Leading real estate investment firms know that a handful of critical factors determine their success. Firstly, they must raise sufficient money from investors to fund the projects they identify. In addition, the investor experience should be flawless. The processes for onboarding, documentation execution and storage, and financial reporting should work without a hitch. And finally, the investor payouts should be error-free and made on time.
Getting everything right can be quite a task. Fortunately, the best-in-class real estate investor portal software can address these three issues successfully. This post will tell you what to look for in real estate investment management software so you can decide which of the different platforms available in the market is the best for you. Here is what you need to focus on:
1. Fundraising Capabilities
Raising money to buy the targeted property is the number one priority. Fund managers, real estate syndicators, and general partners must develop an efficient method to communicate with potential investors and follow up until funds are received.
A high-quality real estate investor portal software with key smart features is a must for raising capital quickly and efficiently. Here is what you should look for in the context of raising capital when choosing a real estate software platform:
- Automation: Check if drafting and sending emails to potential investors can be automated. A software platform that provides this facility can help free up your time for high-value tasks.
- Accessibility: The software portal should allow potential investors to review different investment opportunities quickly.
- Insights: People looking to invest should be able to drill down to access property details and risk analyses.
- Tracking: The software platform should provide automated tracking of the interest indicated by potential investors and monitor commitments until capital is received.
When evaluating different platforms, there is another key feature that you should look out for. Find out if the platform offers white labeling. This functionality will allow you to customize the platform and brand it as your own.
With white labeling, you can replace the software provider's logo and branding with your own. This will serve to boost investor confidence and also help strengthen your brand presence. White labeling has other benefits as well. Among them are:
- Investors receive emails from the firm's official email address.
- All communications will have your firm's logo, colors, and fonts.
- You can also provide investors with branded newsletters and updates.
- The white label platform could provide API access, allowing you to connect the software platform with your other systems and data sources.
2. Documentation Process
Collecting documents from Limited Partners and maintaining them in a manner that makes for easy and quick retrieval can be a difficult task if done manually. The software portal you use should handle all the grunt work, leaving you and your employees free to focus on core business activities. Here is a list of some of the documents that the software platform should store and allow you to retrieve when required:
- Private placement memorandum
- Limited partnership agreement
- Subscription agreement
- Capital notices
- Contribution agreements
- Financial reports on property performance
- K-1 Form
Look for a real estate investor portal that minimizes manual processes. A digital approach to documentation has a host of advantages. It reduces errors, allows instant access to documents when needed, and increases operational efficiency.
3. Reporting to Investors
Investors should be able to view their portfolios whenever they want to. Additionally, the software should be able to automatically send updates to investors, providing details of fund performance as well as the performance of individual projects. When you are looking for real estate investment management software, go for a platform that can generate the following:
Details of Each Project
The DPR (Detailed project report) is a crucial document that provides a wealth of information to investors from a single source. Here is some of the data a DPR could be expected to furnish:
- The objectives of the real estate project
- Proposed date of completion
- Risks involved
- Financial projections
Annual and Quarterly Financial Reports
These should provide details of operating income and expenses.
Performance Analytics
You should be able to see the project-specific as well as the portfolio Internal Rate of Return (IRR) and Time-Weighted Rate of Return (TWR). Review the reporting features carefully. Remember that the best platforms will allow investors to log in at any time to view a personal dashboard containing complete details of their investments. The dashboard should make it easy for the user to see each project's total invested and distributed capital.
4. Distributions and Payouts
Look for a platform with a waterfall automation tool. Using Excel spreadsheets to calculate distributions is cumbersome and prone to error. An automation tool will allow you to compute waterfall distributions accurately at the touch of a button. You also need to verify whether the real estate investment management platform handles the distribution of payments.
Ideally, it should be capable of creating and sending emails to investors and providing details of the payout calculation method. Check if the platform handles payments as well. Preferably, it should. A sophisticated software tool will also allow you to make ACH payments, and check payments to investors.
5. Security Measures
It is advisable to take a little time to examine the security features the software you plan to buy offers. Specifically, look for security protocols relating to data encryption. A software platform that uses bank-grade encryption will help protect your data from unauthorized users and cyber criminals.
Also, see if the software uses MFA (multi-factor authentication). If it does, users would need to enter a code sent to their mobile phones in addition to providing their username and a password before being allowed to log in.
Conclusion
Choosing between the different options can be tricky. That is because the leading real estate investment management platforms available in the market are equally good. Ultimately, it will come down to selecting the platform that is within your budget and best matches your firm's specific needs.
