As real estate firms prepare for capital raises, much of the focus tends to fall on attracting and retaining top talent, improving operations, and investing in growth-ready technology. Yet in the rush to modernize and attract investors, many firms overlook cybersecurity.

Today, digital threats are growing more sophisticated and targeted, making security a top concern for potential investors. Failing to protect your firms financial and investor data can erode confidence, delay transactions, and leave lasting reputational damage.

Why Cybersecurity is a Growth Imperative

Real estate was among the most targeted industries for fraud in 2023, racking up $145 million in reported losses, according to FBI data. Wire fraud, phishing schemes, and identity theft continue to plague the sector, especially during sensitive deal-making periods.

A single data breach can derail an acquisition or capital raise, trigger regulatory scrutiny, and harm investor relationships. For firms moving through the real estate capital cycle, whether launching a fund, preparing for an exit, or onboarding institutional investors, demonstrating strong cyber controls signals operational maturity and helps build trust.

Investing early in protection is much less expensive than recovering from an attack. Alongside technical controls, real estate firms should also consider cybersecurity insurance as part of their risk management strategy. A well-structured policy shows investors your firm takes a comprehensive approach to securing sensitive data and operations, enhancing peace of mind and reinforcing confidence in the strength of a potential deal.

What Makes Real Estate a Target?

Cybercriminals are looking for the right combination of vulnerabilities and financial opportunity. Real estate firms often check both boxes. Here’s why:

• Weak internal systems and fragmented workflows make detection and prevention more difficult.
• High-dollar transactions and large wire transfers are frequent and attractive targets.
• Firms collect and transmit sensitive investor information, including identity documents and bank details.
• Approval processes often involve multiple parties and sign-offs, increasing exposure to social engineering.
• The widespread use of cloud platforms, communication tools, and mobile access opens more entry points for bad actors.

Modern fraud tactics are no longer limited to simple phishing emails. Cybercriminals can now forge identity verification documents, impersonate executives, and intercept fund transfer approvals with alarming success.

For more information on how to protect your real estate assets from sophisticated bank fraud, read our related insight.

6 Steps to Building a Cybersecurity Foundation for Capital Raising

A reliable cybersecurity framework signals your readiness to investors, regulators, and partners. Here are foundational areas to focus on:

1. Secure Transaction Infrastructure

Secure financial transactions are the backbone of investor confidence and compliance. Protecting how data and money move is one of the first things investors evaluate.

• Use a secure portal to transmit info and move money.
• Set up a PCI-compliant payment gateway for capital fund transfers.

2. Assemble the Right Cyber Team

Strong cybersecurity starts with the right expertise. A mix of internal and external specialists helps you reduce risk, detect threats early, and respond effectively.

• Build a capable internal IT team.
• Engage a Managed Service Provider (MSP) for daily support.
• Partner with a Managed Security Service Provider (MSSP) for 24/7 monitoring.
• Consider a cybersecurity consulting firm for strategic guidance.
• Choose the mix that best aligns with your firm’s size and complexity.

3. Strengthen Core Security Controls

Fundamental security practices protect sensitive investor data and prevent unauthorized access to your systems.

• Encrypt sensitive data both at rest and in transit to prevent unauthorized access.
• Implement multifactor authentication (MFA) and least privilege access controls.
• Verify user credentials regularly and restrict access based on role and need.
• Designate trusted stakeholders to manage fund flows and financial authorizations.

4. Conduct Regular Security Assessments

Continuous improvement and routine testing help you uncover and resolve vulnerabilities before they can be exploited.

• Perform vulnerability scans and penetration testing to identify and fix weaknesses.
• Conduct annual risk assessments to identify risks and opportunities.
• Use these assessments to inform updates to your cybersecurity roadmap.

5. Defend Against Social Engineering

When breaches stem from human error, social engineering tactics like phishing and impersonation can bypass even strong technical defenses.

• Recognize that phishing and impersonation attacks are rising.
• Develop and enforce approval verification policies to validate financial transfers.
• Educate all employees to never give out information over the phone or email without proper verification.

6. Maintain Backup and Recovery Readiness

Recovery is just as important as prevention. Having a clear plan enables business continuity after an attack or data loss.

• Keep secure, regularly updated data backups stored both onsite and offsite.
• Develop and routinely test your disaster recovery plan in the event of an incident.

Quick Cybersecurity Hygiene Checklist

Use this checklist to quickly assess your firm’s current cybersecurity readiness:

• Do you understand how your security practices influence investor trust?
• Have you recently tested your data backup and recovery process?
• Are your fund transfer approvals subject to identity verification?
• Do you educate employees on phishing and impersonation threats?
• Have you conducted a cybersecurity risk assessment in the past year?

We Can Help

At Elliott Davis, we help real estate firms assess and strengthen their cybersecurity posture through strategic, risk-based services tailored to your stage in the capital cycle. Our team works closely with yours to:

• Evaluate security frameworks and identify gaps.
• Build a roadmap aligned with capital growth goals.
• Support implementation through strategy, tools, and training.

Don’t wait for a breach to take cybersecurity seriously. Contact us to schedule a comprehensive cybersecurity assessment tailored to your firm’s growth strategy.

The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.

The Department of Health and Human Services is proposing the first major update to the HIPAA Security Rule since 2013. These changes are a direct response to the growing wave of cyber threats targeting healthcare organizations.

The proposal’s key changes include removing the previous distinction between “required’ and “addressable” safeguards, placing a heavier emphasis on documentation, and a focus on modernizing the expected technical safeguards.

While the updates are still in the proposal phase, organizations can prepare now by strengthening risk assessments, locking down technical safeguards, updating incident response plans, and investing in training. Learn more below.

The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.

In this edition of Tax Thursday in Three, Bergin Fisniku, Tax Principal and leader of our National Tax

Practice, provides much anticipated updates on:

• A roadmap for immediate expensing of R&E under OBBBA
• A first look at the qualifying professions under the No Tax on Tips provision of the OBBBA
• A quick review of how a pending government shutdown could affect the IRS

The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.