A Complex Market Requires a Streamlined, Effective Solution
Being a GP in today’s market is extremely complex — you have a firm to manage, a fund to grow, investor relationships to nurture, and 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 Investor 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 interest. So how can the ideal real estate investor management software help? Let’s dig in.
1. It 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 needed in a single platform to make managing investor relationships and activities much easier, efficient, 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.
2. It 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 investor 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 investors’ 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).
3. It 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 software 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.
Ready to Make Your Life — and Investors’ Lives — Easier? Experience Our Real Estate Investor Management Software
Covercy is an innovative, all-in-one real estate investor management software solution for today’s busy GPs. With a complete portfolio of features, advanced security, 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.