A May 23, 2023 article in the Wall Street Journal featured a high-profile foreclosure on a Houston apartment complex in which investors lost their entire investment. It is a tragic tale from which we can gain valuable insights.
The article did not present enough facts for a full diagnosis of the problems, but there was enough information to surmise a number of factors, discussed below, that led to the end result. So, when evaluating a passive investment opportunity, do not ignore these seven signs of potential trouble.
(Click the arrows below to expand each section.)
1. The General Partner (“GP”) Team Lacks Proper Experience
2. The GP Team Lacks Incentives
3. Questionable Business Plan Assumptions
4. The GP Does Not Understand or is Being Evasive about Debt Risk
5. Too Little or No Cash Reserves
6. Poor Property Management
7. Lack of Transparency
To learn how Volhawk can help you invest discerningly in commercial real estate to achieve your financial independence, join our investor club and grab a spot on our calendar so we can chat and get your questions answered. (If you represent a family office, click HERE.)