by a human before it’s used for decision-making.)

Build the Foundation for Your AI Journey with Covercy

Covercy is the first real estate syndication platform that combines banking and investment management. With features spanning fundraising, capital calls, investor relations, investment management, automated distributions, vendor payments, and countless more solutions, our platform provides a strong foundation for commercial real estate firms looking to consolidate their tech stacks, service providers, and more.

And when it comes to AI, our platform allows GPs and their teams to identify investors based on their likelihood of investing in an asset. Whether you want to evaluate your entire database of investors, or only a select group, doing so is easy and can be completed in a matter of clicks!

Once reviewed by AI, your investor contacts will have a ranking assigned to them, and you and your team can further segment that list to see only those that are highly likely to invest, or others that may have lower likelihood, based on your goals. Once completed, you can add your selected investors to your deal and begin fundraising activity.

See it firsthand in a private demo now.

It’s Time to Make Your Daily Work Easier

As a fund administrator for a commercial real estate firm, every day brings new challenges your way. First and foremost, you act as a steward of the resources that have been entrusted to you by your limited partners and other investors. It is your responsibility to protect, manage, and grow those resources. Second, you have to manage a variety of financial tasks and transactions to keep the firm moving forward toward its growth goals.

Both of these responsibilities bring a great deal of pressure, time sensitivity, and accuracy pressures. Unfortunately, many commercial real estate firms today are still behind the curve when it comes to streamlining and automating many of these important functions. Today more than ever, banking solutions for fund administrators are needed to reduce administrative workload, eliminate complexity, and ensure that investors are receiving the value they expect from you and your team.

The challenge, however, is finding the right solution to address all of these needs. Here, we’ll explore several areas where a consolidated and streamlined financial technology solution can make your life and work easier and help those who’ve invested in your fund realize the value they’re looking for.

Make banking count: Learn how to streamline a variety of financial activities to simplify your daily workload.

Open Accounts

It’s no secret that every asset under your control, as well as all future assets, requires a number of bank accounts. These can be for fundraising, operations, rent, special projects, and more. If you’ve been doing this manually, or if you’ve even been opening accounts online with your financial institution, managing all of those accounts can quickly become overwhelming. Today, funded administrators need to be able to open bank accounts quickly and from a single platform that’s tied into investment management capabilities. Imagine being able to open accounts for a specific asset and tying those accounts to that asset and related information — all without having to leave your desk.

Manage Investments

When your LPs decide to invest in a deal, it’s important to be able to collect and manage those funds quickly and easily. Dealing with payments manually, or even with paper checks, creates far too much risk and administrative hassle. You and your team do not need to be distracted by these kinds of tasks. Having a quick and streamlined way to receive funds from investors and funneling them into the correct account automatically makes life simpler for you and your team and shows your investors that you’re a sophisticated operation that is keeping their money safe and properly allocated.

Automate Distributions

As you focus on growing revenue, you’ll of course issue returns to your LPs. Typically done on a quarterly basis, distributions historically have been handled manually. Sometimes general partners even issue paper checks and deliver them in person. While there’s nothing wrong with focusing on relationships, cutting checks and delivering them personally, or even mailing them, is tedious and creates opportunities for error. When the time comes to distribute payments, the right solution will automatically extract funds from the accounts that you specify and transfer them into your LPs’ bank accounts in a matter of clicks.

Pay Vendors

Throughout the daily operation of your assets, you’ll make a variety of payments to different vendors. These can be for repairs and maintenance, legal matters, remodeling, and other investments into the assets themselves. Just as with any other transaction, being able to automate this reduces complexity, lost time, and risk. Funds can be wired to virtually any account for your vendors, ensuring swift payment that is trackable and can be tied to an asset, fund, or syndication.

Financial Reporting

Whether it’s for tax season or just to check on how assets are performing, being able to generate reports — cash flow, profitability, investments, and so on — is critical to investor relations. It enables transparency, helps to build lasting relationships, and more — but at the same time, you and your team have strategic goals to hit. You need to be focused on growing revenue and adding value. A great way to do the latter when it comes to reporting is automating investor reporting. With a self-service platform, your LPs can — at any time — get the information they need to make decisions, report on taxes, and more.

Grow Capital

Last but certainly not least, remember that as a fund administrator, you need to find ways to make existing capital work better for you and your LPs. While you likely have a variety of accounts in play, consider whether they’re helping you grow your uninvested capital. As you gather funds from LPs for new opportunities, or for any capital not yet invested elsewhere, being able to generate meaningful interest will go a long way in helping you maximize revenue and continue to deliver success for all parties.

Success Starts with Covercy

If you’ve been looking for banking solutions for fund administrators, Covercy is your all-in-one platform. Combining investment management with banking, our platform enables GPs and other commercial real estate professionals to:

• Manage all of their assets in one easy-to-use tool
• Open, manage, and report on bank accounts and financial activity
• Fundraise for new deal opportunities and issue capital calls
• Track investor interest in new deals and market properties to them
• Automate distributions to investors as asset revenue grows
• Provide investors with a self-service reporting solution
• Manage all relevant documentation per asset in an organized way
• And much, much more

Connect with us today to learn more about Covercy and how our banking solutions for fund administrators can help you maximize performance this year — and for years to come. Schedule your private demo today.

Using Waterfall Structures in Your Deals?

As a GP with a private equity firm or other industry organization, you’re likely working with a variety of limited partners (LPs) to raise capital beyond your own investment to help fund new commercial real estate opportunities. As a result, a waterfall structure is likely in place that specifies how returns are managed. Because of your role in securing, funding, and overseeing the property as well as generating strong cash flow over time, you’ll receive a GP promote — an incentive for strong performance.

You’re likely already well familiar with GP promotes and have such incentives built into the operating agreements of the properties you manage. However, navigating waterfall structures that include them can be complex and time-consuming for you and your team. Here’s why:

• Managing LP Returns — If the property has a preferred return for limited partners, those individuals will likely receive 100% of the returns until they’ve hit a certain ROI. This is often measured using a metric called internal rate of return (IRR), the calculation of which can vary by transaction. This adds complexity to managing those returns.
• Different Tiers and Buckets — One of the reasons waterfalls are so complex is because the returns for LPs as well as the GP promote changes as the property performs better. As you reach different tiers, the calculation for LP returns decreases and the GP promote increases. Manually calculating and monitoring this adds even greater complexity as well as risk to your daily operations.
• Operating Agreement Variances — You likely have your own operating agreement preferences for your properties, but LPs will likely want input. Additional partners involved with the deal may also have a say in the final terms of the agreement and thus how returns are split. And the inclusion of clauses and provisions further complicates the process. All of this is more detail that has to be managed on a consistent basis.
• Administrative Burden — As we’ve noted already, many firms tend to manage this process manually, often using tools such as spreadsheets. The industry itself has a well known aversion to technology adoption, but this creates a heavy workload on your team and increases the chance of human error. And when there’s this kind of money being moved around, mistakes are the last thing you want to be dealing with.

These are just some of the many challenges GPs face with their promote incentives. The promote is critical, however, because it’s one of the ways professionals create long-term cash flow for their firms (e.g. eventually, the promote % becomes larger than the LP return). How can you make this process more efficient for long-term success?

Ensure Accuracy and Improve Operational Efficiency with GP Promote Calculations

Private equity firms and other commercial real estate professionals involved with GP promote calculations and management must offset the risks and inefficiencies outlined above. Even if you already have a process and tools in place that have served your firm well for years, that is no guarantee that they’ll continue to work well as you grow. In fact, the more assets under management that you have, the greater the complexity and risk.

Value is another consideration here as well — if you were an investor in a large commercial real estate deal, how would you feel if the firm responsible for your returns told you that someone on their team popped open a spreadsheet every quarter to calculate your return? Would that give you confidence in their accuracy? Is there a sufficient history and backlog for you or them to identify errors? Do you have any reporting or tracking tied to that? Most likely not on all fronts.

It’s time for GPs and their teams to consider switching this important process to an automated technology solution. While the GP promote calculation must still be determined and set up front, it’s a one-time effort that is then run automatically each quarter or at a cadence of your choosing.

• Go deeper: Learn more about the value and impact of automation distribution payments to LPs, vendors, and other partners.

Use Covercy to Streamline Returns for Your Investors — and Your Firm

At Covercy, we’ve built the first real estate syndication platform where banking meets investment management. One of the key features of our platform is the ability to build waterfall distribution models for your assets and automate those payments as you see fit. Revenue and profitability are monitored in the system, and at any time you can initiate a payment for your investors and have those funds deposited directly into their bank accounts. The same goes for your GP promote incentive. No more paper checks. No more time consuming calculations. Just fast payments add value for you and those you serve.

Connect with us today to see our platform in action. 

Wire Payments are Essential Today for Multiple Reasons

As a general partner, syndicator, or fund manager in commercial real estate, you know that time is of the essence in your daily work. You have to communicate quickly, get the information investors need quickly, and make decisions quickly — all to keep transactions on track and important players happy. Wire payments in commercial real estate are one of the most critical functions where speed and accuracy matter.

You’ve likely wired payments before, but today being able to issue payments to multiple parties involved in a commercial real estate transaction is not only helpful — it’s virtually mandatory. This is because of how fast, secure, and accurate wire payments are. They can be executed rapidly, ensuring parties have the capital needed for the transaction or that vendors are paid for their services. Because they involve direct interaction between financial institutions, they’re verified for trustworthiness and security. And they help to protect everyone involved in the transaction.

Here, we’ll explore more advantages of wire payments in commercial real estate — and how Covercy offers a seamless solution as part of our complete banking and investment management platform.

• Looking to issue payments outside of commercial real estate? Covercy offers a competitive cross-border payments solution. Learn more here.

Advantages of Wire Payments in Commercial Real Estate

Wire payments offer a few key benefits over other solutions such as ACH (Automated Clearinghouse) transactions. While ACH payments are of course still a standard payment method in this industry and countless others, they’re more suited for batch payments to vendors located in the United States. For larger transactions and those where international or even same-day transactions are needed, wire transfers excel. Here’s why:

1. Settlement Speed — Wire payments are exceptionally fast compared to traditional methods for transferring funds, such as ACH transactions. This is because they’re an individual, direct transaction between two financial institutions, as opposed to a batch of transactions that occurs on a fixed schedule. Money is typically available within 24 hours, and the transaction can often be completed the same day.
2. International Transfers — Whereas ACH transactions are made within the United States only, wire payments in commercial real estate transactions can be issued internationally. This is incredibly valuable as often investors and partners that are involved in commercial real estate deals come from multiple countries.
3. Enhanced Security — A transfer between financial institutions first passes through a secure transfer system, such as Fedwire or SWIFT. Transfers that originate within the United States will also be checked through the Office of Foreign Assets Control to ensure they’re not being used to fund terrorist activities or are going to countries that are currently sanctioned or pose other risks.

Use Covercy to Wire Payments with Ease

Covercy is the first real estate syndication platform where banking meets investment management. A leading feature of our solution is the ability for GPs, syndicators, and other industry professionals to issue a variety of payments and transfers — from wiring payments as part of the larger transaction and issuing distributions to investors to making payments to attorneys, contractors, utility providers, and more. Additionally, our cross border payments solution allows for low-cost international fund transfers for other purposes, such as sending money to family and friends.

For commercial transactions, we also are the first platform to offer an integrated banking solution — combining wire payments with easy-to-open bank accounts, seamless control of all accounts tied to different assets, simple transaction search and filtering, and more, all with a strong interest rate on funds held in your Covercy Wallet.

Ready to put wire payments in commercial real estate to work for your firm? Sign up for a private demo of Covercy today.

If You’re Jumping Into Office Conversions, You’ll Quickly Find That You’ll Have a Lot on Your Plate

In early Q3, the Biden Administration announced plans to help developers convert office buildings — which have been struggling since the pandemic — into multifamily housing by offering loans at below-market rates and continuing to identify opportunities for the best possible office conversions. This follows an already historic period of office conversions, which were at an all-time high in Q4 -22.

While this has been seen as a positive move for the industry, it isn’t without its challenges. As some in the industry have noted, the process of converting an office into multifamily housing is no simple feat. Doing so requires careful evaluation and planning of multiple aspects of the structure in order to prepare them for a different kind of use.

Examples include replacing, refreshing, or repairing HVAC systems, plumbing infrastructure, windows, fire controls and life safety systems, rethinking and reconfiguring floor plans for residential occupants, and more. Some markets, such as California, even require environmental additions such as earthquake retrofitting.

Each of these projects requires careful management — both operationally and financially — in order to get them completed and keep the office conversion on track. And that’s all before or while you’re actively engaging with banks, equity partners, and private investors to raise capital for the property.

For any GP considering getting into office conversions now or in the near future, the need to execute programs of this magnitude will require technology that consolidates its many phases and tasks in order to make it manageable and ensure not a single detail is missed. Just some of these include:

• Creating promotional and financial projection assets to inform and engage investors
• Promoting the asset to an existing investor database and tracking interest
• Managing pro rata, waterfall, private equity, and deb ownership structures
• Securing, coordinating, processing, and tracking fundraising activity
• Managing a variety of payment types to vendors and other involved parties
• Tracking and managing projects related to the office conversion
• Calculating and issuing automated quarterly distributions to investors
• Reporting on the performance of the office conversion over time
• Creating bank accounts, managing transactions, and tracking activity

Office Real Estate Outlook: 2023 & Beyond

Learn more about where the office asset class stands and explore a variety of revenue-generating opportunities related to office assets. Download your free guide now.

Other Possibilities with Office Conversions

Industry professionals have noted that not every office building has the necessary bones to be converted into housing. In some instances, only part of the property can be converted. This creates an additional opportunity for mixed-use developments. Already a popular opportunity for commercial real estate, mixed-use adds more complexity but also more revenue channels via retail, hospitality, and other use cases.

In these instances, leaning on a commercial real estate investment management solution will also be critical. Different codes and regulations will need to be met, investors with different goals and philosophies may be interested in the non-housing aspects of the asset, and countless other details will need to be managed. Firms exploring mixed-use will have greater need than ever to automate and streamline as much of the process as possible.

• Learn how Covercy supports GPs, syndicators, and others with managing multiple traditional and alternative asset classes.

Empower Your Office Conversion Strategy with Covercy

Whether you’re just beginning to explore the opportunities available with office conversions or you’re looking to streamline management of other commercial real estate assets, Covercy is the best solution available today.

As the first real estate syndication platform where banking meets investment management, Covercy enables GPs and other industry professionals to save time, money, and effort with automated distribution, capital call payment processing, fundraising solutions, document and file management, database management, investor portals, and more. And to sweeten the deal, capital funds held in Covercy Wallet generate strong interest while providing you with streamlined, consolidated banking functionality.

Put Covercy to the test for your business. See it in action in a private demo now.

Seeking Sanity in a Process Rife with Inefficiency?

As a commercial real estate professional, you know how important it is to issue payments to your investors. They’ve entrusted you — and in reality, invested in you more than the property — with their capital and are expecting efficient, reliable, and accurate returns. To meet those expectations, you’ll need a payments platform for asset managers.

Why a payments platform? Well, unlike other aspects of the commercial real estate (CRE) industry, innovation when it comes to issuing payments to investors has been on a caterpillar-like pace. ACH transactions and wire transfers are largely the preferred methods for issuing distributions to investors, but even these processes have inefficiencies:

• Reviewing and updating spreadsheets for accuracy
• Verifying calculations based on the deal structure/type
• Potentially navigating more complex waterfall structures
• Preparing multiple files to be used for the ACH transfer
• Investor accounts and payment preferences must be known
• Doing all of the above eats days from your team’s capacity

And of course, there are firms that still prefer to manually cut checks — and deliver them in person. While this can be viewed as a relationship-building approach with investors, which do you think they would prefer more: seeing you once a month/quarter for a check handoff, or knowing that you’re dedicating that time to maximizing revenue (and thus their returns)? It’s ultimately the call of the GP, but our money is on maximizing revenue.

• One-click efficiency: Learn more about the power of automating distributions.

How a Payments Platform for Asset Managers Adds Value

Pay According to Deal Structure and Ownership

How a CRE deal is structured reflects how returns are distributed. For example, in a pro rata structure, each investor receives returns based on his or her percentage of ownership. In a waterfall model, certain criteria and thresholds must be met before profits are distributed. Either way, managing how much investors receive in their distribution requires careful attention and time. Now, multiply that time investment by the number of investors and assets under management. With a payments platform for asset managers, these structures are set up once. Afterward, issuing payments to investors, across all assets and structures, can be done in a matter of clicks.

Reduce the Risk of Human Error

We’ve touched on the difficulty of using manual processes (even the front-end of ACH transactions requires time) to issue distributions and make payments, but one thing your firm cannot afford is mistakes. Dealing with spreadsheets, NACHA files, and other manual processes increases the risk of mistakes significantly. That risk increases as deal structure complexity increases, such as with waterfall structures. As an investor, imagine receiving incorrect returns because an employee in the firm mis-clicked or accidentally hit a different key. Your trust is eroded and will take some time and effort from the GP to regain — not to mention time researching the payment to figure out what went wrong.

Increase Transparency and Simplify Reporting

Closely related to the above is the fact that using a payments platform for asset managers enables greater transparency in conducting transactions with investors. First, distributions and payments can be tracked — creating a record of those transactions over time. Second, such platforms provide reporting capabilities — allowing GPs as well as investors to filter and sort transaction data to understand performance of specific assets, amounts received, certain types of transactions made, and so on. All information is made available in a single location, and investors can self-service to find the information they need without requiring time and effort from your team.

Ready to Find the Right Payment Platform?

While there are a number of tools available for CRE professionals today to manage their assets and the plethora of financial and operational tasks associated with them, only one combines real estate asset management with banking: Covercy. Built by experienced CRE experts for GPs, syndicators, and those they work with, Covercy provides a complete range of solutions that streamline asset management, banking activity, and much more:

• Fundraise for your next deal and conduct capital calls
• Automate distributions to investors in a matter of clicks
• Open, manage, and fund bank accounts right from the platform
• Provide investors with complete self-service reporting
• Simplify investors’ work with an intuitive investor portal
• Earn strong interest on capital in your Covercy Wallet

We’ve only scratched the surface, and there’s more to come with Covercy — the leading commercial real estate investment management platform. Sign up for a private demo of our tool today and experience the difference that Covercy can make for your firm.

It’s Time to Explore Opportunities Beyond the Traditional

For years, general partners (GPs), deal sponsors, and syndicators have focused on the more traditional commercial real estate asset classes. These include office space, retail, industrial, multi-family housing, hospitality, and mixed-use developments. As we all know, many of these classes are facing significant challenges, and for some classes such as office space, those challenges are expected to continue increasing.

Fortunately, there are many other commercial real estate asset classes outside of these traditional avenues to consider. With the industry overall continuing to face more hurdles, the need to strengthen investor confidence and continue driving value persists — identifying, pursuing, and growing opportunities in these asset classes may be worth the time and effort, particularly for smaller firms looking to expand their portfolios.

Speed to impact: It matters more now than ever. Learn how the right technology solutions can streamline processes and reduce administrative hassles — allowing you to spend more time focusing on serving investors and growing revenue.

4 Commercial Real Estate Classes to Consider — and Why

1. Distressed Properties

The number of distressed properties has been growing nationwide for some time. As of Q1-23, more than $64 billion in assets qualified as distressed, and more than twice that were approaching distressed status. Despite these challenges, distressed properties have seen more interest as a viable investment strategy. There are risks to be sure, but with the right approach, GPs and investors can generate real cash flow from this commercial real estate asset class.

2. Manufactured Housing

Manufactured housing as a commercial real estate asset class has been seeing more and more interest due to this property type’s ability to withstand economic downturns. Additionally, the need for affordable housing has been rising nationwide — leading many to look to this class for alternative solutions and providing park owners that lease the land an opportunity to generate attractive, stable returns.

• Learn more about how to maximize results with manufactured housing assets.

3. Student Housing

Along with manufactured housing, student housing near college campuses has seen a boom recently due to strong demand. And despite rising mortgage rates, industry data shows that property sales for student housing in 2022 reached a historic high of nearly $23 billion. GPs and investors exploring alternative commercial real estate asset classes, particularly those in academic communities, should consider this avenue to drive value. While this class brings some complexities due to tenant cycles and maintenance, it may be a worthy addition to a growth-focused portfolio.

4. Build-to-Rent

Build-to-rent projects are thriving due to housing inventory shortages, rising home costs, and the high rate environment. With more people looking to rent, build-to-rent communities add yet another opportunity for GPs and their investors. These homes typically lease up quickly because they resemble single-family residences and have comparable rates — making them an attractive option.

What’s the Key to Success with Alternative Commercial Real Estate Assets?

Investment management. As a GP, syndicator, or deal sponsor, understanding where an opportunity in any of these commercial real estate classes stands at any one time is critical. As you’re already aware, there are many steps and tasks to oversee — from sourcing new deals and navigating fundraising to communicating with partners, reporting on progress over time, and distributing payments to investors.

Being able to seamlessly navigate these tasks, produce the required information, keep investors informed, and reduce administrative workloads on your team helps to accelerate time to impact. Your team will be able to focus on doing what it does best: closing deals and building relationships. All the while, the essential steps needed to make that happen are being handled either automatically or in a matter of clicks.

That’s what you get with Covercy: a complete commercial real estate investment management solution, with the addition of banking capabilities to further enhance your work, protect your assets, and generate additional revenue.

Learn more about Covercy and how it can help you achieve success with these asset classes and others. Sign up for a private demo today.

Diverging from conventional private capital methodologies, real estate investment managers grapple with the need to monitor and analyze industry-specific key performance indicators (KPIs) and metrics. In many cases, real estate professionals resort to elementary spreadsheets or unspecialized tools that fall short of addressing the intricate demands and workflow of the real estate industry. That is where real estate investment management software comes in.

To bridge the gap, Covercy offers an automated, optimized, and easy-to-use integrated real estate investment management solution. Our investment management platform features tools for fundraising capital calls, asset management, distribution payments, real estate portfolio management, and performance reporting solutions.

This tailored investment software is designed to empower property management professionals and enables real estate firms to efficiently navigate the complexities of their industry while fostering sustainable growth and expansion.

CRE Investor Management Software for a Complex Market

Being a general partner in today’s market is extremely complex — you have a an entire organization to manage, a fund to grow, investor relationships to nurture, make investment strategies, of course, deals to make. All of this in itself is more than a full-time responsibility, even with a team supporting you. To add to this already heavy workload, the commercial real estate market is heating up.

Currently, more capital is available in the market for commercial real estate (CRE) investment than deal opportunities. This is not surprising considering the massive increase in interest in CRE throughout the pandemic. Based on research data reported in the Wall Street Journal, commercial real estate sales hit $809 billion last year — more than double the 2020 figure and well above the $600 billion sold in 2019. Investors turned their focus on warehouses due to the growth of eCommerce, apartment buildings as housing inventory fell and rents increased, and other property types.

This demand is not expected to slow down anytime soon, either. Demand is expected to increase by five to 10 percent in 2022 over 2021 according to the 2022 U.S. Real Estate Market Outlook by CBRE. As a GP, this presents an opportunity for growth as well as a challenge in obtaining deals and managing additional investors. If your aim is growth this year, it’s time to take a look at the tools you’ll use to support it — starting with your real estate investor management software.

What an Ideal Real Estate Investment Management Software Should Do for You

Currently, many CRE investors handle investor management manually — especially smaller firms that manage several deals per year and have a limited pool of investor relationships. But regardless of size, this inefficiency can cost you as a GP. When the next deal comes in, it’s critical that you get in front of your investors — whether it’s 20, 200, or 2,000 — as quickly as possible to present the opportunity. Keep in mind that CRE investors are more than likely on lists for other firms as well, so you’re always competing for their interests. So how can the ideal real estate investment management software help? Let’s dig in.

1. Investor Management Software Must Help You Streamline Investor Relations

With each property under your management, you and your team will have a good deal of work to oversee. You’ll need to go about managing the property, adding value where you can, communicating with investors over time, navigating any future issues that may arise, and managing distributions. Many GPs today still manage this work in spreadsheets, too — creating hassle and complexity that derails higher-value tasks. All of this work is incredibly time-consuming and inefficient — even if you have a team supporting you.

The right real estate investor management platform will provide the tools and analytics dashboard needed in an investor portal to accelerate relationship management and make investment activities much easier, more efficient, scalable, trackable, and pleasant for all parties. It will allow you to manage capital calls, centralize resources as they come in, generate reports and documents, more effectively manage investor databases, and eliminate unnecessary manual file management.

Experience Covercy — A complete CRE investment management software solution providing everything GPs need to manage deals, investors, and more.

2. Investor Management Software Must Simplify Distributions to Your Investors

After a deal closes, providing best-in-class service to your investors will be critical. Distributions are one of the most important and often frustrating for GPs. You’re likely well aware of how frustrating wiring funds to your investors can be — in many firms, it’s forebodingly referred to  as “wire day.” If you’re already using a real estate investment management software, it might provide an ACH file, but you’ll still have to take care of the actual wiring process itself. Even if you’re handling this quarterly, it can still be frustrating.

A better solution would allow you to distribute payments to investors automatically — with pro-rata calculations based on each investor’s percentage of asset ownership and appropriate tax withholdings (by percentage or a fixed amount), either domestically or internationally and in the right currency. Investors should be notified when this process occurs and be able to view all of the financial information involved (as well as be able to update their bank account information at any time for future distributions).

The Covercy Difference — Unlike many of today’s solutions, our software platform provides everything needed to seamlessly manage investor distributions in a matter of clicks.

3. Investor Management Software Should Make Fundraising a Breeze

If you’re approaching fundraising at a high level, without evaluating the past investments and activity of your current investors, or identifying people who haven’t yet invested, you’re casting a wide net when the time comes to raise capital for your next opportunity. While deals can still be shared with your investor base en masse, being able to understand what your investors are interested in, their positions in current investments, and their overall activity in your communications will help you prioritize your fundraising efforts.

The ideal investor management solution for real estate will not only give you the tools you need to announce and communicate your CRE opportunities but also to understand how investors are engaging with those elements. It should show you how often your investors are engaging, thereby giving you an understanding of which investors are most likely to act. Further, it should make the process of investing simple by streamlining contracts, payment processing, and more.

Evaluate Interest with Covercy — our CRE platform allows you to create webpages for properties, share them via email, track investor activity, and more.

Ready to Make Your Life — and Investors’ Lives — Easier? Try Covercy’s CRE Investor Management Software

Covercy is an innovative, all-in-one CRE investor management software solution for today’s busy GPs. With the complete features of the real estate investment portfolio, advanced security, management services, and more, our platform has helped many CRE firms and GPs redefine the way they manage deals and investor relationships. It can do the same for you.

Sign up for a free trial here, or connect with our team to learn more.

Explore a variety of advantages and risks associated with a multifamily investment strategy. Get complete insights here.

Multifamily real estate investment has been a popular and proven strategy for building a successful financial CRE investment portfolio. It has consistently shown higher returns compared to the stock market, and if done right, can provide a steady stream of passive income and long-term financial stability.

Although there are various ways to make money in Multifamily commercial real estate investing, if you’re looking for a less risky commercial real estate investment opportunity that generates strong cash flow, these multifamily investing tips could propel you to the next level. 

Note: Covercy is the first end-to-end multifamily syndication platform that integrates with banking partners for instant distribution payments & capital contributions from LPs. Covercy is free for GPs with 2 assets or fewer. Give Covercy a try today.

Get Complete Insights About Multifamily Real Estate — Right Now

Multifamily real estate properties are a solid avenue for wealth — and with a number of markets seeing outstanding growth over the past year, this strategy is one that’s too good to pass up. Our guide to multifamily real estate investing tips is your first stop to realizing your investment goals — whether you’re already an experienced commercial property – CRE investor or are just beginning to explore your commercial investment options.

Get a complimentary copy of the guide right here.

What is Multifamily Real Estate Property?

A multifamily real estate property is a type of residential real estate building that accommodates more than one family or household unit. The defining characteristic of multifamily real estate properties is the presence of multiple housing units, each with its own kitchen and bathroom facilities. 

Apartment buildings or apartment complex properties that have multiple units are the most common form of multifamily real estate investment property. These structures vary in size, from small duplexes to high-rise apartment buildings with hundreds of units.

Real estate investors often target a building with at least five units for multifamily property investment. Such type of commercial real estate building is considered a commercial property instead of a residential property, requiring commercial loans instead of residential mortgages.

Why Now Is a Great Time to Consider Multifamily Real Estate Investment 

Multiple economic factors in key markets have made multifamily properties more appealing to a wider audience than ever before, and it’s easy to see why. With long-term wealth creation potential, soaring demand for housing, and strong rent growth (12.3% year-over-year as of July 2022), this type of Multifamily real estate CRE asset stands out while others struggle. But in order to succeed, it’s important to carefully consider your multifamily investment strategy and complete knowledge about how to invest in commercial real estate properties.

Here, we’ll go deeper into several reasons why you should get involved in multifamily investing in real estate as well as risks and challenges you should proactively consider in order to make the most of your time and resources.

The Advantages of Investing in Multifamily Real Estate Property

Apart from long-term wealth creation, multifamily property investing brings a number of other benefits — just some of which include:

• Tax advantages — As a multifamily commercial real estate investor, you may be able to take advantage of a number of tax benefits. These include depreciation, management expense deductions, cost segregation, and more. (Note that you should consult your own tax advisor for guidance before investing in CRE properties.)
• Stability — Multifamily real estate properties are a relatively stable asset class as compared to industrial properties — particularly useful in today’s market. Due to the significant housing shortage, multifamily properties will continue to see strong demand for years to come.
• Easy entry — You don’t necessarily need years of experience and significant financial acumen to get started in multifamily real estate. That said, there are some common pitfalls that many real estate investors new to the world of the commercial real estate market should make. Overall, a multifamily real estate investment strategy is a fairly low barrier to entry.

Go deeper: Explore more multifamily investing benefits in our guide here.

Potential Challenges in Multifamily Real Estate Investment Strategy

While the advantages of multifamily real estate investing are many, so too are the potential risks when the investment strategy isn’t planned early and managed efficiently once the deal closes.

• Management — It’s important to determine whether you’ll be managing the property yourself or if you need to work with a property management company (PMC). If you do the latter, working with a proven, experienced company that you trust is crucial for a higher return on investment.
• Raising capital — You will likely need to conduct fundraising up front in order to raise the funds needed to secure financing to buy the property. You’ll need other Multifamily real estate investors to work with and will need a solution to manage distributions and other financial details on a pro-rata basis.
• Overreaching — This one is important and is a common multifamily real estate investment mistake. Many investors who are new to investing in commercial space make poor investment decisions to get a property with a couple of hundred units when they should have purchased a smaller property with which to build experience. Going too large too quickly will result in you being overwhelmed and tend to have higher chances of potential issues with tenants.
• Your role — Remember that investing in multifamily real estate properties is about more than the investment itself. You’re also taking on people’s livelihoods. Your tenants will depend on you to keep their homes safe and in good working condition. They expect you (or your PMC) to be responsible, accountable, and available.

Find other potential pitfalls: Download your free copy of the multifamily investing tips guide here.

Success Tips for Multifamily Real Estate Investing

• Never be satisfied — Always strive to be a better, more informed, and supportive investor. You’ll build stronger relationships with your tenants and partners and will realize more success in the long term.
• Pressure test yourself — Multifamily real estate investments require your time, attention, and resources. Make sure that you’re ready and able to take on this responsibility before proceeding.
• Start conservatively — Again, don’t bite off more than you can chew. Strive to meet your ROI expectations in a manageable way and scale up when you’re ready and able to do so.
• Always add value — If you’re considering a multifamily real estate investment strategy purely for wealth creation, you likely won’t see success. Always seek to add value such as renovation, to increase the market value of a property for your partner investors, your tenants, and your team if you have one. This strengthens relationships and can lead to greater participation from other investors in the future.

Invest In Multifamily Real Estate with Confidence — and with Covercy

Covercy is a commercial real estate (CRE) investment management platform designed specifically for GPs and investors with moderate asset portfolios (think 10-20 assets). Our platform provides the technology investors need to maximize key functions such as fundraising, investor relations, automated distributions, and even banking.

With all of these capabilities, GPs are able to accomplish more, add more value, and better understand the long-term performance of their assets — without the administrative hassles often associated with CRE investing. And it’s ideally suited for investors looking to grow their portfolios through a multifamily real estate investment strategy.

Get a private demo of the platform now.

As a general partner at a commercial real estate firm, you know that deals are becoming harder and harder to find.

More than ever, real estate professionals are exploring new ways for sourcing deals and moving them across the finish line faster. But once you have an asset lined up, you’ll need to raise capital to fund the purchase. This is where many professionals struggle — too much is still manual and lacking in insight. This is why a commercial real estate marketing software solution is crucial — not just today, but for the months and years ahead.

The commercial real estate technology space is growing, but not every tool out there allows you to conduct marketing activities while also managing assets and relationships. Sure, you could invest in multiple platforms and CRMs to build the stack that you need, but each tool in your toolkit adds cost, training time, implementation, and disparities. Much of this can be avoided by leveraging commercial real estate marketing software that has the other tools you need built in for investor relations, fundraising, distributions, and other needs.

Whatever route you choose to take, what matters most is that you’re using a tool that gives you the capabilities and insights you need to make the most out of every opportunity — and every click. Let’s explore a few essentials that should be at the top of your list as you explore your options.

1. Investor Database Management

Your investors are your audience. You might also build a strong database of vendor contacts, legal partners, and service providers that you need to communicate with from time to time as part of your ongoing asset management work. Either way, the ideal commercial real estate marketing software will provide a CRM-like solution that enables you to manage these various audiences and the myriad tasks around them:

• Track investors by portfolio position and filter by asset, contact, entity, and referrer
• Link investors from multiple entities to understand their stake in your assets
• Drill down into each investor to view individual contributions, distributions, and contact information for more intelligent segmentation and marketing needs

2. Investor Pitching and Tracking

While your investors are putting their capital behind you just as much as the asset itself, it’s still crucial to put your newest deal opportunities in the best light possible. Creating digital assets that showcase your investment opportunities and provide needed information — while enabling investor-level capabilities — will go a long way in informing investors and allowing them to decide whether to get involved. Here’s what you should look for when evaluating commercial real estate marketing software:

• The ability to quickly generate online assets that can be easily shared with investors detailing everything they need to know about the opportunity
• Track investor activity on those digital assets, with the ability to see how engaged one investor is versus another and prioritize more interested investors
• Share a variety of deal-related information such as offering decks, photos, and more

3. Funding Tracking

While not a marketing activity per se, the ability to track the funding progress of your asset provides you with insights into the best next step. Is an investor not committing yet engaging with the asset opportunity repeatedly? Has an interested investor committed but not yet transferred funds? Which investors or entities have committed the most to your newest deal? Having immediate access to this information in a matter of clicks saves you significant time and gives you a clear path forward on where to focus your energy. Your commercial real estate marketing software should:

• See at any time where the funding progress of your asset stands so you can make an informed decision about what to do next
• Give investors the ability to indicate their preferences on a new deal and track them from soft circled to committed and funded
• Give you the ability to drill down into the investment progress of an asset and work with data to find out the information you need to keep up the momentum

Get Covercy — A Commercial Real Estate Marketing Software Solution That Offers Far More Than Just Marketing

At Covercy, we’ve built the first banking-embedded commercial real estate investment management platform that not only provides the marketing capabilities you need to capture investor interest but also manage assets from funding to post-close and beyond.

With advanced — and growing — sets of features that eliminate the manual, time-consuming tasks that commercial real estate has historically struggled with, general partners and their investors are empowered to have greater oversight and decision-making with each asset.

If you’ve been handling marketing efforts for your new deals manually and without any insight into performance, now is the time to make a change. Get in touch with us today to learn more about our platform’s capabilities and to see it in action.

It’s No Secret That Commercial Real Estate Has Lagged Behind Others in Tech Adoption

CRMs and other tools are must-haves in any professional environment, but how do they solve the specific needs of this industry? For example, capital call and distribution processing are two functions where professionals are even today continuing to handle related tasks manually, and many times even in person.

Don’t get us wrong — personal relationships shouldn’t be deprioritized in favor of automation or efficiency. But here’s the key: both you and those with whom you work on a commercial real estate deal stand to benefit from automation and efficiency. It simply makes your life and work easier, and that’s an advantage for everyone. This is particular timely today because:

• Professionals need to dedicate more time to sourcing new deals
• Industry financial activity (e.g. banking) needs to be streamlined
• Growing regulation necessitates stronger oversight and reporting
• Incoming generations prefer technology use vs. manual activities

With capital calls and distribution processing, putting an automated solution to work enables you to execute two of the most important functions of the commercial real estate process. Capitals are essential to fundraising, and distributions are how you give back to your investors after they put their trust in you. But what should such a solution actually enable you to do? Let’s break down the essentials.

5 Must-Haves for Capital Call and Distribution Processing

• Tracking Commitment — Think about the last time you had a deal in your pipeline. At any time, would you have been able to tell which investors or partners had expressed interest in your pitch deck? What about those that have soft circled the investment opportunity? What about those that have already issued their payments? Handling this manually will take time and mindshare from you and your team when you could be spending time on building relationships or pursuing additional opportunities.

• Streamlining Capital Calls — When it comes to capital calls and distribution processing, actually obtaining those funds has often been manual. If you’ve manually sent requests for capital to committed investors, you’ve likely wondered at some point if this was the easiest way to go about it. Mailing letters, sending emails, etc. is a time sink. Now imagine cashing checks from several dozen investors at different times while keeping tabs of where you stand in your funding progress. As you might expect, consolidating this work and timeline via a tech solution will make your life easier and make the process easier for your investors.

• Collecting Funds via ACH — The actual process of collecting funds has historically been an undertaking for commercial real estate firms and professionals. Filling out NACHA files and other spreadsheets, dealing with banks, and handling other outdated processes is just another in a long line of time-consuming tasks that can be simplified and streamlined with an online solution. When it comes to receiving funds via capital calls and issuing funds via distributions, consider implementing a digital solution that will accelerate the process while reducing your workload.

• Allocating Funds to Specific Asset Accounts — Here’s another complication that you’re likely often dealing with: allocating specific funds from specific investors for specific assets. It’s a lot of detail that has to be managed. Even if your firm is only handling a few assets per year, there’s a lot happening there. You’ll need to report on this as well, and without a tool to simplify the reporting process, you’re going to have a lot on your hands when the time comes to start generating that information.

• Distributing Payments to Investors — The final consideration in capital call and distribution processing is the often-dreaded “wire day” — a time when firms deal with complex calculations and research in order to issue payments to investors whose funds helped make the deal a success. Consider: what if you could, at any time, generate a distribution to an investor or group or investors based on their pro rata ownership, in their own currency, while adding a personalized touch? With the right tool, that’s exactly what you can do.

The Solution Already Exists — But Will You Leverage It?

Covercy is the first banking-embedded investment management platform built specifically for commercial real estate professionals and their investors. Everything detailed above is readily available in our platform, and it’s helped numerous firms become more efficient and effective. Here’s a great example from a real-world customer:

We have over 500 investors with thousands of capital calls & distributions dating all the way to the 90s. Our entire investor management now runs on Covercy. We’re 10 times more efficient than before. — Jocelyn Rosenwald, Director of Acquisitions, Beachfront

If you’re tired of doing things the same way, or if you’re looking to position your business for more growth in the year ahead, consider Covercy. Explore our features, learn what people use our platform to achieve, and sign up for a private demo today.

You’ve Probably Been Dreading This…

Issuing quarterly distributions to investors is an important part of commercial real estate. However, depending on the structure of the deal, the number of parties involved, their ownership percentages, and the amount of revenue that the asset is bringing in (and whether you as a GP are compensating yourself for those returns), it can be difficult for you and your team to calculate CRE distributions efficiently — let alone accurately.

There are countless details that must be considered when the time comes to calculate CRE distributions to investors, just a few of which include:

• What are the terms of the investment agreement?
• What entities are involved (individuals, syndicates, funds, etc.)?
• How many investors do you need to calculate distributions for?
• What is the ownership percentage of each investor?
• Is a waterfall structure in place with a tier-based system?
• What revenues are required in order to meet specific tiers?
• Do you have the banking information for each investor?

With commercial real estate facing more challenges than ever, the last thing you and your team need to be dealing with is manual calculations — most likely built out in dense spreadsheets where the risk of human error increases exponentially. Additionally, your time is critical and should be spent on building relationships, identifying new deals, and looking to maximize value for investors — not handing out paper checks.

Here, we’ll explore a few quick tips and share resources to help you expand your knowledge and, hopefully, streamline your workload when the time comes to calculate CRE distributions to your investors.

1. Automate Waterfall Calculations

If you have a waterfall distribution structure in place, it’s likely fairly complex. There are multiple people or entities involved, all with their respective share of due returns. And of course, there are tiers — levels of returns that govern how profits are distributed according to the terms of the investment agreement. Often, firms use spreadsheets to calculate CRE distributions in a waterfall model, but again, even if you have the most glorious of spreadsheets set up with clean, sophisticated functions — it’s still a manual process. And it only takes one accidental keystroke to completely ruin it.

• Solution: Leverage technology that automates waterfall calculations. These platforms allow you to build out waterfall structures according to the unique terms of the investment agreement for each deal. A bit of upfront work, and you and your team will be all set going forward.

2. Streamline Banking Activity

While the overall banking situation is its own beast, the daily process of making deposits, transferring funds, reporting on balances, issuing payments to vendors, and other related activities is — again — manual, time consuming, and fraught with risk. One misguided click, and you’ve just sent $100,000 to the wrong investor. That’s just one of the many risks involved, to say nothing of the sheer time commitment from you and your team that could be better dedicated elsewhere.

• Solution: While you likely have multiple bank accounts per asset, each of those accounts is likely with a different institution. That’s a great way to mitigate risk, but consider using a digital solution that enables you to open, fund, manage, and report on banking activity (while earning great interest) with just a matter of clicks.

Automate Payments

Closely related to all of the above is the need to automate payments. Every day, you likely have a number of transactions you’re executing, per asset. These could be for repairs, legal services, payments to other financial institutions, investor distributions, and more. Rather than cutting checks, inputting the details for an ACH transaction, and dealing with the countless other manual tasks present in making CRE payments, consider how much time and hassle you could save by going a different route.

• Solution: It’s time to leave wires, NACHA files, and paper checks behind. Consider using tools that integrate with third party banking partners to help you issue payments of virtually any kind to the right parties in just a few clicks. The right tools will allow you to generate and provide reports to investors, improve transparency, and allow investors to see exactly where the asset stands in performance.

Calculate CRE Distributions with Covercy

Covercy has developed the first platform for GPs and their investors that brings all of the above together — and much, much more — into a single platform. Using our CRE investment management platform, which integrates banking in addition to asset management, teams have been able to achieve significant results:

“Covercy has allowed us to streamline our investor interaction through their direct deposit distribution payments, document storage, and investor portal where investors can see their investment portfolio information regarding each asset.” — Sadie Swisher, Operations Manager, Profusion Private Asset Fund

If you’re ready to experience a new way to calculate CRE distributions and streamline the rest of your workflow, our team is ready to help. Get in touch with us today to get started.

Many of the Traditional Asset Classes Have Been Facing Extensive Challenges Over the Past Year

However, at the time of writing, industrial commercial real estate serves as an exception. Consisting of warehouses, distribution centers, manufacturing facilities, data centers, cold storage facilities, and even life sciences buildings, industrial commercial real estate is experiencing an uptick — and it has the statistics to prove it:

• Low Vacancy — As of April 2023, the average vacancy rates for industrial assets stood at 3.9% — much lower than the 16.7% national average for office assets.
• Low Cap Rates — Thanks to low vacancy and rents being up 7% year-over-year, industrial assets continue to see strong earnings, keeping cap rates favorable.
• Market Share Growth — The market share for industrial assets has doubled since 2016 and now takes up one-third of the market today.

These are just a few of the reasons why industrial commercial real estate is high on investors’ radar, but they’re primarily commercial real estate industry data points. What about these assets themselves is contributing to their popularity and growth? Here, we’ll explore some key trends that are influencing the performance of industrial assets.

Factors Influencing Industrial Commercial Real Estate Growth

1. The Continued Growth of eCommerce

The growth of eCommerce purchases during the pandemic has continued to steadily increase years after the initial boom. According to reporting from the U.S. Department of Commerce, eCommerce accounted for 15% of total retail sales — an increase of 3% from Q4-22 and nearly 8% from Q1-22.

With consumers continuing to expect “everything on demand” and companies pressing forward on optimizing logistics, inventory management, and more, it’s no surprise that eCommerce continues to drive industrial asset purchases and new builds. Companies are expanding in order to secure the best locations possible to meet demand and streamline distribution, and industrial assets are key to that strategy.

2. Reshoring Operations

Following the supply chain and logistics challenges of 2021 and 2022, companies with international suppliers and operations had to rethink their approach in order to avoid bottlenecks, extensive lead times, rising costs, and consumer backlash. As a result, companies are actively engaged in or are thinking about re-shoring for better oversight and risk mitigation. Thus, the need for industrial commercial real estate has increased.

The need for industrial assets isn’t limited to OEMs — the tiered suppliers that support them in their supply chain and production processes have a greater need for industrial facilities. With more production being re-shored to the U.S., timelines and expectations will get tighter — creating the need for suppliers to strategically position themselves where they can effectively compete for business and add value.

3. Transportation & Logistics Costs

Closely related to the above is companies’ desire to reduce their logistics costs and risk. It was a challenge during the supply chain crisis of recent years, but it’s even more of a challenge today with rising rates and inflation. Companies are investing in their footprint to offset these costs over the long-term and to streamline how products and materials move between production stages or on to customers.

Construction has played an important role here. Depending on the organization and their strategy, building may be the best route versus buying an existing industrial asset as it allows the company to optimize the facility from the start. This approach is picking up steam, with construction spending on new industrial assets having increased to around $147 billion in March 2023 — up from $90 billion in 2022, according to U.S. Census data.

Use the Right Tools to Achieve Your Goals with Industrial Commercial Real Estate

Whether a good portion of your portfolio already consists of industrial assets or you’re considering getting started with them, it’s critical to leverage the right tools to help you manage this asset class effectively. Covercy is the first real estate syndication platform where banking meets investment management. Using just one system, you can:

• Manage your entire database of investors, vendors, and assets
• Pitch deals and track investor engagement throughout the process
• Open, manage, and track bank accounts tied to specific assets or funds
• Conduct fundraising efforts and issue capital calls to accelerate your efforts
• Skip the hassles of “wire day” and automate distributions to investors
• And much, much more

Experience What Covercy Can Do for Your Firm

Connect with our team today for a private demo of our platform.

Learn 6 Ways to Simplify CRE Investment Distributions

CRE (Commercial Real Estate) investment managers help develop and enhance a business’s management model for real estate investors in the commercial real estate market. While carefully formulating and essentially minimizing previous managing techniques, CRE investment managers can help their clients keep a direct grasp on their investment return by calculating real estate distributions every quarter and with easy-to-understand processes and reports.

Commercial Real Estate Investing professionals see several issues daily. While managing their clientele’s investments and ensuring calculations of real estate distributions for gains and losses are accurate; investment managers continuously strive to provide the best-in-class performance possible.

Having to do all of this without the proper CRE investing tools to calculate real estate distributions and other important tasks can be tough.

To cut back on the time spent managing clients who invest in commercial real estate, several innovative and advanced tools have been compiled. They show CRE investment managers how they can streamline their processes, calculate real estate distributions, and utilize these technological advancements to better organize and manage their client base.

1. Stop Using Spreadsheets to Manage Your Commercial Real Estate Clients and Distributions

This should go without saying that calculating real estate distributions and managing real estate clients are not simple tasks that can be done by working on mere spreadsheets. Spreadsheets might seem like the “simple and easy” way to get what you need from the client and commercial properties management system.

However, the amount of information that can be monitored through the design of the spreadsheets ends up creating more work. Commercial real estate owners and real estate investment firms must keep the needed cash flow, CRE property, CRE investors, real estate distributions, and financial information accurate and up to date.

Switching to alternative investment programs such as Covercy, IMS, or Juniper Square will help keep all portfolios and information organized and easily recalled or updated. These tools can help you easily calculate real estate distributions. Providing you with an organized streamline of all the commercial investment business that you do.

This is particularly beneficial when making significant investment decisions that require timely and accurate information.

2. Stop Using NACHA Files For CRE Investing Management

If you’ve ever used NACHA files, you already know the struggle and probably rolled your eyes when you read the word. An outdated system has been replaced by far more advanced payment system options that will appeal to every client.

It is a time-consuming, completely manual system that provides unneeded steps in managing your commercial real estate investor business and processing payments. Inclusive management platforms complete these processes, and products, and manage reports accurately. Easing investment management’s role as account overseer.

While using IMS, a NACHA file will be required. However, the Covercy payment platform completely eliminates the need for using NACHA files. All of the payments are done through an end-to-end online. The money goes right from the source platform to the investors’ bank accounts.

3. Use a Waterfall Model That Has Been Carefully Reviewed, Then Use Automated Waterfall Calculations for Real Estate Distribution

We know, we cheated and technically gave you two steps instead of one, but that just means you get more helpful information, right? Especially for those new to investing in various property types or interested in real estate investment trusts.

Using a waterfall model that is easy to understand allows you to quickly assess return on investment values for clients, including tenant performance in their investment property. Without intricate loops to jump through to get the answer, investment managers can easily identify gains or loss values for clients, catering to the needs of many real estate investors in the ever-changing CRE market through an easy-to-use platform.

Having the model reviewed by a professional before inputting it into the management system ensures accuracy for your clients. Once approved, using an automated waterfall calculation system will generate the results you need.

Some calculations can be challenging for this automated system, such as private equity fund accounting, but other accounts related to property investing can be automated to find their calculations and input them into the system for you automatically. Consulting with a professional will help ensure your data is accurate.

4. Automatic Pro-Rata Calculations

CRE investment managers should consider an automatic pro-rata calculation tool that takes all the guesswork and stress out of the allocation of investors’ funds. The system creates value for clients that ensures accuracy every single time in the world of the commercial real estate industry.

Using a cloud-based platform that is easy to use, like Covercy would enable nearly anyone to perform pro-rata calculations and process and calculate real estate distribution payments right in the same window.

5. Having an Investor Portal with The Best-in-Class Experience and Automated Messaging For CRE Investment

We know that an investor portal is something that you may or may not have thought about adding to your management system, especially when dealing with commercial real estate properties. If not, now is the time to acquire this groundbreaking technology.

You don’t have to hire someone to manually input information each time someone messages your firm, an automated message promptly is dispatched to your client letting them know you are on the task.

Not only does this system automatically generate replies but you can also conduct all correspondence about payments, inventory, real estate distribution, or anything else in your automated reply through the platform. This approach is particularly advantageous for commercial property owners and those looking to invest in CRE.

Having this portal is going to give your company an advantage.  Every investor, including many investors exploring various commercial real estate investment strategies and investment opportunities, will want to obtain their financial statistics and see accurate reports for any of their investment gains or losses.

The portal also allows the investor to manage which bank account they want their distributions to go. They can change it at any time giving them both security and flexibility. 

Through this portal, you’re giving them more control, building trust, and in turn strengthening your investment relationship and potential with your clients amid volatility. It is a win-win for everyone. What’s on that investor portal?

Expecting to see complete breakdowns of all metrics, reports, market analysis, results, contacts, etc. will help clients to verify their information limiting their need for communication with their CRE investment manager. Staying connected through the portal can help eliminate some of the unknown variables.

6. Use Cloud-Enabled Tech

Having cloud-enabled technology throughout the office space is something that is going to safeguard your data. If something, anything, should happen, then you are protected.

Storing items in the cloud, especially calculations that are crucial to businesses is going to save you a lot of stress and time. Protecting your client’s sensitive information and your business’s data ensures no one suffers a loss should an unforeseen circumstance arise.

Streamline your processes by being able to save, store, and share files through the cloud, with access through any devices on the service at the same time. This helps to keep documents available to everyone in the office building but also helps to keep them protected. The cloud is one of the most secure places to store various online files.

*Disclaimer

Investing in commercial real estate can be risky. It is not a fit for everyone. While we aim to provide general information to help you better understand CRE investments, we are neither providing any investment advice nor advising for or against any particular investment.

Retail Has Seen Its Struggles, But Consistent Demand and New Trends are Influencing New Growth

The pandemic changed how consumers researched and purchased goods, forcing brands to rethink their go-to-market strategy and how those goods were made available to consumers. As a result, retail commercial real estate experienced challenges despite high levels of demand. The class hit a low point in Q4-21 but rebounded throughout 2022 as consumers began returning to stores.

Retail has continued its upward path ever since, with year-over-year annual sales growth. This year, the National Retail Federation (NRF) forecasted that retail sales will grow between 4% and 6% over 2022. However, sales growth is just one reason why retail commercial real estate assets are worth greater consideration.

Even with today’s notable economic hurdles, there are additional signs that retail assets should be on your firm’s list this year and into 2024. Let’s explore a few of these indicators and what they mean for retail commercial real estate.

1. In-Store Shopping Persists

While eCommerce exploded during the pandemic and has continued to grow, it accounts for only 15% of all retail sales. As noted in the 2023 Midyear Commercial Real Estate Outlook from J.P. Morgan, many products still require in-person visits. Looking deeper, consumers utilize multiple channels when shopping to make a purchase decision. Gen Z is an influence here as well — just as many Gen Zers enjoy in-store shopping as much as online shopping. It’s clear from these trends that in-store shopping and thus retail commercial real estate assets are here to stay.

2. Retail Itself is Expanding

Consumers now want more than just in-store shopping for their retail experience. They also want dining and entertainment. New retail entertainment types are emerging, with millions of square footage planned across the U.S. and Canada. “Eatertainment” specifically is growing, which is a space that combines food, beverages, games, and more in one facility. With dining out increasing nearly 14% in Q4-22 over 2021, the revenue opportunity is there. The demand for mixed-use space and EV charging infrastructure growth are also contributing to retail asset evolution.

3. Low Vacancy Rates

The vacancy rate for retail commercial real estate is promising, standing at just 4.2%. Retail’s high net absorption rate — 90% as of Q1-23 — looks to continue well throughout 2023 and 2024, and store openings well exceeded closings in 2022. Major retailers announced plans to open a comparable number of locations while closings reduced by more than 57% over 2021.

Are You Set Up for Success When Your Next Retail Commercial Real Estate Deal Arrives?

Whether you’re exploring the evolving retail industry or are considering assets adjacent to it, speed to impact will be crucial. You’ll need to show prospective investors and partners that your vision is one worth their consideration. But more importantly, you’ll need to be able to deliver value as soon as possible. And that can only be achieved by streamlining the many processes involved in managing a deal from end to end.

At Covercy, we’ve built the first real estate investment management platform that combines banking, investor relations, fundraising, automated distributions, and more into a single platform. With the industry still — even today — struggling to adopt technology solutions, there’s no better time to take a proactive step forward and implement tools that make virtually every aspect of your work simpler, faster, more effective, more transparent, and more valuable for all parties involved.

Ready to learn how Covercy can help you transform your existing processes while setting you up for success in future deals? Request a private demo of our platform today.

Effectively managing your Limited Partner (LP) relationships is the cornerstone of success in the realm of real estate investing. But as a General Partner (GP), you’re perpetually juggling calls, emails, cash flow, and meetings related to your rental properties, liaising with real estate agents, and dealing with tenant concerns.

In this fast-paced environment, finding time to update your investors on your progress, including the status of mortgage payments and property management strategies, can often be challenging. Unfortunately, not every real estate investor, particularly those just stepping into the dynamic real estate market, has the luxury of a dedicated investor relations team.

Luckily, we at Covercy Real Estate Investment have some insightful tips about why it’s so important to have great relationships with your LPs, your pivotal role in that relationship, and specific points to help you maintain and strengthen it.

Related Webinar: Seven Ways to Make Sure your LPs Reinvest in Your Next Deal

Why is a good investor relationship critical for your fund?

Building a solid investor relationship is critical for your fund’s success, particularly when it comes to long-term Commercial Real Estate (CRE) investing, a type of real estate that attracts many aspiring GPs and fund managers. While you may aspire to become as attractive as KKR or Blackstone in terms of reputation and stability, smaller GPs often encounter problems trying to forge new relationships and raise capital to buy a property or diversify their investment properties.

During the journey of real estate investing, which often involves different ways to invest in real estate, relationships between you and your LPs can (and should) last many years. This long-term connection persists even as roles and firms change, and you transition from a rookie real estate investor to an experienced landlord or property manager.

Therefore, it’s essential to treat these relationships as long-term commitments, finding ways to consistently harness and nurture your investors, particularly in an online real estate world. This strategy can be your key differentiator and a sign of a good investment.

When you start investing, the way you structure your regular LP updates and treat these network connections can significantly impact your reputation and future fundraising efforts. For instance, outlining your investment strategy clearly can help your LPs understand your vision better.

So, consider these connections as your long-lasting relationships, as they can support your standing in the competitive real estate market and your future efforts to secure capital.

Your role and responsibilities of a General Partner

As the general partner of a fund, your responsibilities stretch far and wide. You’ll raise and allocate investor capital, often on an online real estate platform designed to streamline the process. You’ll analyze potential deals, ponder ways to get the best returns, and invest in real estate without excessive risk.

Related Article: Real Estate Asset Protection: What GPs Should Know

You’ll be held responsible for the outcomes, as you’ll be the one making the final investment decisions on where the fund’s resource pool will be dispersed, and when. These decisions are critical and have a significant impact on the ability of the fund to generate income.

Compensation comes in various forms, including management fees, carried interest, and capital distributed back from the fund’s deals. Although the ways to generate income are diverse, they all revolve around one central principle: nurturing your Limited Partner (LP) relationships. Essentially, your responsibilities are many, but all are geared towards maintaining the health of these relationships and the overall prosperity of the fund.

Here’s how you do it while perfecting your responsibilities.

How to build and manage relationships with your investors?

Set clear expectations early on

Being in sync with your investors, and making sure you’re on the same frequency or page, is paramount, especially when it comes to owning real estate or making a direct real estate investment.

It’ll help you avoid dealing with confused money looking to pool out too early from your real estate projects, and unwarranted bad reviews due to it. You’ll also need to make sure you clearly communicate your vision, investing methodology, scale, growth plans, and exit strategy. When it comes to direct real estate investment, clear communication can make a significant difference.

Setting these expectations early can save disappointment and frustration for both sides later on. It’s an essential step in maintaining healthy relationships and ensuring the successful execution of your real estate projects.

Show conviction

When an LP puts his money in your hands, he’s not just making a financial transaction or choosing an investment type, he’s making a personal finance decision that’s deeply tied to his faith in you. He’s investing in your fund, but he’s mainly investing in you, your character, vision, and ideas. It’s about more than just real estate values; it’s about you embodying the ways to make money in real estate he believes in.

As a GP, you are looking for strong LPs, the ones who understand your approach to the market and see the value in your strategies. Similarly, strong LPs will choose a strong GP. They’re not just selecting based on return rates, they’re also selecting based on who you are and what you stand for.

Related Article: Ensuring Partnership Success: The Role of Distribution Waterfalls in the GP-LP Relationship

Nothing scares an LP more than a GP who’s constantly seeking direction and reassurance. In this world of real estate investing, where a conviction can mean the difference between success and failure, it’s crucial to exude confidence. Show conviction. Always. Let them see that you are as committed to their personal finance goals as they are.

Listen actively to concerns

Your investors want you to succeed, both because their money is on the line, but also because if they chose to work with you – they respect you. Show them respect back by actively listening to their concerns and by encouraging open, clear dialogue. This will help you learn about the risks they’re willing to take, and those they deem futile.

Strategize how you’ll add value

Many GPs can make good ROI for their LPs, but few can get great ROI and add extra value. And while every investor loves money, they value relationships more, as networking in real estate can win you deals. Your LPs know other LPs. If you go the extra mile for them, they’ll help you get your financing done, introduce you to their network – and by doing so, help you build your brand reputation organically.

Consider hiring a professional mediator.

Your LPs will come from diverse backgrounds. They’ll be from different countries and states, might hold different political views, and originate from different cultures. This might cause communication hurdles, and when things don’t go as planned, a professional can help. To maintain relationships, and avoid creating a bad name for yourself, avoid litigation against your LPs, even if things go south. Try hiring a mediator first, or an arbitrator as a last resort.

Communicate wins and challenges frequently.

In business, uncertainty creates hostility; hostility creates conflict; and conflicts result in delays, trouble, and losses. Communication is the most important factor in any relationship, especially in new business partnerships—where doubt is prevalent, and trust is hard to build.

But the truth is, most investors don’t want to know everything going on in your office. So, consolidate your update into a few relevant highlights and lowlights.

Highlights can include a few wins, like new partnerships, exciting deals or noteworthy new customers, recent major deals closed, or key leadership changes. Also, if poor portfolio performance or disappointing exits occur, put that in your lowlights report as well, as transparency is key. With your bad news, appearing strong and presenting alternate strategies is advised.

That said, investor reporting can differ from one company to another, but there’s one thing all LPs look for when hearing updates on their investments: KPI updates.

Present trackable information, like deals closed, ongoing, and initiated, alongside metrics about your portfolio of companies and their current valuations in a visually easy-to-understand manner. It should be presented professionally, but easy to understand.

Stay Connected On Social Media

The world has changed. In 2022, lots of influencing CEOs and VC money roam LinkedIn and Clubhouse. Social media is a prime way to keep in touch and build real, lasting relationships with potential investors.

Connect, comment, and collaborate with experts in your industry. Engage with their posts online and offer up your ideas on topics they’re writing about. Then, try taking those relationships offline and setting up lunch meetings and getting to know them on a personal level so they become more than a contact. It’s not going to change your network size overnight. This process takes time. But a foundation for amazing partnerships will be built if you show them you’re interested in their work and keen to establish a relationship.

It’s also a wonderful space to stand for your ideals, voice your ideas, and create an organic following that will naturally brand you to the right prospects. Build a legacy of sorts leveraging the collective memory pool of the internet. If you don’t have time to do so yourself, you can always hire a virtual assistant/social media marketer/copywriter who can attune to your tone and do it for you. Make sure you’re staying in touch with your followers, gathering new ones, and staying up to date with this new reality of quarterly social trends.

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Executing this list will make you stand out as a GP, help you maintain relationships, and ease your fundraising process. We covered why investor relations are important, and your role in the process, and delved into specific ways how to stand out while doing so.

*Disclaimer

Investing in commercial real estate can be risky. It is not a fit for everyone. While we aim to provide general information to help you better understand CRE investments, we are neither providing any investment advice nor advising for or against any particular investment.

Opportunity Abounds for Those Who Seek It

While rising interest rates, a slowing debt market, asset-specific challenges, and other issues continue to keep the commercial real estate industry on its toes, it’s worth remembering that every challenge is also an opportunity. And when it comes to commercial real estate opportunities, there are plenty available for professionals that are willing to consider new approaches and technologies.

Note that not every commercial real estate opportunity is a quick-hit revenue generator. Instead, some are opportunities to streamline many of the same repetitive processes that have kept GPs and their teams from becoming more nimble and effective. That said, every improvement made can support new revenue as well as value creation for teams and investors. Let’s dig in and explore some of these commercial real estate opportunities.

1. Greater Access for Investors

While falling property prices aren’t good news for sellers and GPs, they can lead to more accessible investment opportunities for investors who otherwise might not have been able to get in the game. Additionally, falling prices and a slowdown in the debt market mean sellers may be more open to options as to where financing comes from, as recently discussed in the Commercial Observer’s State of Commercial Real Estate forum.

• More investors means more data to manage. Consider simplifying this important data management process to maximize service to current and new investors.

2. Add Value to Office Assets

While this class has seen significant challenges over the past few years, it now has distinct commercial real estate opportunities — particularly when it comes to adding value for tenants. Buildings that can add that value by helping them measure and meet their sustainability commitments or provide desirable amenities are expected to see continued demand. Office assets that aren’t likely to survive the current economic climate are being considered for conversion opportunities such as multifamily housing (and much is being done in the legislative sphere to provide funding and make these conversions happen).

3. Streamline Manual Banking

To date, much of the banking activity in commercial real estate has been manual — and incredibly tedious and time-consuming. Now, with the banking industry experiencing its own challenges and setbacks, firms would be wise to consider their approach. How is capital being protected? How can costs be reduced by streamlining banking processes such as payments and even opening accounts? And how can firms gain greater insight into banking activity by asset and fund? While more on the administrative side, this commercial real estate opportunity will reduce time spent on low-value tasks and enable teams to focus on better serving investors and managing assets.

• Go deeper into the challenges associated with banking in commercial real estate and why now is the time to work with the right banking partner.

4. Assess Your Tech Stack

While there are a number of tools available for commercial real estate firms today, some are focused on key processes or functions. Few enable teams to execute the spectrum of tasks associated with managing investors, assets, transactions, and more. Firms that have too many tools — or that are still using manual processes — should look to leverage technology that brings as many processes and needs into one system as possible. Examples include investor relations, fundraising, asset management, banking, investor distributions, and more.

• Get a comparison of popular tech tools for commercial real estate professionals so you can make the most informed decision possible.

Make the Most Out of Every Day with Covercy

Covercy is the first real estate platform that combines banking with investment management. From helping firms better communicate and manage their investor databases and raising capital for new deals to managing bank accounts and distributing funds to investors, Covercy provides tools and capabilities that cover a wealth of tasks and needs for GPs today. It’s one of the best commercial real estate opportunities available for firms looking to streamline processes while maximizing value and revenue.

Schedule a private demo with our team today to get started.

As a GP, you know that finding the right tools to make your work more efficient is challenging.

You’re not managing a single property and account throughout your daily work — you’re managing multiple properties, accounts, and financial processes that all require consistent attention (to say nothing of the tenant management, property improvement, and other areas pulling on your attention).

A notable administrative difficulty for many GPs is the account aspect. Historically, there haven’t been any vertical-specific solutions in commercial real estate banking to centralize activities such as:

• Opening accounts for individual deals
• Distributing funds to your investors
• Making ACH payments to vendors/partners

Here, we’ll explore these activities more thoroughly and how a vertical solution such as Covercy is needed in commercial real estate banking to help you become more efficient and deliver better service to your investors and industry partners.

1. Opening Accounts

When you’ve landed a new deal, you’ll need to start collecting capital from investors, making payments to vendors for repairs and improvements, paying partners for their services, and other financial activity. Without a vertical commercial real estate banking solution, you’d need to manually open a bank account. While you can certainly open an account online, you’d still be working through an online banking platform — not a commercial real estate banking platform designed for your industry. Thus, you’d still be managing property and investor data separately.

How Covercy solves these challenges:

• You can open a new bank account associated with your deal in a matter of clicks
• We use a simple one-page application that can be completed in just a few minutes
• Most CRE bank accounts are opened and ready in a few hours to one business day
• It’s 100% self-service — no outside assistance is required
• Your information is passed to our banking partner (it’s not saved on our servers)
• You can view the status of your application (s) at any time in our platform
• If any additional information is needed, you’ll see it and can take action
• It’s part of our complete platform — simplifying your CRE toolkit

Go deeper: Learn how to further simplify CRE banking.

2. Automated Distributions

You know it well: the dreaded wire day, when it’s time to bust out those spreadsheets and start tackling calculations for investor distributions. We’ve already explored the administrative burdens that many GPs shoulder when it comes to quarterly distributions, just some of which include preparing outdated files, manually calculating distributions based on pro rata ownership, and even physically cutting and delivering checks. It’s an incredibly inefficient process that distracts you and your team from building stronger relationships with investors and managing your properties for growth.

How Covercy solves these challenges:

• Automated distributions can be initiated from two spots: the account screen or from the Distribution tab on the asset page
• The system calculates distributions based on pro rata ownership with just a click
• Distributions are processed and account balances are updated automatically
• All distributions are noted in your bank account transaction list
• Any issues will be noted directly in the bank account interface for review
• Two-factor authentication is required as part of the process for added security (more than one person can confirm as well)

3. Paying Vendors and Partners

Part of your responsibilities as a GP is managing the property, which comes with a host of expenses for everything from utilities and legal support to tenant management, repairs and improvements, and more. If you’re using separate bank accounts (or even separate banks) to issue payments for these transactions, not only are you losing time that could be better spent elsewhere, but you’re also creating administrative headaches and even security risks.

• Make any payment you want, to anyone, from a single interface
• Enter details for the payment and the recipient in one screen for ease of use
• Your account balance is updated automatically after the payment is made
• All transactions are noted and are available to review in the transaction list
• Two-factor authentication is included for verification and security

Manage All of Your Commercial Real Estate Banking Needs in One Platform

At Covercy, providing a commercial real estate banking solution is just one of the many enhancements we’ve innovated to create a complete, all-in-one solution for GPs — and we’re not stopping anytime soon. Our team is continuing to develop new solutions and features to further streamline your daily operations, consolidate your tech stack, provide greater oversight of and visibility into asset/fund performance, and provide strong service to your investor database.

Just a few of our planned additions and solutions include ACH transfers to fund accounts; conduct capital calls and receive those funds right in your account; implement account hierarchies; manage multiple bank accounts per asset; and add more payment options such as wires, charge cards, and checks. We look forward to sharing more information on these features in the coming months!

Until then, don’t hesitate to start putting the commercial real estate banking features we’ve outlined here to use for your firm. Get started with Covercy today:

Start a Free Trial | Sign Up Now | Talk to Sales

During a challenging economy, one investment has risen above the rest thanks to its relationship with a fundamental human need: multifamily properties.

Multifamily property investing didn’t struggle as much as offices and retail spaces throughout the pandemic. Toward the end of 2021, it even experienced a surge in interest and is continuing to see strong growth well into 2022 — despite inflation and other difficulties. Whether your portfolio already consists of multifamily properties or you’re just starting to explore their benefits, it’s crucial you utilize a multifamily asset management software solution to streamline processes, reduce your workload, and provide the best possible service to investors.

Note: Covercy helps commercial real estate partners manage investors, properties, and fund administration tasks in a whole new way. Book a demo to see how Covercy could streamline operations for your firm.

This becomes increasingly important as you identify new opportunities, conduct fundraising with your investor base on them, and then go about managing them afterward. All of these steps require significant effort from you and your team. You have to build investor databases and manage a high volume of financial documentation for them. You have to gather data about properties and market them to investors. You have to set up funds and bank accounts to handle a variety of banking activities ranging from investor distributions to vendor payments and more.

These are hefty responsibilities that when handled separately create administrative hassles, cause service bottlenecks, increase risk, and in general make commercial real estate activity more challenging. With a multifamily asset management software solution, all of these needs — fundraising, investor relations, property management, banking, and distributions — can be centralized, streamlined, and in many cases automated. The result? You and your team are able to spend more time focusing on what matters most: providing unmatched value and returns for your investors.

How Multifamily Asset Management Software Addresses These Needs

Fundraising

Effective, insightful fundraising is essential when you’re looking to add more multifamily deals to your portfolio. When the right deal opportunity arises, you need to be able to quickly and compellingly market the deal to prospective investors and those you’ve worked with on past deals. With multifamily properties winning more of the spotlight in today’s market, it’ll be important to get the deal funded quickly so you can close, take over management, and start generating returns for your investors.

Raise with Covercy: Quickly create landing pages to market your deals, share offering decks, track investor engagement, automate agreement and contract data fill and signature collection, conduct capital calls, and manage your pipeline and progress — all from one system.

• Learn more about engaging your LPs so they continue to invest with you.

Investor Relations

In a competitive market, your investors are the key to a successful multifamily deal. As a GP, providing best-in-class service is essential to securing their resources to see each deal across the finish line. Providing them with a self-service platform — as opposed to manually distributing information on a periodic basis — enables greater service and insight so they know where they stand 24/7/365. Making document management, performance reporting, distribution details, transaction history, and more readily available (even for more complex investment structures) not only means less time managing this information yourself but is rapidly becoming the expectation — and it’s up to you to not disappoint.

Connect with Covercy: Our multifamily asset management software provides a sophisticated investor portal where you can nurture these relationships by providing them with access to their information at any time. Better service means stronger relationships.

• Get more insights into how to strengthen investor relations here.

Distributions

Perhaps one of the greatest needs in commercial real estate investing today is a solution for automated distributions to investors. You already know about the dreaded ‘wire day,’ outdated NACHA files, and the many other headaches that come with managing distributions — especially when you have investors with different ownership percentages in each asset. If you have or plan to take advantage of multifamily investment opportunities, your need to efficiently distribute funds to your investors will only increase.

Pay with Covercy: Covercy is the only CRE investment management platform that enables automated distributions. Our system allows you to pay investors by pro-rata ownership, execute payments rapidly domestically and internationally, deduct taxes from individual transactions, automatically reconcile distributions, and more.

• Go deeper into the value of our automated distribution capabilities in our free ebook.

Banking

With an average of three to five accounts per CRE asset and anywhere from 10 to 20 assets, it’s clear that you and your team have a lot on your plate when it comes to managing financial accounts. These accounts are used for everything from investor distributions to capital calls and vendor payouts. Covercy has interest-bearing checking accounts for these 10 to 20 real estate accounts.  A multifamily asset management software solution with embedded finance streamlines this workload while giving you unparalleled oversight across all of your assets. If multifamily properties are in your portfolio, you need a solution that makes managing myriad financial transactions simpler and faster.

Bank with Covercy: Covercy is the first CRE platform that combines fundraising, investor relations, and automated distributions with a banking element — bringing all of this financial activity into a single system that makes your life easier. Rapidly open accounts under funds or asset names to automate capital calls, distributions, and payments. View all accounts across all assets easily and drill down into transaction-level details. Get liquidity projections, reporting data, asset sub-accounts, and more.

• Learn more about the banking advantages that only Covercy provides.

Grow with Ease Thanks to Our Multifamily Asset Management Software

Unlike other technology solutions, Covercy is the only multifamily asset management software that speaks your language and understands what you need to make your life easier, work more streamlined, and relationships stronger. Our team is hard at work developing new features designed with GPs in mind, and there’s plenty more to come. If multifamily properties are part of your investment strategy now or on the road ahead, now is the time to leverage a software solution that simplifies your work.

Try Covercy Free | Book a Demo

Covercy is a financial technology company. Banking provided by Choice Financial Group: Member FDIC.

With Greater Success Comes Greater Complexity

We’re sure the headline piqued your interest because you — just like many other commercial real estate GPs — are likely managing the distribution process manually. Even if you’re already using a technology solution to prepare and manage distributions, it’s likely you’re taking the funds across the finish line yourself — either by setting up an ACH transaction, contacting your bank to wire the funds, or even sending (or dropping off!) checks.

This process gets more complex when a property has a variety of investors with varying levels of investment. As the property begins to succeed and generate more revenue, you’ll need to provide returns to your investors. Depending on the number of investors a property has, calculating these can be an extremely time-consuming and manual process. And, if the property has a waterfall structure tied to it, that complexity only increases more.

Additionally, if your investment structure has a GP promote component built into it, you’ll need to build that into the calculation as well to ensure you’re compensated for your efforts in managing the fund and property itself. The icing on the cake is that you’re likely having to deal with this for every property under your management. Even handling distributions quarterly means this is a significant undertaking, either on your part or that of your team.

Clearly, there’s never been a more important time to consider a solution for fund distribution automation. Here, we’ll explore a few advantages that such a platform provides.

3 Benefits of Fund Distribution Automation Software

1. You Can Factor Pro-Rata Ownership into Your Distributions

Investors participating in a deal are all doing so at different levels. While you’ll likely have some that have bought in at the minimum level, others will invest according to their own financial strategy. This means you have a number of different pro-rata calculations to consider when executing distributions. If you’re doing these manually, you’re likely spending a lot of time here. Manual work also creates unnecessary risk in that you or your team could make a mistake, which creates confusion and extra hassle to resolve.

Managing this is just another administrative component that takes your focus away from building stronger relationships, overseeing properties, and hunting for new deals. With Covercy, you can automatically calculate distributions based on each investor’s pro-rata ownership of the property or fund. You can also build more complex waterfall models right within the platform. When using our fund distribution automation platform, this further expedites what is already a streamlined distribution process and allows you to get back to doing what you do best.

2. GP Promote Allocations Can Be Included

You deserve to receive — and are likely incentivized with — compensation for managing the investment process, closing the deal, overseeing each property in your portfolio, and managing distributions to your investors. It’s time-consuming work, with or without fund distribution automation software to help streamline what is only a piece of a bigger responsibility. If your deals include a GP promote component, you can save time and effort by including those calculations in the automated quarterly distribution.

With Covercy, GP promote can be included in the above-mentioned pro-rata calculations. And, if your deals have a waterfall component attached to them, those calculations can be imported into the system and included in the distribution process as well. So if your compensation increases as the property does better and better, you’ll be able to quickly and efficiently receive your just earnings along with providing rapid distributions to investors in their preferred currency, whether domestic or international.

Explore more in distribution: Learn how Covercy excels with automated distributions.

3. Speed — and Value — Are Increased

In addition to simplifying your workload and allowing you more time to focus on your investors and properties, fund distribution automation allow you to deliver what your investors want, faster: their returns. Gone are the days when you and your team have to spend countless hours and days sifting through the calculations and spreadsheets mentioned above — now, you can import the data you need for an asset or fund (such as investor info, bank account information, pro-rata ownership, and more) into one system and execute distributions in a matter of clicks.

Investors receive a notification with the complete details of the distribution and, if you choose to include it, a personalized message from you. After selecting a gross distribution amount, you can also select tax withholding as well as indicate adjustments as needed. If your investors have multiple bank accounts, the system will automatically default to the most recent account used. Collectively, these features make Covercy the fastest, most efficient, and investor-focused platform available for CRE GPs.

Experience a New Approach to Fund Distribution Automation

Distributions are a critical part of your work as a GP. Your investors are everything, and ensuring they’re satisfied with their decisions and returns is of the utmost importance. Covercy’s automated distribution capabilities empower you to ensure exactly that, but they’re far from the only advantage the system offers:

• Helps prevent phishing and fraud via enhanced security
• Supports complex investment structures like private equity
• Provides investors with an elegant, easy-to-use portal
• Enables greater communications with investors
• Allows GPs to prepare performance reports and share documents
• Provides fundraising solutions and investor activity tracking
• Allows for creation and management of capital calls

Experience a New Kind of Fund Distribution Automation Software

Book a Demo | Try Covercy Free

Plenty of investment opportunities exist today for people looking to grow their wealth and maximize their returns. Whether you’re a veteran or a new general partner looking to start an investment fund, it’s important you brush up on your trade to instill confidence in your prospects so they choose to invest with you.

We’ll touch on how funds work, their different types, how they’re structured, the benefits and risks of being involved with one, what legal issues to consider, and of course, how to start a real estate investment fund in just 10 steps.

Let’s begin.

What is a real estate investment fund?

A real estate investment fund is a resource pool that’ll store your investor’s money. When you’re setting up an investment fund, your investors trust you to use this pool wisely, providing them with great ROI at reduced risk – when purchasing securities like real estate and stocks.

How do property investment funds work?

Property investment funds work by having a GP (general partner) collect a pool of capital from other (limited) partners for the purpose of buying real estate properties (or shares).

What are the different types of real estate investment funds?

Three main types of real estate investment funds are available to investors:

1. Real estate exchange-traded funds (ETFs) are passively-managed investment vehicles that track an index – enabling investors to earn market-matching returns. They’re open to public trading on most major stock market exchanges.

1. Real estate private equity funds are actively-managed and target institutional investors and HNWI (high net worth individuals). Usually, private real estate funds are only available to accredited investors.

1. Real estate mutual funds are professionally-managed investment vehicles. They expose money pooled from investors to a diversified portfolio of real estate opportunities, including real-estate publicly-traded companies, REITs, and physical real estate like residential buildings. They’re open to the public and could be accessed via financial advisors or online brokerages, but investors must meet minimum requirements to participate.

What’s the main difference between REITs and real estate funds?

Real estate investment funds and REITs (real estate investment trusts) have some similarities. They’re both pooled sources of capital used to invest in real estate.

However, there are some key differences between them, but the biggest one will be important to your investors: REITs are obligated to distribute 90% of their taxable income back to shareholders in order to maintain their tax-advantaged status with the IRS. But real estate funds don’t have to comply with those rules, making them favorable to investors preferring returns via capital appreciation instead of dividend payments.

Unlike a trust, a fund accepts money from investors at any time in exchange for issuing “units” to investors, often called “open-ended fund”, since the fund is “open” to new investors at any time.

How is a real estate investment fund structured?

Usually, real estate investment funds are set up as a corporation (LLC) or Limited Partnership to allow a group of people to pull their money together and invest in real estate. Also, the investor’s initial investment is paid first, with the fund’s manager or sponsor being entitled to a larger portion – based on the agreed preferred return structure – splitting the remaining profits between themselves and lower-tier investors.

How a fund is structured (whether or not it’s close-ended) determines how the profits are then distributed. Most investors value a real estate investment fund’s structure by how quickly can liquidity be reached, and by how it schedules payments of its profits.

Real estate investment funds can be generally broken into two types:

• Set end date (closed), like REITs, are structured to distribute profits quickly via dividends, sometimes even on a monthly basis.

• Open date, like a real estate investment fund. They’re structured to yield long-term appreciation, which can take years, and even decades.

These two are related, but not always directly. For example, appreciation can happen as a result of investing in property development, but also due to changing real estate market conditions.

Who runs a real estate investment fund?

Just like a mutual fund, a real estate investment fund can have passive or active management. Some funds have commission-based fees, while some are managed by an online brokerage that requires a yearly flat rate in order to invest.

Leading a fund as a GP, you have to be a knowledgeable expert who can effectively manage investments. It’s also crucial you stay up-to-date on the latest real estate market trends, so you can best maneuver market shifts—knowing where the next big investment is.

Today, technology is playing a larger role in the management of investment funds and has begun to revolutionize the industry.

How can technology help you start a real estate investment fund?

Technology is changing our world, shifting one industry after another. Our space is affected as well. Starting a real estate investment fund is easier if you’re using the right tech.

Covercy will help you organize your fund, manage finances, and communicate with your investors by letting you:

• Create and manage your capital calls.

• Auto-calculate, manage and execute your capital distributions.

• Slash the risk of phishing and wire-fraud with our secure platform and payments.

• View the positions of your investors in all assets & funds. Slice and dice as you wish.

• Give your investors access to their account and view the portfolio’s info, transactions, documents, and reports via an Investor Portal.

• Call capital in your investment currency; while letting your investors fund them in their selected currency. International Capital Call Payment Processing.

What are the benefits of a real estate investment fund?

Creating a real estate investment fund will create a win-win for you and your investors.

Here’s how:

• Expose your investors to a healthy portfolio diversification

• Enable preferred return for your investor, letting them get paid first

• Produce stable profits in the long-term. Real estate appreciation is proven

• Help them save on taxes as they become part of your pass-through corporation

• Give people an opportunity to invest in real estate without having to qualify for financing.

What are the risks of a real estate investment fund?

This might be worrying your LPs, and it’s important you know how to best address it because while a real estate investment fund has many benefits, it doesn’t come without risks.

Here are the two most common pitfalls you’ll need to communicate to your investors:

1. Real estate funds are structured in a way that avoids having investors withdraw capital early. Make it clear for them it’s a necessary part of how you operate. If liquidating fast is a priority for them, a fund might not be their best route.

1. With the rise of digital assets flipping at light speed, and SPAC deals replacing traditional, slow IPOs, some investors are looking to cash in quickly. Explain that real estate funds are usually structured to make money over time, which means delayed gratification for the opportunity to reap great rewards.

As for you, on the legal side, it’s important you know:

• Legal business entity

When starting out, small real estate investment companies (funds) usually don’t form a legal entity. But once you grow, it’s important you protect yourself and your personal assets by incorporating them, with the most common form/structure being an LLC. It’ll provide you with flexibility when markets fluctuate or your needs change.

• Insurance

It’s vital to insure properties correctly once deeds pass into your fund’s control, so getting the right kind of insurance as an investment property fund is paramount.

Make sure you research and talk to experienced RE attorneys and insurance agents to nail down coverage that best suits your fund. Additionally, work with a lawyer to make your tenant contracts waterproof, clearly stating what are they responsible for, what your limit of liability is, and what’s beyond reasonable coverage.

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What are the first steps to starting a real estate investment fund?

Starting a real estate investment fund as a general practitioner (GP) requires careful planning, legal considerations, and the ability to attract investors. Here are the general steps you would need to take:

• Define your investment strategy: Determine the specific focus and strategy of your real estate investment fund. Will you invest in residential properties, commercial properties, or a mix? Will you focus on specific geographic locations or property types? Clarify your investment goals and risk tolerance.
• Form a legal entity: Establish a legal entity for your investment fund, such as a limited liability company (LLC) or a limited partnership (LP). Consult with an attorney to understand the legal and regulatory requirements in your jurisdiction and to ensure compliance with securities laws.
• Develop a business plan: Create a comprehensive business plan that outlines your investment strategy, target market, financial projections, and fundraising goals. This document will serve as a roadmap for your fund and will be useful when attracting potential investors.
• Secure regulatory compliance: Familiarize yourself with the securities laws and regulations governing investment funds in your jurisdiction. Determine whether you need to register with the relevant regulatory authorities or qualify for any exemptions. Comply with all necessary filing requirements and disclosures.
• Assemble a team: Surround yourself with professionals who can support your real estate investment fund. This may include attorneys, accountants, real estate experts, property managers, and administrative staff. Their expertise will be invaluable in managing the fund effectively.
• Raise capital: Reach out to potential investors who may be interested in investing in your fund. This could include high-net-worth individuals, family offices, institutional investors, or even friends and family. Develop a compelling pitch that highlights the unique value proposition of your fund and clearly articulates the potential returns and risks.
• Structure the fund: Decide on the fund structure that aligns with your investment strategy and investor preferences. Common structures include open-end or closed-end funds, as well as different classes of shares or units that cater to various investor profiles.
• Acquire properties: Once you have raised sufficient capital, identify and acquire suitable real estate properties that align with your investment strategy. Perform thorough due diligence on potential properties to assess their financial viability and potential returns.
• Manage the properties: Oversee the day-to-day operations of the properties, including tenant management, property maintenance, rent collection, and financial reporting. If necessary, hire property management professionals to assist with these responsibilities.
• Provide investor updates: Maintain regular communication with your investors by providing periodic updates on the fund’s performance, property acquisitions, and any other relevant information. Transparency and accountability are crucial to maintaining investor trust.

Remember, starting a real estate investment fund involves complex legal and financial considerations. It is strongly recommended to consult with professionals such as attorneys, accountants, and financial advisors who specialize in fund formation and real estate investments to ensure compliance and maximize the chances of success.

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We covered lots of ground today. We discussed what is a real estate fund, its different types, how they’re structured, operate, and make money. We also learned how technology can help propel you forward should you choose to start a fund, or improve upon your existing one. Lastly, we covered some of the benefits, risks, and legalities involved, and provided a 10-step list to starting a real estate investment fund of your own.

Your safe and tech-empowered real estate fund starts here.

*Disclaimer

Investing in commercial real estate can be risky. It is not a fit for everyone. While we aim to provide general information to help you better understand CRE investments, we are neither providing any investment advice nor advising for or against any particular investment.

Understanding CRE Investment Management Software

CRE investment management software is a single-source solution for managing your assets, investors, fundraising, finance, reporting, and more.

CRE investment management software has been part of the commercial real estate industry for some time, but the need for it has never been more pressing — particularly as the demands for managing assets continue to increase alongside investors’ and tenants’ demand for value creation. Additionally, challenges in key sectors of CRE have created the need for greater productivity so that professionals can focus on creating that value. GPs and other real estate asset managers would be wise to leverage these solutions to:

• Reduce the administrative demands of their jobs
• Eliminate outdated processes from work streams
• Automate repetitive tasks and functions
• Consolidate cumbersome technology stacks
• Reduce costs by using fewer tools
• Maximize revenue and value creation

In this post, we’ll explore several capabilities of the ideal CRE investment management software solution that you and your team should look for when evaluating options. Armed with the right platform, you’ll be able to eliminate many of the distractions and inefficiencies that have historically plagued the industry.

What to Look for in CRE Investment Management Software

• Investor Database Management — While you might have a CRM in place to manage contacts, is that CRM designed for the breadth of commercial real estate needs? If not, an all-in-one management tool should be considered so your team can build, sort, and manage a robust database of investors, vendors, and partners with the ability to tackle actions like those below. Learn more about what investor database management capabilities to look for.
• Investor Engagement — In addition to having a centralized investor database, the ideal solution should enable you to pitch new deal opportunities, share offering decks, automatically generate marketing assets, and — perhaps most critically — track investor engagement with those assets once presented. The value here is that you and your team will be able to measure investor engagement and interest with new deals at all stages — from initial offering to soft circled to funded. Learn more marketing-focused must-haves in your technology.
• Fundraising & Capital Calls — So you have a strong database of investors and have pitched the deal to them? Anything from that point on requires a financial solution to request, collect, and report on fundraising. Additionally, capital calls have historically been a manual process. Fortunately, CRE investment management software solutions are available that bring this functionality into a single solution. This allows you to request funds from committed investors, track the fundraising performance of your assets, report on that performance by asset, drill down into specific transactions, and conduct capital calls — all in a matter of clicks, without having to leave that one platform. Learn more about fundraising and capital calls in a single tool.
• Automated Distributions — Perhaps one of the most manual processes in commercial real estate, distribution day is typically one of the most dreaded functions because of its complexity and the administrative workload associated with it. But with the right platform that automates the distribution process, you can send funds to investors according to their pro rata ownership of an asset. Complex investment structures are also supported, so whatever the investment arrangement of an asset is, you can send the appropriate amounts to the right people — also in just a matter of clicks. Go deeper into the value of this for CRE professionals here.
• Integrated Finance — With anywhere from three to five bank accounts per asset, banking can be an epic pain and time sink for you and your team. Now imagine consolidating all of those accounts and the myriad transactions into a single platform — and one where you can do everything mentioned above, and where it’s all seamlessly tied together so you can efficiently report on and track where money is going and to whom. With a platform that features integrated finance, you can issue payments, track transactions, report on activity, and — best of all — earn interest on uninvested capital with the peace of mind of knowing your funds are FDIC insured. Learn more about banking-embedded real estate investment management here.

The Solution is Here: Put Covercy to Work for Your Firm Today

If you’ve been using multiple tools to perform the tasks above, it’s time to make a change. The CRE industry is undergoing a significant amount of change and uncertainty, so why add more complexity into the mix? Streamline how you work, add value for your team and investors, and maximize your capital with the right CRE investment management platform. Learn more about Covercy — the first real estate platform where banking meets investment management. Get in touch with us for a private demo now.

Book your demo today.