1. Find a fund manager with a successful operating track record in all real estate cycles not just the current one.
The litmus test for fund managers is realizing healthy returns even in a recessionary market. Anyone can ride the current capital markets and target an immediate opportunity, but a manager who can strategically invest and operate for the long haul is one who will build wealth no matter where the market goes.

2. Look for fixed rate financing.
Eight out of ten funds invest with adjustable rate financing, a strategy that may look good in the short term but can have significant impact on your ROI when rates increase (and they always do, at some point). Invest with a fund that can lock down rate and provide a stable investment scenario.

3. Diversify locations.
Often investors focus on one or two markets that they know best, invariably in cities that are currently on the radar of others. This past recession caught many investors off-guard who had counted on the continued growth of a single location only to have all their assets drop in value simultaneously. Have a balanced geographic allocation, even in a single region, will ensure that you still have the scope and a strategy to shore up the rest of the portfolio despite a downturn.

4. Consider a contrarian approach.
It’s no accident that everyone is scrambling to invest in core and core plus assets in urban CBDs. Often these are the most obvious and easiest markets in which to identify a growing demographic or a revitalization initiative that attracts buyers and tenants. As investors re-enforce one another in the feeding frenzy, however, both the cost to acquire and the price per square foot to lease goes significantly up. Businesses that once flocked to overheated urban centers become priced out and retreat to a suburban business address with competitive rates and amenities closer to home. Investors who make the suburban move sooner than later will have the edge.

5. Look for a fund manager with a disciplined reporting process.
Family office investors should not have to chase down reports or have in-house accountants do their own calculations. An experienced real estate investment fund will have sophisticated reports and a regular reporting rhythm, providing transparency into both the methodology and return on investment.