Everything you need to know
about deal sourcing software
What is “deal sourcing?”
Deal sourcing refers to the process of identifying, evaluating, and securing investment opportunities. It’s a proactive approach that often involves research, networking, and using software to discover promising deals before they become widely known.
Why is deal sourcing essential?
Deal sourcing is pivotal in acquiring quality assets at competitive prices, ensuring that investors get optimal returns. It’s also a way to maintain a pipeline of opportunities, thus ensuring continuous growth.
How can I source real estate deals?
Deal sourcing can happen through a myriad of channels: referrals, brokers, direct outreach, online platforms, industry events, and increasingly, technology and software tools designed specifically for the purpose.
Is deal sourcing different in commercial real estate compared to other sectors?
While the principles remain similar, CRE has its nuances. It involves larger transaction values, complex due diligence processes, and often demands deep market insights.
Manage end-to-end deal flow, from sourcing to closing, with Covercy’s deal sourcing & deal management software.
By embedding banking functionality within the investment management platform, Covercy gives commercial real estate GPs a unique way to manage deal flow process and investor communication. Choose from three investment management software packages based on your firm’s needs.
Research and Due Diligence: Once a potential deal is identified, it’s imperative to conduct thorough due diligence. This involves evaluating the property’s condition, understanding market trends, assessing the neighborhood and local economy, and running the numbers to ensure the deal is financially viable.
Direct Outreach: Some general partners take a proactive approach by directly reaching out to property owners. This can involve sending letters, making phone calls, or even visiting properties in person.
Brokers: Commercial real estate brokers are often in the know about off-market deals. Building a rapport with them can ensure general partners get first dibs on prime opportunities.
The best software solutions provide tools to showcase past successes and upcoming opportunities, making it easier to encourage existing investors to reinvest.
Deal sourcing is a multi-faceted process that requires a blend of traditional networking, research, and the leveraging of modern technology. For general partners in commercial real estate, mastering the art of deal sourcing is not just beneficial—it’s essential for sustained success and growth in the industry. Whether you’re a seasoned professional or a newbie, understanding the intricacies of deal sourcing and leveraging the right deal sourcing software can set you apart in this competitive landscape.
General Partners (GPs) in the commercial real estate sector, or any investment sphere for that matter, must contend with a myriad of risks when setting deal criteria and evaluating opportunities. While there are numerous potential risk factors, three key ones that GPs should consistently consider include:
Market Risk: This refers to the potential that the entire market, or a specific sector within it, could experience downturns or not perform as expected. Such risks can be influenced by broader economic factors, changes in interest rates, or global events.
When setting deal criteria, GPs must determine the acceptable level of market volatility and how well the investment can withstand broader market downturns. For instance, certain property types might be more resilient during economic downturns, while others could be more susceptible.
GPs should assess the historical performance of similar assets in comparable markets, study market forecasts, and understand factors that could influence the market, such as policy changes or major infrastructural developments.
Asset-Specific Risk: This pertains to potential challenges or problems unique to the specific asset or deal in question. Examples include structural issues with a property, legacy legal disputes, or tenant-related risks.
Deal criteria might set specific thresholds for age of the building, necessary improvements, occupancy rates, or tenant creditworthiness.
Due diligence is paramount here. Comprehensive physical inspections, legal reviews, and tenant assessments can help identify and quantify these risks. Additionally, understanding the local market nuances and having boots-on-the-ground intelligence can provide a clear picture of asset-specific challenges.
Liquidity Risk: Liquidity risk arises from the inability to quickly sell an asset or exit an investment without a substantial loss in value. In real estate, properties are inherently less liquid than stocks or bonds.
GPs need to consider their and their investors’ time horizons and the need for liquidity. The deal criteria might dictate a specific exit strategy or timelines based on these considerations.
It’s essential to analyze the historic liquidity of similar assets in the market, considering factors like average days on market and price reductions. GPs should also assess broader market conditions that could influence liquidity, such as the availability of financing or the health of the economy.
In conclusion, while these three risk factors are paramount, the real estate sector presents a multifaceted risk landscape. GPs should adopt a holistic approach, considering multiple risk dimensions while leveraging expertise, due diligence, and market intelligence to make informed decisions.
Covercy is the first real estate syndication platform where banking meets investment management. Save time with our automated distribution & capital call payment processing, gain your LPs’ trust with our intuitive Investor Portal, and generate interest from capital funds held in your Covercy Wallet – all in one platform.
Covercy is a financial technology company, and is not a bank. Banking services provided by Thread Bank, Member FDIC.
The Covercy Visa Debit Card is issued by Thread Bank, pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa is accepted. Your deposits qualify for up to a maximum of $2,500,000 in FDIC insurance coverage when placed at program banks in the Thread Bank deposit sweep program. Your deposits at each program bank become eligible for FDIC insurance up to $250,000, inclusive of any other deposits you may already hold at the bank in the same ownership capacity. You can access the terms and conditions of the sweep program at https://go.thread.bank/sweepdisclosure and a list of program banks at https://go.thread.bank/programbanks. Please contact email@example.com with questions on the sweep program.
The Currency Cloud Limited (Non MIFID related products). Registered in England No. 06323311. Registered Office: Stewardship Building 1st Floor, 12 Steward Street London E1 6FQ. The Currency Cloud Limited is authorized by the Financial Conduct Authority under the Electronic Money Regulations 2011 for the issuing of electronic money (FRN: 900199)
Covercy Europe Limited. Registered in England No. 675000. Registered Office: 5 Elstree Gate, Elstree Way, Borehamwood, Hertforshire, WD6 1JD, UK
Covercy Technological Trading Limited. Registered in Israel No. 57797. Registered Office: 3 Ha-Yetsira St, Ramat Gan 5252141.
For clients based in the European Economic Area, payment services for Covercy Europe Ltd. are provided by CurrencyCloud B.V.. Registered in the Netherlands No. 72186178. Registered Office: Nieuwezijds Voorburgwal 296 – 298, Mindspace Nieuwezijds Office 001 Amsterdam. CurrencyCloud B.V. is authorised by the DNB under the Wet op het financieel toezicht to carry out the business of an electronic-money institution (Relation Number: R142701).
For clients based in the United States, payment services for Covercy Europe Ltd. are provided by The Currency Cloud Inc. which operates in partnership with Community Federal Savings Bank (CFSB) to facilitate payments in all 50 states in the US. CFSB is registered with the Federal Deposit Insurance Corporation (FDIC Certificate# 57129). The Currency Cloud Inc is registered with FinCEN and authorised in 39 states to transmit money (MSB Registration Number: 31000206794359). Registered Office: 104 5th Avenue, 20th Floor, New York , NY 10011.
For clients based in the United Kingdom and rest of the world, payment services (Non MIFID related products) for Covercy Europe Ltd. are provided by The Currency Cloud Limited. Registered in England and Wales No. 06323311. Registered Office: Stewardship Building 1st Floor, 12 Steward Street London E1 6FQ. The Currency Cloud Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 for the issuing of electronic money (FRN: 900199).
All testimonials, reviews, opinions or case studies presented on our website may not be indicative of all customers. Results may vary and customers agree to proceed at their own risk.
Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.
Essential Website Cookies
These cookies are strictly necessary to provide you with services available through our website and to use some of its features.
We provide you with a list of stored cookies on your computer in our domain so you can check what we stored. Due to security reasons we are not able to show or modify cookies from other domains. You can check these in your browser security settings.
Other external services
We also use different external services like Google Webfonts, Google Maps, and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.
Google Webfont Settings:
Google Map Settings:
Google reCaptcha Settings:
Vimeo and Youtube video embeds: