Real Estate – Investormint https://investormint.com Personal Finance Tools and Insights Wed, 10 Nov 2021 20:11:22 +0000 en-US hourly 1 https://wordpress.org/?v=5.5.7 https://investormint.com/wp-content/uploads/2017/02/cropped-investormint-icon-649x649-20170208-32x32.png Real Estate – Investormint https://investormint.com 32 32 YieldStreet Review https://investormint.com/real-estate/yieldstreet-review https://investormint.com/real-estate/yieldstreet-review#disqus_thread Wed, 03 Nov 2021 20:16:56 +0000 https://investormint.com/?p=14407 YieldStreet Review: YieldStreet was ranked among the most rapidly expanding financial services firm in the Inc. 500 list and is popular for accredited investors seeking income and diversification.

The article YieldStreet Review was originally posted on Investormint

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YieldStreet provides access to alternative investments previously used only by hedge funds, institutions, and the ultra-wealthy. It offers a range of alternative products that cover real estate, marine, commercial, and even art instruments all in one convenient platform.

Yieldstreet offers accessible funding option for all types of investors. Its Prism Fund, for example, is a managed fund that invests in alternative assets such as real estate to potentially produce higher returns than traditional stocks.

The firm has been a hit with investors, and was ranked among the most rapidly expanding financial services firm in the Inc. 500 list in 2019.

As of now, YieldStreet investors have invested just over $1.9 billion on the platform.

How Does YieldStreet Work?

With YieldStreet, you can choose from a variety of crowdfunding opportunities. Investments range across many different asset classes including Real Estate, Marine, Legal, and Commercial.

For each opportunity, the company calculates its expected yield based on market data and analysis.

When you log into the platform, you can browse all the investment opportunities available by category. Then select which opportunity you would like to fund and complete your investment in just a few minutes.

Each opportunity lists details such as the investment type, the company’s location and industry, product details such as annualized yield or expected return, and specific terms of the offering.

YieldStreet also offers its own take on what is to like about the investment and the expected return.

YieldStreet.com SPOTLIGHT

yieldstreet logo

InvestorMint Rating

4.5 out of 5 stars

  • Accounts Payable Automation
  • Syncs with Accounting Software
  • High ROI on Price Vs Time Savings

via Yieldstreet.com’s secure site

What Makes YieldStreet Different?

Many crowdfunding platforms offer investment opportunities in specific asset classes like Real Estate or Art. YieldStreet provides a variety of asset classes that investors can choose from to better diversify.

For example, you might want the income stream that comes with fixed-income investments like corporate preferred bonds but also the exposure to commercial real estate deals.

Or perhaps you are looking for opportunities in both private business credit and exotic art? Whatever your investment preferences, YieldStreet is likely to have something tailored to your preferences.

YieldStreet Features

YieldStreet has many features that make it stand out from other crowdfunding platforms, such as:

Flexible Investing Investors can select among many different asset classes, including Real Estate, Marine, Legal and Commercial.
Risk Mitigation Investing in alternative assets comes with a higher risk than traditional stocks and bonds. YieldStreet allows you to invest alongside the Fund, mitigating your risks by diversifying across multiple sectors for each deal.
Investments Backed by Collateral Debt investments are backed by assets that help protect your principal.

This can be commercial real estate or technology assets. Collateral helps investors protect their investments by minimizing their downside risk.

Real-time Transparency You can keep track of your investments and receive regular updates about them through an open-book approach that provides real-time transparency into how investments are performing based on the market movements via a dashboard display which is accessible on any device.
Typically Low Stock Market Correlation Debt is typically less correlated with the stock market than equity.

Low stock market correlation is attractive because it allows investors to reduce the overall volatility of a portfolio. 

Short Durations Debt instruments typically have shorter durations, which means they don’t have to be held as long before investors can access funds.
Low Minimums Many debt opportunities on YieldStreet are available with minimums as low as $500. This low barrier to entry allows investors to “get their feet wet” and test out the platform with a small initial investment.
100% Transparency YieldStreet offers 100% transparency about every single deal they list, so you know exactly what kind of return you’re going to be getting as well as how much risk is involved.

Because this data comes directly from each deal origin/sponsor themselves, there’s no guesswork as to how much risk is being assumed.

Multi-asset class fund

YieldStreet offers a unique fund where investors can create their own customized debt and equity investments portfolio to meet their individual investment needs.

Short term notes

Investors can select offerings with term lengths as short as three months.

Short-term notes are enticing for investors who are looking to diversify their portfolios if they already hold longer term, higher yielding instruments.

Single asset class offerings

Single-asset class funds are easy to understand and provide opportunities for high diversification.

Structured notes

Structured Notes are popular investments for many sophisticated investors.

High-interest wallet account

FDIC-insured 0.2% interest wallets help investors maximize interest earnings.

Different Investing Options

Ways to invest with YieldStreet:

Direct investments

Direct investments are a straightforward way to invest on the platform. With direct investments, investors can choose from a diverse suite of investment opportunities across asset classes.

As an accredited investor, you have access to:

  • Residential and commercial real estate
  • Oil tankers and large shipping vessels
  • Blue-chip art market

Prism Fund

The Prism Fund is designed to provide exposure to various asset classes, seeking to create income and capital appreciation for investors.

Asset investment allocation emphasizes income-generating opportunities across several different categories, including fixed-income instruments or cash flow-backed investments like real estate equity shares, for example.

Key elements of the Prism include:

-Quarterly distributions

Distributions are set to be made every quarter and will be based on the authorization of the Board of Directors.

The benefits of reinvestment accrue via a Dividend Reinvestment Program (DRIP). Dividends get automatically reinvested into more shares.

Prism will be closing down in the next few years. When the Fund shuts its doors in March of 2024, all asset will be sold, with all profits being distributed among investors who held their investments during that time frame and getting another chance to invest in the next Prism fund.

-Transparent Fee Structure

The management fee is 1.5% per year, with no load or redemption fees charged on invested assets and expenses only applied when money has been put into the market.

-Limited Liquidity

Each quarter the Fund offers to buy back shares from existing investors, subject to approval by the board, and limitations are written in its prospectus.

YieldStreet Wallet

YieldStreet wallets are an investment account that’s insured by the Federal Deposit Insurance Corporation (FDIC). The interest rate on these accounts typically remains very low.

YieldStreet’s wallet account is an attractive way to fund retirement. With this service, you can invest in IRAs without worrying whether money will be taken out before maturity.

YieldStreet Pros and Cons

YieldStreet Pros YieldStreet Cons
Transparent Fees: YieldStreet has a very transparent fee structure that’s easy for investors to understand. With the fees broken down into their essential parts, investors can see exactly how much it will cost. These include:

  • sales charges,
  • management costs, and
  • trading costs.

So there’s no confusion about what your money is going through before getting where it’s supposed to go. This helps cut back on some hidden expenses while also ensuring more capital goes towards actually producing returns.

Higher Risk: Collateralized debt obligations are investments with a higher risk of default, so if you invest with the understanding that there’s a chance your money may not come back, then this is the right platform for you. Since the platform curates investment opportunities, the chances of default are low. However, even without default, collateral may lose value.
Low Minimum Investment: The minimum investment is $500, which means you don’t have to be a millionaire to get started. This makes it easier than ever before for anyone and everyone with small amounts of funds available to put their savings towards investments. Accredited Investor Selections: YieldStreet has many investment opportunities available only to accredited investors. If you’re not an accredited investor, you’ll need to look into the Prism fund to find options available. The criteria for accredited investors are the same as SEC guidelines, and you should be making a minimum of $200k per year.
Multiple Assets: YieldStreet is one of the few platforms that offers investors access to various assets. This platform invests in everything from real estate, legal, finance, art, and marine assets, so you can diversify your portfolio with ease. IRA Limitations: If you want to open an IRA, there are some limitations. Unlike other platforms that integrate with various third-party IRA custodians, YieldStreet can only connect to your IRA if it’s held by the same custodian they are using. This means you’ll have to open an account and only invest through YieldStreet if you want a self-directed IRA.
Short Term Options: YieldStreet has short-term investment options that are available for customers with low-risk tolerance. This makes it easy to put your money down in ways where you can get out quickly if needed without compromising on the returns at large. Multi-Year Commitment: Many opportunities found on YieldStreet are long-term investments, so investors will need to commit for at least two years. To cash out early, it’s best to invest elsewhere.
Proven Scalable Platform: YieldStreet investors have invested just over $1.9 billion on the platform. Multi-Year Commitment: The investments through YieldStreet can be illiquid, which means they’re not as easy to turn into cash without penalty. This is especially the case with real estate and other physical assets that take time to sell or liquidate, so this platform isn’t for you if you need your money quickly.

YieldStreet Fees

Investors can expect to pay 1%-4% for any open position with an annual management fee. This is competitive compared to other platforms, but it’s still worth looking into as there may be less risk involved in this type of investment than in others.

YieldStreet and Taxes

The Prism Fund, which is available to all non-accredited investors, uses the 1099-DIV tax form. This is similar to the tax associated with stock index funds and ETFs.

All investment products will receive a 1099-DIV or K-1 tax form at the end of every tax year.

Is YieldStreet Reliable?

The Better Business Bureau has given YieldStreet an A+ rating. When a company is evaluated, they use this grade range to determine if their customer service stands out from other businesses in its industry that provide similar services. Having been rated A+, investors can take this is as a great sign of customer service.

While this is a good indicator of reliability, the firm has not been around for very long, so its track record is limited. YieldStreet was founded in 2015, and it’s still growing which means that many clients haven’t had their investments reach fruition.

It’s essential to perform your own due diligence when choosing an investment platform, whether it’s YieldStreet or any other company you’re considering.

Is Alternative Investing Right For You?

Due to its unique set of investment opportunities, YieldStreet is a good fit for investors looking for diversification and yield.

There are many different types of debt investments that can offer varying levels of risk with corresponding yields, which makes it a desirable option for sophisticated investors who seek higher returns than they might get by putting their money in traditional interest-bearing accounts or government bonds.

Investing in alternatives does come with an increased level of risk. Still, YieldStreet offers many opportunities to mitigate that risk by pursuing legal action in the event of a borrower defaulting or ensuring collateral per each investment.

However, it is essential to know that even with these mitigation tactics to lower risk, it’s still possible in rare cases that an investor may lose out on their principal investment.

A relatively new (since 2015) product, YieldStreet Investments offers higher returns with higher risk for those looking to diversify their portfolio. It is important to bookmark that investments with YieldStreet are illiquid and may take months to receive distributions, so YieldStreet is an excellent option for those with more advanced investment knowledge or with an already sizeable portfolio who don’t need cash in the immediate future. Those who are risk-averse or just starting in investing may want to consider an alternative investment option with a lower risk profile.

The main advantages of investing in alternatives are: 

  • Diversification: YieldStreet offers many different types of investments and options to choose from.
  • Suitability: YieldStreet can be a good fit for those with more advanced investment knowledge who don’t need their money urgently, as the platform is illiquid. This helps to mitigate risk by ensuring that investors do not have access to their principal until it has been paid out.
  • Higher Profits: Alternatives are known for having higher yields than more traditional investment opportunities.
  • Seasoned Investors: Alternatives investments tend to be ideal for those who already have significant knowledge about investing who are looking to diversify their portfolio.
  • Access to unique investments: Access to debt investments that the average person might not have a chance to invest in otherwise.

The Future of YieldStreet

The company has already positioned itself as a leader in the alternative investment market and continues to grow at an impressive rate.

It’s one of the few platforms to embrace technology in the finance world and has its own mobile app for iOS and Android.

YieldStreet Alternatives

YieldStreet isn’t the only investment platform offering alternative investments. Other popular platforms include RealtyMogul, which provides real estate and private equity opportunities to non-accredited investors through its online marketplace model with a flexible flat fee structure.

Venture capitalists are another source for high-risk/high reward investing, also known as angel investing in startups or small businesses that need an infusion of capital to get off the ground. Many accredited individuals invest this way, but some alternatives are available, like AngelsDen, where members can connect directly with entrepreneurs who want funding from angels rather than venture capitalists.

Direct competitors to YieldStreet may include:

iCapital Network

iCapital Network is a direct competitor to YieldStreet and offers many of the same investment opportunities but with a slightly higher minimum required deposit.

Fundrise

Fundrise is another investment platform that allows investors to buy into commercial real estate investments. Minimum investments are significantly lower with Fundrise, at $10.

Masterworks

Masterworks is a peer-to-peer lending investment platform that allows investors to invest in fine art and other high-end collectibles, including vintage guitars.

Vinovest

Vinovest allows wine lovers to invest in high-end, rare wines and receive a portion of the wine’s future sale price.

YieldStreet Review: Conclusion

There are many different types of debt investments that can offer varying levels of risk with corresponding yields, which makes it a desirable option for sophisticated investors who seek higher returns than they might get by putting their money in traditional interest-bearing accounts or government bonds.

Investing in alternatives does come with an increased level of risk. Still, YieldStreet offers many opportunities to mitigate that risk by pursuing legal action in the event of a borrower defaulting or ensuring collateral per each investment.

If you are looking for a way to diversify your portfolio and increase returns, YieldStreet may be a great option.

The article YieldStreet Review was originally posted on Investormint

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Is Fundrise Safe, Legit And Insured? https://investormint.com/real-estate/is-fundrise-safe-legit-insured https://investormint.com/real-estate/is-fundrise-safe-legit-insured#disqus_thread Thu, 22 Oct 2020 15:07:34 +0000 https://investormint.com/?p=13983 Fundrise is an SEC registered firm that offers an eREIT to investors who want exposure to real estate.

The article Is Fundrise Safe, Legit And Insured? was originally posted on Investormint

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FUNDRISE SPOTLIGHT

fundrise logo

InvestorMint Rating

4.5 out of 5 stars

  • Minimum Investment: $500
  • Returns: 11.44% (net of fees)

via Fundrise secure site

We stumbled across a question “is Fundrise a ponzi scheme” recently and decided to explore further. Nothing injects fear into an investor’s heart like the risk of an investment being labeled as such.

So we decided to investigate. Specifically, we wanted to answer the question “is Fundrise safe, legit, and insured?”

To answer those questions, we first jump back in time to understand how real estate crowdfunding platforms, like Fundrise, came to exist in the first place.

How A Ponzi Scheme
Shattered Investor Confidence

For those who lived through the 2008 – 2009 Great Recession, a few events stand out.

The near bankruptcy of Bear Stearns in March 2008 and the actual bankruptcy of Lehman Brothers in September 2008 are two of the most prominent.

However, there is no individual who ignites deeper passions than Bernie Madoff – the former stockbroker who operated the largest Ponzi scheme in history.

is fundrise safe legit insured

Madoff’s scam didn’t contribute to the financial crisis. In fact, it was the financial crisis that exposed his fraud.

In December 2008, the news broke that Madoff’s “$65 billion hedge fund” – and its supposed returns – were entirely fabricated, creating massive losses within an already fragile economic ecosystem.

The experience made many investors deeply wary of “too-good-to-be-true” returns, but Madoff’s very public downfall did little to prevent new Ponzi schemes from swindling unsuspecting consumers.

In fact, in 2019 alone, state and federal authorities identified 60 Ponzi schemes in progress. Collectively, these schemes held $3.25 billion in client funds.

More investors are aware of the dangers posed by Ponzi schemes, but that doesn’t necessarily make it easier to avoid them.

Perpetrators are clever, and they possess extraordinary skill when it comes to instilling confidence and gaining investor trust.

With this in mind, it’s no wonder investors are questioning their own judgement in choosing investments. Such concerns are driving the question, is Fundrise a Ponzi scheme?

>> Fundrise vs Betterment

Is Fundrise A Ponzi Scheme?

Charles Ponzi became the face of Ponzi schemes when he was arrested in August of 1920.

For years, he convinced investors to give him their money in exchange for consistently high returns.

The problem with these promises – and Ponzi schemes as a whole – is that there was no actual investment.

Instead, con artists use funds from later investors to pay returns to earlier investors.

Ponzi schemes work as long as enough new investors pay in to cover returns owed to earlier investors.

Of course, that means more and more new “marks” are needed to support the weight of upper levels.

Often, earlier investors are key to bringing additional money into the scheme, because they received the returns they were promised and can vouch for the investment’s legitimacy.

They refer friends, family, and professional contacts, which keeps the cycle going.

The most common reason Ponzi schemes collapse is a run on principal withdrawals. 

If too many investors want their principal and interest paid out, there isn’t enough left to support the remaining members.

That’s what happened with Bernie Madoff.

>> REIT vs Fundrise

How The Madoff Ponzi Scheme Collapsed

As the economy tanked, large investors decided to move their funds away from Bernie Madoff’s fund.

He saw that his scheme was unsustainable, and he confessed to his sons – and later to government officials – that his hedge fund was entirely fraudulent.

While Ponzi schemes are named for Charles Ponzi, he wasn’t the first to successfully scam investors.

Well before Ponzi got into the business of fraud, Sarah Howe had already persuaded a number of women to trust her with their savings.

She operated in Boston in 1879 through an organization she named Ladies’ Deposit, and was eventually caught and convicted.

Perhaps the most astonishing part of Howe’s story is that after serving three years in prison, she managed to create and conduct a nearly identical scheme for another two years.

In nearly every case, careful research by investors would have exposed the fraud. Since the promised returns are essentially impossible to deliver, examining the underlying strategy of any Ponzi scheme would expose gaping holes.

Unfortunately, investors tend not to do this sort of research, and those that do allow the con artist to explain away any anomalies. As a result, Ponzi schemes can still be found in abundance.

With that in mind, smart investors are more diligent about researching any fund or investment plan before they buy in. In this case, they want to know, is Fundrise a Ponzi scheme?

>> RealtyShares vs Fundrise

What is Fundrise?

Real estate investment is a critical component of building wealth, but that presents a problem for those who aren’t wealthy to begin with. You can’t realize returns from purchasing and managing properties if you don’t have the cash or credit to buy those assets in the first place.

Some investors start small, buying residential properties to rent, or purchasing distressed buildings, renovating them, and selling for a profit.

However, even that is out of reach for many – and those that can afford these types of investments are typically not generating the sorts of returns that larger projects produce.

Participation in the larger, more profitable real estate ventures is often limited to institutional investors, because they have the necessary capital.

Groups of smaller investors have come together in innovative ways to find creative methods of entering the larger real estate market. Real Estate Investment Trusts (REITs) are one example. 

They work a bit like mutual funds in that they are publicly traded, but instead of pooling investors’ money to buy securities, they pool investors’ money to participate in the real estate market. They own, manage, and/or finance large projects like shopping malls, and profits are paid out to shareholders.

Fundrise was the first company to launch an eREIT or electronic Real Estate Investment Trust through crowdfunding. 

It operates in a similar manner to REITs, but there are critical differences. Most importantly, a REIT investment is an investment in a corporation that subsequently invests in buying, managing, and/or financing real estate. Those who invest in an eREIT are investing directly in specific properties or projects.

That distinction is particularly important for investors asking is Fundrise legit or is Fundrise safe?

While quality REIT shares can generally be liquidated right away, it’s far different for eREIT investments. These funds are tied up in actual real estate, much as if you had purchased a home, and it is something of a process to pull cash out.

Some investors find that illiquidity alarming, causing them to wonder whether Fundrise is a scam.

>> How To Be A Real Estate Investor

How Does Fundrise Work?

Fundrise started off as an experiment, and it rapidly gained mainstream attention.

Since 2012, a company that started with virtually nothing has invested in $4.7 billion worth of real estate nationwide – a total of more than 200 properties.

Today, Fundrise boasts 130,000 individual investors who collectively own more than $1 billion in real estate equity.

Essentially, Fundrise works like this: investors pool their money to make real estate purchases.

Some of the properties purchased are small – for example, single-family homes – but there are opportunities to participate in larger projects. These include the sort that are typically only available to commercial investors, due to their size.

There are four levels of investment, depending on how involved you want to be in this eREIT:

  • The Starter Portfolio – This option gets you involved in between five and ten smaller-scale real estate projects and requires a minimum $500 investment.
  • Core Plan – This more robust option is intended to diversify your exposure by including you in 40 or more unique projects. The minimum investment is $1,000.
  • Advanced Plan – You can participate in a much larger pool of projects, typically 80 or more, when you invest $10,000.
  • Premium Plan – If you choose to invest $100,000 or more, your portfolio is far more diverse. You have access to a variety of projects ranging in size from very small to massive.

Fundrise uses in-house expertise to select properties that appear undervalued.

The company then works to bring the property in-line with the market to generate profits through rent or sale.

Part of the company’s strategy is to keep expenses down by handling the logistics of these transactions in-house.

That means more profit goes back to investors, rather than into the pockets of various intermediaries. Today, fees stand at about 1 percent.

What concerns some investors is the illiquidity of their funds. They can’t simply withdraw whenever they wish. That isn’t because the company is a scam nor a Ponzi scheme – it’s because buying and selling real estate takes time.

In other words, if you expect to need your principal in the near future, this sort of investment might not be right for you.

Conversely, if your goals are longer-term, this is an opportunity to gain exposure to the lucrative real estate market.

>> What Is Turnkey Real Estate Investing?

Can You Make Money
With Fundrise?

Fundrise has already generated respectable returns for its investors, proving you can make money with Fundrise.

To date, averaged annualized returns look like this:

  • 2014 – 12.25%
  • 2015 – 12.42%
  • 2016 – 8.76%
  • 2017 – 11.44%
  • 2018 – 9.11%
  • 2019 – 9.47%

Of course, historical performance is no guarantee of future results.

The bottom line question for many investors is can Fundrise make you rich?

Unfortunately, there is no simple answer. Your returns depend on how much you put in, which projects you choose, and the success of those projects.

More importantly, how much you ultimately add to your own wealth through Fundrise depends on how long you leave your money in the program.

Real estate can be lucrative, but typically not overnight. Those that do get rich from real estate have patiently waited through years – even decades – of appreciation.

>> How Real Estate Market Cycles Work

Can You Lose Money
On Fundrise?

Fundrise is up-front about the fact that any investment is at-risk, given the nature of speculating in the real estate market.

In its SEC filing, the language is clear:

“Investing in our common shares is speculative and involves substantial risks. You should purchase these securities only if you can afford a complete loss of your investment.”

This is true of any investment you make, be it stocks, mutual funds, REITs, eREITS, and so on.

There are two specific risks to consider before you buy into Fundrise. First, the company pays a manager to choose and manage real estate investments.

Expenses related to hiring that manager are passed onto you, and that can impact your returns. That particular risk applies to most fund-style investments you make.

Second, Fundrise is a relatively new company exploring a new method of real estate investment.

While it is seeing positive returns, there is no guarantee of success for any period, short-term or long-term. Many investors like the Fundrise concept and have confidence that it will deliver profits, but they aren’t necessarily correct.

Before you put your own money in, examine Fundrise’s strategy and progress to decide for yourself whether the level of risk matches your comfort level. If not, step back and continue to monitor results before you move forward with your own investment.

>> What Are Qualified Opportunity Zones?

Is Fundrise FDIC Insured?

Fundrise is not FDIC (Federal Deposit Insurance Corporation) insured, but that’s true of any investment.

FDIC insurance covers account holders in banks and savings institutions that are simply holding your funds and perhaps paying you interest – not investing on your behalf. Such accounts are insured by the FDIC against failure of the entire financial institution.

In other words, if your bank goes out of business, the FDIC will ensure you get your money back up to the insured amount.

Investment accounts are also insured against failure of the brokerage. This coverage comes from the SIPC (Securities Investor Protection Corporation).

While your investments are not protected against losses if the company you invest in fails, you are protected if the brokerage firm you invest with fails.

Any cash in your account will be returned to you if something goes wrong with the firm.

>> RealCrowd Review

Is Fundrise Legit?

The bottom line is no, Fundrise is not a Ponzi scheme. Neither is it a scam from our research. If you’re wondering, is Fundrise legit? It certainly appears to be and has thousands of investors who agree.

“Is Fundrise safe” is another question. How your money is used, where your profits come from, and the cause of any losses is clearly explained and documented.

Remember, a Ponzi scheme uses cash from new investors to pay out profits to earlier investors. New investors are attracted through promises of guaranteed returns, and there are no actual investments.

Fundrise uses your investment to purchase real estate, and your returns are based on the performance of that real estate. Can you lose money with Fundrise? Yes.

No legitimate investment can guarantee returns. Does it take longer to cash out with Fundrise than it does with traditional stock? Yes. But that’s because Fundrise isn’t traditional stock. It is an eREIT.

>> How To Buy Real Estate Online

The article Is Fundrise Safe, Legit And Insured? was originally posted on Investormint

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Pros and Cons Of Investing In Condos https://investormint.com/real-estate/pros-cons-investing-condos https://investormint.com/real-estate/pros-cons-investing-condos#disqus_thread Wed, 22 Jul 2020 19:23:42 +0000 https://investormint.com/?p=13870 The cost to invest is lower vs single family homes but more research is required such as HOA fees, legal risks, and tenant types.

The article Pros and Cons Of Investing In Condos was originally posted on Investormint

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Buying a home is a huge financial step. For some, it feels like a rite of passage, marking the transition from young adulthood to a more settled and established lifestyle. For others, it’s an important way to grow wealth. After all, building equity is more financially satisfying than paying rent.

However, many would-be real estate investors find that a single family property isn’t practical or possible. Sometimes, financial challenges put such a property out of reach, and other times, there simply aren’t such homes available in the neighborhood of choice.

It’s also worth noting that the responsibilities of caring for a single family home aren’t right for everyone, whether it’s a primary residence or a rental property. Under any of those circumstances, it’s time to weigh the pros and cons of investing in condos.

Is Investing in Condos
a Good Idea?

Whether you are planning to live in the property or rent it out, there are significant advantages to investing in condos over traditional single-family homes. By definition, you are purchasing a unit within a larger building.

Condos are available in all sorts of structures, from small two or three family houses to high rises with dozens – even hundreds – of apartments.

Another way to own a small portion of an apartment building with hundreds of units is to invest passively via an online real estate platform, such as Fundrise.

FUNDRISE SPOTLIGHT

fundrise logo

InvestorMint Rating

4.5 out of 5 stars

  • Minimum Investment: $500
  • Returns: 11.44% (net of fees)

via Fundrise secure site

Because you own a single unit within a larger building, you don’t have to worry about most of the maintenance and repairs required to keep the place sound.

Security, landscaping, building-wide water, electricity, and so forth are all managed by the condo association or property manager.

Your responsibility begins and ends within the walls of your unit.

>> 17 Ways To Live Rent Free

Is A Condo Right For You?

That’s good news for those who lack the time necessary to deal with the chores that take over entire weekends when you own a single family home. No more shoveling snow, raking leaves, or mowing the lawn.

However, keep in mind that you will pay for this convenience. Condos come with monthly dues or fees, which are placed in a fund for maintenance and repairs. For some, these fees, when added to monthly mortgage payments, are more costly than purchasing a single-family home.

With that said, delegating maintenance and repairs only works if the building has effective management. In far too many cases, repair and maintenance accounts are woefully underfunded, which means issues are neglected or owners must pay special assessments when repairs come up.

The convenience of condo living may be of interest to couples and families, but condos are most popular among singles, couples just starting out, older people who are downsizing, those who are away from home frequently.

These groups don’t need the sort of space that kids require, and they appreciate the convenience of delegating repairs and maintenance to others. If you are planning to rent the condo, these sorts of people will be your target audience.

>> What Are Qualified Opportunity Zones?

Do Condos Appreciate in Value?

Whether you plan to live in the condo or rely on it for rental income, appreciation in the value of the property is an important consideration when deciding to invest.

Historically, condos have not appreciated in value as quickly as detached single-family homes, but they certainly haven’t been stagnant.

Research from the real estate site Zillow demonstrates that the average appreciation of condos over the past ten years totalled approximately 42 percent. That’s a solid return on investment for those who bought condos in 2010.

Is a Condo a Bad Investment?

Buying a condo is like any investment, real estate or otherwise. Building value and generating profit has more to do with the quality of the specific condo you purchase – not the category of real estate you choose.

Condos in undesirable locations, poorly maintained buildings, excessive fees and assessments, and poor management will inevitably turn into bad investments.

Condos that are located in popular neighborhoods, close to amenities, in attractive, well-maintained, and well-managed  buildings may generate a profit. 

When and how much depends on the same factors that impact real estate across the board, including interest rates, demand, the local economy, and conditions in the larger economy.

>> What Is Turnkey Real Estate Investing?

Can You Make Money
Renting Condos?

The short answer is that you can make money renting condos. Because they tend to be less expensive, you can own more properties for the same initial cash outlay, which drives up profit potential.

However, condos come with a long list of complications that don’t necessarily apply to detached single and multi-family buildings. In particular, you are subject to condo association rules, and you are not necessarily in control of whether and how much money is spent on building expenses.

When you choose a popular location, and the specific unit is in a building that meets high standards for financial management, you can realize significant profits from rental payments, in addition to the unit’s appreciation over time.

>> How To Be A Real Estate Investor

How To Make Money
Renting Condos

If your goal is to make money renting condos, the most critical work occurs long before your first tenant moves in. The research you do before you buy can mean the difference between monthly profits or on-going losses.

inside city condo

First, consider why potential tenants choose apartment living. Some want short-term rentals in vacation spots as an alternative to hotels. Others want an urban lifestyle. Their goal is to live in the middle of the action, close to shopping, dining, entertainment, and work. Certainly, these aren’t the only reasons someone might rent your condo, but these two types of rental properties tend to be the most lucrative.

If you plan to cater to the vacation crowd, explore properties within a reasonable distance to main attractions. Obviously, the closer you get to beaches, theme parks, ski facilities, and golf courses, the better, but you can still command impressive rental income when a short drive is required.

If your goal is to invest in condos that offer an urban lifestyle, focus on access to public transportation, as well as distance to business centers, grocery stores, pharmacies, and other critical services. 

Your condo will become a hot commodity if these are in walking distance. It’s also worth watching development plans in your target area. When large companies build new office parks to centralize operations, it’s a smart bet that any housing in the area will increase in value.

Another possibility is to invest in an online real estate crowdfunding platform such as RealtyShares.

REALTYSHARES SPOTLIGHT

realtyshares logo

InvestorMint Rating

4 out of 5 stars

  • Minimum Investment: $5,000
  • Investment Length: 6 months to 10 years
  • Fees: 1-2%

via RealtyShares secure site

Research The Unit,
Building & Management

Once you have a list of potential properties in the appropriate area, do a deep dive into the unit, the building, and the building’s management. This is far more extensive than the sort of inspections you do for a single-family home.

In this case, you are examining the costs associated with bringing the unit up to your standards, the potential need for repairs within the unit, and the condition of the larger building – in particular, whether you might be tapped for special assessments to make large repairs.

Finally, take a close look at the condo association agreement, and speak with members of management to ensure you clearly understand your rights and responsibilities.

Among other things, many agreements don’t permit you to rent your condo out, which is a deal-breaker.

Other rules and regulations of concern may relate to whether and how pets, shared spaces, visitors, parking, and amenities are handled.

>> Is Roofstock Right For You?

Pay Close Attention To HOA Fees

Gain a clear understanding of the condo association fees, and make sure you know what the fees are for.

At minimum, by paying the fees, you should be covered for exterior and common space maintenance, security, building utilities like water, sewer, and trash, homeowner’s insurance for the exterior and common areas, and a reserve fund that can be tapped for the sorts of expenses that come up from time to time – roofing repairs, replacing water heaters, and similar.

Inquire about the history of condo fees in this building.

  • Do they tend to go up regularly, or have they remained level for some time? 
  • Are there plans to increase these fees in the near future? 
  • Have there been any recent special assessments? 
  • Are any assessments planned for coming projects? 
  • Is the current reserve fund robust, or will any unexpected expenses require a special assessment? 

All of this information should be contained in standard financial records – if you can’t get the details, this might not be the right investment property for you.

>> Realty Mogul Review

Find Out If Legal Risks Exist

Ask the condo association management about pending litigation, and look at whether the building has a comprehensive liability policy.

While an occasional legal dispute may come up in any building, large legal expenses will impact your monthly fees, and a history of legal claims typically indicates issues within the building’s management – and perhaps the larger community.

Finally, ask whether association meeting minutes are available to you. If so, you can get a clear picture of the types of issues that come up within the building, the sort of requests brought before the board, and whether those requests are approved or denied.

If you aren’t given access to meeting minutes, consider whether that lack of transparency is a cause for concern.

If you get to this point and all signs look promising, it might be time to buy. It goes without saying that you should negotiate for the best possible price and get the best possible rate on your financing to maximize your returns.

When the deal closes, make the sort of repairs and updates that will ensure your property appeals to potential tenants.

You can then attract applicants through do-it-yourself methods such as online advertising in appropriate forums, or hire a management company to select and screen tenants.

>> Best Real Estate Investing Websites

Pros and Cons of
Investing in Condos

There are plenty of pros when it comes to investing in condos – less maintenance, fewer repairs, and lower purchase price, in particular  – but there are certainly some cons, as well.

From a lifestyle perspective, residents must be comfortable with apartment-style living. Typically, condos share walls, ceilings, and/or floors with neighbors, which means less privacy and a greater chance of living with the sounds of other people going about their business. That can be a problem for those who are easily frustrated by others’ music, guests, and similar.

You must also consider all the complications that come with sharing management decisions.

There is typically a condo board or association that handles the finances, arranges for repairs and maintenance, and so forth.

When these boards and associations are well-run by strong, organized members, you have nothing to worry about. Unfortunately, that’s not always the case.

Condo associations and boards are not immune to differences of opinion, personality conflicts, and other standard issues that come up in work groups. If the board is dysfunctional, you may find yourself spending an excessive amount of time managing conflict and advocating for important repairs, maintenance, and improvements within the group.

As with any investment, you must carefully assess the pros and cons of investing in condos before making a financial commitment.

The right purchase in the right location at the right time can generate significant returns, but an error in when, where, and how much you pay for a condo can lead to losses.

>> How Real Estate Market Cycles Work

The article Pros and Cons Of Investing In Condos was originally posted on Investormint

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0
What Are Qualified Opportunity Zones In Real Estate? https://investormint.com/real-estate/what-are-qualified-opportunity-zones-in-real-estate https://investormint.com/real-estate/what-are-qualified-opportunity-zones-in-real-estate#disqus_thread Fri, 22 Nov 2019 10:00:54 +0000 https://investormint.com/?p=13045 What Are Qualified Opportunity Zones In Real Estate? Opportunity Zones are economically-distressed communities where new investments, under certain conditions, may be eligible for preferential tax treatment.

The article What Are Qualified Opportunity Zones In Real Estate? was originally posted on Investormint

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qualified opportunity zones in real estate

Owning property has been critical to building wealth for centuries. Not only does real estate tend to appreciate over time, but property owners also generate income by allowing others to use the land and buildings.

The most common choice of investment property is a small residential or commercial building that brings in rent, but some investors have also had success in buying run-down buildings, renovating them, and then reselling for a profit – also known as “flipping”.

Of course, the biggest rewards come from large commercial properties with multiple tenants. Building and managing this sort of real estate brings greater, more reliable returns.

Unfortunately, the amount of capital required for such investments is usually out of reach for individuals. Until fairly recently, participation in large commercial real estate projects was generally limited to institutional investors.

Real Estate Investment Trusts (REIT) were developed in the 1960s to give individuals access to large commercial investments, and the program has been quite popular. However, many were not satisfied with publicly traded REIT shares. They wanted the option to invest directly, without buying buildings outright.

Companies like EquityMultiple have made this possible, through platforms that connect individuals with project sponsors. When the 2017 tax overhaul created Federal Opportunity Zones, EquityMultiple designed programs that give individuals access to these special tax-advantaged investments.

What Are
Federal Opportunity Zones?

Economically distressed areas are caught in a downward spiral.

Those living and working in these neighborhoods lack the necessary funds to maintain and improve real estate, and it loses value. Those who can afford to move their homes and businesses to better neighborhoods do so, pulling money out of the area.

Buildings fall into disrepair, and no new businesses come in. Eventually, the only residents and businesses left are those that can’t afford to leave.

EQUITYMULTIPLE SPOTLIGHT
equitymultiple logo

InvestorMint Rating

4 out of 5 stars

  • Passive Income Opportunity: YES
  • Access To Commercial Real Estate: YES
  • Accredited Investors Only: YES
  • Minimum Investment: $5,000

via EquityMultiple secure site

In an effort to encourage private investors back into such areas, the 2017 Tax Cuts and Jobs Act created Opportunity Zones

These are defined as “economically-distressed communities where new investments, under certain conditions, may be eligible for preferential tax treatment.”

More than 30 million people currently live in such areas, which include everything from urban environments to suburbs and rural communities.

Each of the 50 states and the District of Columbia nominated zones marked by a concentration of low-income residents, and the zones were then certified by the IRS as Opportunity Zones. 

What Qualifies As
An Opportunity Zone?

Now, investors can create Qualified Opportunity Funds for the purpose of investing in these areas. If all criteria are met, fund participants are eligible for preferential tax treatment.

Some of the relevant criteria include:

  • More than 90 percent of the fund assets must be in the Opportunity Zone
  • Funds must make substantial improvements in the investment properties that are at least equal to the original value of the property
  • Improvements must be made within 30 months of purchase
  • Investment properties cannot include country clubs, golf courses, hot tub facilities, massage parlors, tanning facilities, liquor stores, racetracks, or gambling venues, even if they are located within Opportunity Zones

The challenge for individual investors often comes in selecting real estate with potential, then arranging for the necessary improvements. Once that is complete, the property must be managed or sold.

These tasks can be a full-time job, making it near-impossible for average investors to participate in the Opportunity Zone program. Opportunity Zone Funds transfer most of this work to real estate experts, so investors can enjoy the benefits without being responsible for the details.

EquityMultiple Opportunity Zone investments combine the benefits of EquityMultiple’s commercial real estate investing programs with the tax advantages of Opportunity Zone Funds.

>> High Yield Real Estate Investing

What Are The Tax Benefits Of
An Opportunity Zone?

Generally, investing in large commercial real estate projects over small rental properties means less risk and more reward.

These are the most common benefits cited by financial services professionals:

  • Downturns in the economy, or systemic risk, affects commercial real estate differently than it does stocks and bonds. Historically, commercial real estate hasn’t moved in sync with the global equity markets. That makes commercial real estate investment important for portfolio diversification.
  • Rental payments provide a steady source of income, even though the property itself is not particularly liquid.
  • Commercial real estate typically has many tenants versus the limited number found in small residential or commercial properties. This reduces the risk of losses should a single tenant fall behind on payments or a single unit stand empty for a period of time.
  • Businesses are more inclined to sign long-term leases – three to five years, at least, and 10 year leases are not uncommon. That means less volatility, regardless of events in the larger economy.

In addition to the benefits that come with general commercial real estate investing, Opportunity Zone projects offer potential for greater tax savings. For example, investors can defer federal capital gains tax from these projects until December 31, 2026.

Better still, taxes on gains from previous investments can be deferred if the gains are invested in Opportunity Zone projects within 180 days.

More importantly, when investors hold their Opportunity Zone investments for more than five years, there is a 10 percent exclusion on the deferred gain when taxes come due.

This exclusion increases to 15 percent after seven years, and after 10 years, no federal income taxes are assessed on the investment’s appreciation.

>> Crowdfund Real Estate Investing

Why Choose
Opportunity Zone Areas

You might be wondering why invest in an opportunity zone area vs putting your money to work in a publicly traded real estate investment trust, or REIT.

REITs offer individual investors a chance to participate in the commercial real estate market without purchasing and managing a commercial property outright.

Essentially, the trust is a publicly-traded corporation that holds at least 75 percent of total investable assets in real estate, gets at least 75 percent of its income from rent or mortgage interest, and pays at least 90 percent of taxable income to shareholders as dividends.

Those interested in adding commercial real estate to their portfolio can purchase REIT shares, just as they would buy stock in any other corporation.

Historically, share prices have fluctuated with the larger market, and downturns in the economy have equated to declines in REIT value – though perhaps to a lesser extent.

The main concern with REITS is this: as a publicly-traded company, value is determined in the court of public opinion, and REITs are subject to systemic risk. A bit of bad news about a project can decimate stock prices.

Privately-held real estate assets are more insulated from systemic risk, which gives EquityMultiple’s platform an advantage. 

It puts individuals in a position to invest in private market commercial real estate, just like institutional investors do.

In addition to the standard categories of commercial real estate – multifamily, office, retail, and industrial – EquityMultiple offers exposure to niche property types that are rapidly gaining investor interest.

Examples include senior living facilities, manufactured home communities, data storage centers, and student housing.

>> Best Real Estate Crowdfunding Sites

How Much Can You Make
Investing in Opportunity Zones?

It’s hard to pinpoint a specific rate of return for commercial real estate investing in general and Opportunity Zone investing in particular.

The first consideration is the quality of the project selection process. EquityMultiple takes some of the guesswork out of this process by delegating responsibility for project selection to industry experts. The project sponsors and the projects themselves are vetted through rigorous underwriting, and EquityMultiple accepts less than 10 percent of all projects it reviews.

To date, EquityMultiple has participated in 70 transactions across 40 markets, with $1 billion in total capitalization on funded projects. The weighted average internal rate of return (IRR) on fully-realized investments is 17.3 percent. 

EquityMultiple investors have three choices when it comes to how they put their money to work.

Syndicated Debt is the safest option, offering maximum protections. However, that also means a capped upside. The target rate to investors is between 7 percent and 12 percent, and the standard term is 6 → 24 months. Typical loan to value (LTV) runs between 50 percent and 75 percent.

Preferred Equity has some downside protection, and investors are entitled to a share of the upside. The target current preferred return is between 7 percent and 12 percent, and the target total preferred return is between 10 percent and 14 percent. The typical term is one to three years.

Finally, there is the Equity option, which has unlimited upside potential. Of course, that means more risk and very limited downside protection. The target annual cash return is 6 → 12 percent, and the target IRR to investors is 14 percent or more. The typical term for this investment is three to seven years.

Of course, these figures include all of EquityMultiple’s projects. Data specific to Opportunity Zones is not yet available, as the program is relatively new.

The biggest factor in Opportunity Zone investment is the tax advantage. By holding the investment for ten years, investors realized gains virtually tax-free.

The result is a 30 percent → 40 percent increase in annualized returns, which puts the upside of this type of investment leaps and bounds ahead of other commercial property investments.

>> Estate Planning For Seniors Made Easy

How to Qualify For
Opportunity Zone Investments

EquityMultiple works with investors who meet specific qualifications. However, once the qualifications are met, the investment minimum is fairly low – just $5,000 for certain programs.

The benchmark to be eligible for EquityMultiple programs is at least $200,000 in income for the past two consecutive years, or at least $1 million in net worth, excluding primary residences. 

Getting started is as simple as creating an online profile. Once registered, investors can review offerings real-time, select investments, and link accounts from financial institutions to fund the investment and receive distributions.

A dashboard offers up-to-date information on the progress of each investment, including a wide selection of user-friendly reporting and analysis tools. Investment documents are signed on the portal, making the entire process simple and streamlined.

For many investors, EquityMultiple is the easiest way to diversify into commercial real estate and take advantage of the tax benefits available from Opportunity Zone Funds.

EQUITYMULTIPLE SPOTLIGHT
equitymultiple logo

InvestorMint Rating

4 out of 5 stars

  • Passive Income Opportunity: YES
  • Access To Commercial Real Estate: YES
  • Accredited Investors Only: YES
  • Minimum Investment: $5,000

via EquityMultiple secure site

The article What Are Qualified Opportunity Zones In Real Estate? was originally posted on Investormint

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What Is Turnkey Real Estate Investing? https://investormint.com/real-estate/what-is-turnkey-real-estate-investing https://investormint.com/real-estate/what-is-turnkey-real-estate-investing#disqus_thread Wed, 06 Nov 2019 10:39:05 +0000 https://investormint.com/?p=12942 To some property companies, turnkey means that they put a fresh coat of paint on the walls before listing the investment. To others, it could mean that the place has been completely renovated.

The article What Is Turnkey Real Estate Investing? was originally posted on Investormint

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turnkey real estate investingReal estate can be a tricky business. You may view a property and see a thousand possibilities, but convincing another person that the building you buy is right for them is another matter.

Some of the best real estate requires imagination, and it is difficult to sell someone on an idea alone.

Empty shells may be endlessly configurable, but they are hard to sell. It is another matter entirely when a commercial property is ready to use, or turnkey.

What Is Turnkey Real Estate?

Turnkey real estate is property that can be rented or leased.

When the property is ready for commercial use – as opposed to a hollow shell that needs improvements – that job is a little easier. This means that the flooring is down, the fixtures wired in, and the walls are painted. A business could move in immediately.

Investing in turnkey real estate involves buying turnkey real estate so that you can rent or lease it out.

In most cases, there is a property management company involved who handles everything for you in exchange for a cut of the rent or leasing fee, but there doesn’t have to be.

Also, there is no standard for what condition constitutes “Turnkey.”

To some property companies, turnkey means that they put a fresh coat of paint on the walls before listing the investment and that’s about it.

In contrast, to other companies, the term could mean that the place has been completely renovated and outfitted with nicer fixtures.

In other words, “turnkey” can mean different things to different people, so buyer beware.

>> Roofstock vs HomeUnion

Why Invest In Turnkey Property?

Turnkey real estate is an investment opportunity that some investors overlook, but don’t be too hasty.

There is real opportunity here as long as you invest in a good property, hire the right management company, or choose a turnkey investment property vendor who handles everything for you.

Diversification

Turnkey property is one way to diversify your investment portfolio.

Unlike stocks, real estate is not tied to fluctuations like buyer sentiment or even broad economic trends.

Once you find a tenant, you will have a lease agreement in place that could extend for years.

Simplicity

Turnkey property investment also tends to be very simple – buy the property and let a property management company handle the rest.

You get a tangible investment without having to do much legwork after you make the deal.

ROOFSTOCK SPOTLIGHT

roofstock logo

InvestorMint Rating

5 out of 5 stars

  • Buyer Fees: 0.50%
  • 30-Day Money Back Guarantee
  • 100% Online Purchase

via Roofstock secure site

Is Turnkey Real Estate Risky?

There are many reasons to love investing in turnkey real estate, but it is still an investment, and that means RISK.

In your research, you may find shady companies and hear a few horror stories alongside other reports of investors getting amazing returns on their investments.

Both are true.

Which one you get is going to depend on how well you manage your risk by doing the work.

Due Diligence

Start with basic due diligence.

Verify that the property they are trying to sell you exists and that it is in the condition they say it is in.

Tour the property if you can or consider sending in your own home inspector.

Look into the taxes for the property by checking with local authorities. Sometimes property companies quote the taxes that the previous owner had paid, but there could have been an owner-occupied exemption or some other special scenario.

Next, check the numbers. Make sure that any figures or math you are quoted come out correctly and do some research.

Dig in and see what property values are like in that area, where the rents usually fall, and how many properties in that neighborhood or zip code are vacant.

Compare the characteristics those properties share with the one you are considering buying.

You want to make sure that you are dealing with real-life numbers instead of best-case scenario figures.

ROOFSTOCK SPOTLIGHT

roofstock logo

InvestorMint Rating

5 out of 5 stars

  • Buyer Fees: 0.50%
  • 30-Day Money Back Guarantee
  • 100% Online Purchase

via Roofstock secure site

Ongoing Costs

With turnkey real estate, you are going to have some ongoing costs.

In addition to taxes and insurance on the property, there is a certain amount of maintenance work to be expected.

Depending on your rental agreement, you may also need to pay for specific utilities, handle lawn maintenance, offer snow removal, and more. Add these up and see how much money you would really be getting net of the ongoing costs.

If you can’t get enough rent in a worst-case scenario, you may need to pass or risk losing money every month.

Understanding Turnkey

Look into how long you may need to hold the property before it is truly turnkey and what your costs will be during that period.

There is no standard definition for what turnkey is in the real estate world. Some turnkey real estate companies are very above-board, listing out costs and expectations clearly.

Other so-called turnkey-real estate companies will sell you an unfinished property and charge you for all the repairs and maintenance, including a fee for them.

If work is necessary to make the property turnkey, make sure that you understand how long you may need to hold the property and the scope of the work involved.

If you have ever hired a contractor, you know that construction projects often go over budget – your turnkey investment could be no different.

That’s not to say you should never buy a property that needs some repairs or fixing up – you could miss out on big opportunities if you took that approach – but you should UNDERSTAND what needs to be done, why, and how much it will be for the repairs as well as your holding costs until it rents.

Understanding your Market

Remember that turnkey real estate is not terribly liquid. You can’t sell property in minutes the way you can certain stocks.

When you want to exit the investment, it is going to take time to find a buyer or otherwise sell the property.

There is a certain time commitment involved. Make sure that you figure those costs into your ROI calculations.

>> How Many REITs Exist In America?

How to Invest in Turnkey Real Estate

If you decide that turnkey real estate is a good match for your investment goals, there are three basic ways that you can get started.

Find and Manage Your Own Investment

The first is perhaps the most obvious. You could find a property that is ready to rent and buy it. Then, advertise the property and find a renter.

Whether you want to deal in commercial real estate or residential, it can be that simple.

However, you will need to handle all the maintenance, collecting payment, and generally overseeing the property yourself.

Go Through a Property Management Company

Alternatively, you could hire a property management company to do the work for you.

They can accept payments on your behalf, arrange for maintenance services, and even have a handyman on-call in case your tenant needs anything.

Property management companies make the entire investing-in-turnkey-real-estate process easier, but they take a percentage of the rent as a fee.

They may even inflate the cost of hiring a handyman or doing some other service to account for the time they spent arranging it.

Find a Turnkey Real Estate Company

Finally, you could go through a turnkey real estate company like Roofstock.

These businesses handle all of your property management needs and help you find properties to buy.

They also give you access to analysis and insights about the property and its comps.

Plus, when you are ready to sell, they can connect you with buyers via a secure marketplace.

You may get less net income from your investment through this route, but you will save a significant amount of time, and that could be worth the investment (as long as the gross income is there).

ROOFSTOCK SPOTLIGHT

roofstock logo

InvestorMint Rating

5 out of 5 stars

  • Buyer Fees: 0.50%
  • 30-Day Money Back Guarantee
  • 100% Online Purchase

via Roofstock secure site

Is Turnkey Property Right for You?

“Turnkey” can mean different things to different people, so buyer beware. There are good, safe ways to invest in turnkey real estate, but you have to do your research.

Start by choosing a well-established company or picking a more local property that you can tour before buying anything, then do your research.

With a little effort, you may be able to find a turnkey property that fits into your portfolio very well.

>> Compare Roofstock vs Realty Shares

>> What Are Opportunity Zones?

>> Is Fundrise Right For You?

The article What Is Turnkey Real Estate Investing? was originally posted on Investormint

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EquityMultiple Opportunity Zones: Should You Invest? https://investormint.com/real-estate/equity-multiple-opportunity-zones https://investormint.com/real-estate/equity-multiple-opportunity-zones#disqus_thread Mon, 23 Sep 2019 21:11:34 +0000 https://investormint.com/?p=12913 Opportunity Zones were created as part of the Tax Cut and Jobs Act of 2017. They are areas designated by the United States government for tax-advantaged investment.

The article EquityMultiple Opportunity Zones: Should You Invest? was originally posted on Investormint

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equitymultiple opportunity zones

If you keep up with developments in the investment world, you may have heard about something called an opportunity zone once or twice already.

For most investors though, these zones remain something of a mystery, and investing in them is an unclear process.

Here’s what you need to know about opportunity zones, what advantages they present as investments and how you can start investing in them.

What Are Opportunity Zones?

Initially created as part of the Tax Cut and Jobs Act of 2017, opportunity zones are areas designated by the United States government for tax-advantaged investment.

Most opportunity zones are communities that suffer from low incomes, limited investment or other local economic obstacles. Although many such zones are found in inner cities, they run the gamut from deeply urban areas to more rural communities.

The core concept of an opportunity zone is to drive private investment into areas that experience high levels of poverty, thus allowing for improvements to be made in those areas without the need for public tax dollars to be spent.

These private investments, in turn, are expected to create new jobs within the opportunity zone, thus raising incomes and lowering unemployment.

While investors can invest directly in real estate or business equity in opportunity zones, a more popular approach is to invest into a managed opportunity zone fund that holds a portfolio of properties within designated areas.

These funds allow investors to take advantage of the tax benefits attached to opportunity zones without having to arrange deals and manage properties in remote areas.

EQUITYMULTIPLE SPOTLIGHT
equitymultiple logo

InvestorMint Rating

4 out of 5 stars

  • Passive Income Opportunity: YES
  • Access To Commercial Real Estate: YES
  • Accredited Investors Only: YES
  • Minimum Investment: $5,000

via EquityMultiple secure site

Why Invest In Opportunity Zones?

The main reason to invest in opportunity zone funds is that the investment is heavily tax-advantaged compared to ordinary capital gains.

When an existing investment with unrealized capital gains is rolled over into an opportunity zone investment, the gains become eligible for tax deferral until 2026.

Through this mechanism, investors can sell their current assets and put off paying taxes on their profits.

The real power of opportunity zones, however, comes through when an investor holds an asset in a zone for a long period of time.

If an investor holds an asset in an opportunity zone for at least five years, the basis of that investment will be adjusted upward by 10 percent when capital gains taxes on it are calculated. At the 7-year threshold, the investment basis can be adjusted upward by 15 percent.

For assets held in an opportunity zone for 10 years or more, capital gains taxes are waived altogether.

Aside from the obvious tax advantages presented by opportunity zones, there is also a strong argument to be made for real estate in these zones on its own merits as an investment.

Depressed neighborhoods often have more room for real estate appreciation than those that have already matured as real estate markets, giving investors a chance for greater returns.

>> What Are The Best Real Estate Sites?

Diversify Investments
Via Opportunity Zones

Investing in opportunity zone real estate also gives investors a chance to diversify their portfolios and manage stock market risks.

While the American economy is currently in the midst of the longest expansion it has ever experienced, many investors are looking for alternatives to stocks that will hold their value when the bull market finally comes to an end.

Private investment funds provide just such an alternative, and the other advantages of opportunity zone investment make it a natural fit for investors trying to minimize their tax bills.

Finally, for socially conscious investors, it’s worth noting that investing in opportunity zones is a great way to combine profit and the promotion of the general good. Putting your money into these zones gives you a chance to improve underserved, distressed communities where the effects of investment can have the greatest impact.

>> What Are Tax-Coordinated Portfolios?

Opportunity Zones Funds vs REITs

If you’re an investor with experience in the real estate market, you may have already noticed that opportunity zone real estate funds sound quite a bit like REITs in the sense that both are investment vehicles for managed real estate projects.

While there certainly are similarities, there’s also one important distinction between these two vehicles. Because REITs trade publicly and operate much like stocks, they are also subject to the whims of the investment market.

While this isn’t a huge flaw in the REIT model, it can cause the value of shares in the fund to fluctuate with changing market conditions.

Private real estate funds, on the other hand, are less correlated to public market fluctuations than REITs.

By taking open trading out of the equation, private funds insulate themselves from external factors that aren’t correlated to the value of the real estate in their portfolios.

What Returns Can You
Expect To See?

Due to the fact that each zone is different and that opportunity zone investment is a relatively new phenomenon, it is difficult to say just what kind of returns investors can expect to see when placing their money into opportunity zone funds.

According to some projections, you may be able to realize return percentages as high as the middle teens.

If such projections prove to be true, investment in opportunity zone funds would markedly outperform the long-term average of REITs, which average returns of 11.8 percent annually.

You should also keep in mind that the tax advantages of investing in opportunity zones make for a higher effective return after taxes.

>> What Is Tax-Loss Harvesting?

What Are The Potential Drawbacks?

As with any investment, putting your money into an opportunity zone fund is not a foolproof way to make money.

One of the most obvious downsides that should be taken into account when investing in opportunity zone funds is the sheer time commitment involved.

To get the highest utility from the investment, you’ll need to leave your capital in one place for a period of 10 years. This fact could limit the flexibility of your investments and make it more difficult to reallocate capital into other investment vehicles.

There’s also an argument to be made that opportunity zone investment may rely too heavily on tax incentives and not put enough focus on finding fundamentally good deals.

Just as with any other potential investment, it’s important that you carefully vet any fund or property before putting money into it.

A good rule of thumb to follow is that the investment should make good sense for your strategy and portfolio on its own merits, with the tax advantages being largely an added bonus.

How To Get Started

You could get started in opportunity zone investment by directly buying a business or a piece of real estate in a designated zone.

The easier approach, however, is to use a private real estate fund with opportunity zone investment options.

One of the leading platforms that gives investors access to opportunity zones is EquityMultiple.

Through this platform, investors can put their money directly into an opportunity zone fund created by an experienced real estate investment company.

EquityMultiple also offers real estate investment opportunities outside of these designated zones, making it a good platform for overall portfolio diversification. It should be noted, however, that EquityMultiple is open only to accredited investors.

If you’re looking for a long-term investment with substantial tax advantages and the potential for reasonably high returns, opportunity zone funds may be a good option for you.

Opportunity zone investment is also well worth looking into if you’re a socially conscious investor who wants to achieve both profit and social good through your investment activity.

While they have their potential downsides, opportunity zones offer considerable advantages that could benefit a wide range of investors.

EQUITYMULTIPLE SPOTLIGHT
equitymultiple logo

InvestorMint Rating

4 out of 5 stars

  • Passive Income Opportunity: YES
  • Access To Commercial Real Estate: YES
  • Accredited Investors Only: YES
  • Minimum Investment: $5,000

via EquityMultiple secure site

The article EquityMultiple Opportunity Zones: Should You Invest? was originally posted on Investormint

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How To Be a Real Estate Investor https://investormint.com/real-estate/how-to-be-a-real-estate-investor https://investormint.com/real-estate/how-to-be-a-real-estate-investor#disqus_thread Fri, 16 Aug 2019 10:37:59 +0000 https://investormint.com/?p=12389 How to be a real estate investor: 1. Choose Hands-on or Passive Investing 2. Crunch The Numbers 3. Master the Law 4. Look After Your Investment

The article How To Be a Real Estate Investor was originally posted on Investormint

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how to become a real estate investorInvesting in real estate is popular with many investors. Historically, it has performed favorably, and the opportunity to use leverage to take control of an asset with a relatively low down payment makes it accessible for many investors.

Other options, such as investing in REITs (real estate investment trusts) or crowdfunded investments, make real estate an option for investors with smaller initial investment amounts.

Step 1: Choose Your Investment

First, you must choose:

a) how you are going to invest, and then

b) what type of property you are going to invest in.

Here are a few things you should consider:

How Hands-On Do You Want To Be?

There are different types of real estate investment that are easily accessible to most investors:

  • Income-oriented: Buying a property and renting it out to a tenant or tenants
  • Flipping: Buying a property, improving it, and then selling it for a profit
  • Indirect: Investing with a real estate investment trust
  • Crowdfunded: Purchasing part of a company that owns real estate (crowdfunded real estate investment and real estate investment groups)

Of these, the first two require significant hands-on work. You will need to either find and manage tenants, or project manage the improvement of the building (depending on whether you are buying to rent out or to flip).

If you like the idea of owning property outright (as opposed to owning shares in a REIT), but don’t like the idea of managing the property yourself, Roofstock has an innovative solution.

roofstock advisor picks properties

Roofstock vets property managers and connects you to them so you can hand over day-to-day responsibilities, like leaky toilets, replacing refrigerators or fixing broken windows.

ROOFSTOCK SPOTLIGHT

roofstock logo

InvestorMint Rating

5 out of 5 stars

  • Buyer Fees: 0.50%
  • 30-Day Money Back Guarantee
  • 100% Online Purchase

via Roofstock secure site

Roofstock even goes so far as to enable you to buy property online. By rating neighborhoods by school district and a host of other important factors, the due diligence process is largely done for you.

The second two options listed above – Indirect and Crowdfunded real estate investing – are far more passive.

The Importance of Understanding Your Investment

Like any investment, it’s important that you understand what you are investing in and what that means for you.

We recommend you understand the following:

  • Are you focusing on residential or commercial real estate?
  • What is the market size like for that type of property in that area?
  • Are there any risks or opportunities in the area that might increase or reduce the property value and potential income above the market rate?
  • What quality tenants can you expect?
  • How much will you need to invest in the property?
  • Will you use a third-party to manage the property, if so, what are the likely fees?

The more information you have, the better decisions you can make. That’s why many investors start off either buying a property to rent or buying a property to do up and sell again – they can leverage skills they already have (valuation, DIY, project management).

Residential vs Commercial Real Estate Investing: If you like the idea of investing in commercial real estate vs residential, Rich Uncles may be a good fit for you.

Rich Uncles selects triple-net lease properties with high caliber tenants like

Minimum Investment $500
Property Type Commercial Property
Pre-Vetted YES
Do You Own Property? NO
Offering (Preferred) Equity
Term Length 4-7 years
(average, not guaranteed)

Consider Spreading Your Risk With Crowdfunding

If you can only afford to invest in one property, you can end up with a considerable portion of your savings in one investment, which you may feel is risky.

Some investors prefer crowdfunded real estate investments, where many investors contribute a small amount to the purchase of the property.

In return for your investment, you receive a portion of the rent (or a future sale) in proportion to your share. This allows you to purchase portions of multiple properties and spread your risk.

Real estate crowdfunding marketplaces include Fundrise, RealtyMogul, and CrowdStreet. For as little as $500 at Fundrise, you can get access to a diversified portfolio of property investments.

FUNDRISE SPOTLIGHT

fundrise logo

InvestorMint Rating

4.5 out of 5 stars

  • Minimum Investment: $500
  • Returns: 11.44% (net of fees)

via Fundrise secure site

*historical performance: average annualized returns thru 2017

Step 2: Crunch The Numbers

Once you’ve chosen a likely investment that fits your criteria, it’s time to crunch the numbers. You need to calculate your likely return and compare this to your costs to ensure the investment is worth it.

If you’re purchasing a property to rent out, you need to take into account your likely rent, potential time the property may be empty, management fees, maintenance, transaction costs, and closing fees.

The calculation is similar if you are flipping, except that instead of rent, you’re calculating how much your improvements will cost and the likely increase in value you think you can achieve.

cost of owning vs renting a home in each state. is it more affordable to buy or rent?

*Source: howmuch.net

If you’re investing on a crowdfunding platform, you will be provided lots of details about the property and potential returns, but you need to make your own assessment. Don’t forget to take into account the platform fees!

Finally, be aware of any tax implications. If you haven’t already, get an accountant who can help you understand your investments and how they affect your finances.

Step 3: Master The Law

It is important that you understand the federal, state and local laws that apply to you and your investment, especially if you are planning on renting that property out.

You should understand the following:

  • Your rights as a landlord and that of your tenants
  • How to deal with disputes and eviction rules
  • Your liabilities (for example, if a tenant has an accident on your property)

To help you understand the law, it is recommended that you hire a good lawyer. A real estate lawyer may also be invaluable when buying or selling the property.

Step 4: Look After Your Investment

Once you’ve invested in property, either as a landlord or using another method, you need to look after your investment – and that means taking regular action.

As a landlord, this includes staying on top of maintenance, but it goes much farther than that – as the market changes, you should regularly reassess your investment to check that it is meeting your investment objectives.

For example, a landlord may examine a change in the local market (forthcoming job losses in the area, reduced demand, etc.) and conclude they are better off selling and investing in another property.

In another example, a person approaching retirement age may wish to move their investment from being in a couple of rental properties to real estate crowdfunding to spread their risk and protect their investment (which they rely on in retirement).

Here’s a quick comparison of a popular crowdfunding site, Fundrise vs REIT investing:

REIT vs Fundrise Comparison

Real Estate Investing Fundrise REIT
Reviews Fundrise Review REIT Review
Minimum Investment $500 → $1,000 Varies
Dividend Frequency Quarterly N/A
Fees 1% ~1%
Non-Accredited Investors
Diversified Investments
Passive Income
Liquidity
Leverage
Tangible Asset

As with any investment, you’ll need to use your own judgement to make these decisions for what is best for your portfolio.

The article How To Be a Real Estate Investor was originally posted on Investormint

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How to Choose a Property Management Company https://investormint.com/real-estate/how-to-choose-a-property-management-company https://investormint.com/real-estate/how-to-choose-a-property-management-company#disqus_thread Fri, 02 Aug 2019 07:50:08 +0000 https://investormint.com/?p=12332 The amount that you pay a property management firm may depend on whether the company charges for managing unoccupied units and the agency charges extra for finding new tenants.

The article How to Choose a Property Management Company was originally posted on Investormint

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choose property management companyBecoming a landlord doesn’t mean that you have to spend a lot of time fixing property damage, performing background checks, and chasing tenants for rent. In fact, owning rental properties can provide a source of passive income that requires very little effort on your part.

Unfortunately, many landlords choose to do all of the work themselves. It doesn’t take long before they discover how difficult it is to maintain even one rental property.

Instead of running yourself ragged, find a reliable property management company that can do most of the work for you.

Why You Need a Property Management Company

The vast majority of landlords have careers that demand at least 40 hours of work per week. Unless you own dozens of properties, you probably work a 9 to 5 job.

Most landlords also have families who they’d much rather spend time with than leaky toilets!

How can you find time to maintain rental properties when you need to go to work, take your kids to soccer practice, make dinner, and tuck in your little ones at night?

You can’t!

Hiring a reliable property management company gives you back your free time and better protects your health from sleep deprivation while helping you earn passive income for your family.

You can often hire property management companies to perform specific tasks, including:

  • Find and process new tenants for your properties.
  • Perform credit and background checks before accepting new renters.
  • Collect rent and other fees from renters.
  • Maintain and repair properties when needed.
  • Handle requests and complaints from tenants.
  • Complete the eviction process when necessary.

How Much Do Property Management Companies Charge?

As you explore the property management companies in your area, you will discover that they charge a variety of prices. The prices often depend on what services you want them to perform and how they choose to bill clients.

In most cases, you can expect to pay your property management company 8 to 12% of the collected rent. You will also have to pay for extra expenses, such as replacing old furnaces and refinishing floors when needed.

Some companies, however, charge a flat fee per month. When comparing prices, make sure that you turn the percentages into dollar amounts so you can evaluate offers properly.

The amount that you pay a property management firm may also depend on:

  • Whether the company charges for managing unoccupied units.
  • Whether the agency charges extra for finding new tenants.
  • Whether the property management company needs to hire a maintenance crew.
  • Whether the company charges extra for collecting late payment fees from tenants.
  • Whether the agency charges an additional fee for evictions.

What Your Responsibilities Are When You Hire a Property Management Company

Your responsibilities depend on the arrangement that you make with a property management company.

Many of the agencies will let you choose specific services to match your budget. You could, for example, ask the property management agency to handle payments and repairs while you search for new tenants.

As you accumulate more properties, you will probably want to shift more responsibilities to the property management company. If you want to give them all of the responsibilities, then you only have to make sure that you pay the company. The rest is taken care of for you.

How to Know When Your Property Manager Is Taking Advantage of You

Even if you let your property management company handle all of your rental affairs, you still need to pay close attention to your business’s operation.

When your company gains more control, it also gets more opportunities to sneak additional charges onto your bill.

Some signs that your property manager is taking advantage of you include:

  • Deducting money from your bank account without sending you a detailed invoice.
  • Charging you to replace appliances that should still work for a few more years.
  • Irregularities in your rental income, such as dramatic increases or decreases in the number of tenants living in your units.
  • Difficulty communicating with the manager in charge of your properties.
  • Getting charged for services that you did not request.

Ideally, your property manager will give you a monthly invoice that describes the services you received, how much money the agency collected from tenants, and the amount of money that you owe the company. Any agency that doesn’t want to follow those guidelines creates more opportunities to take advantage of you.

Hiring a property manager can make it much easier for you to generate passive income while you work a full-time job and spend time with your family.

Before you choose a company to manage your properties, you should read reviews and talk to other landlords in your area. The information you learn may help you avoid an unscrupulous company.

After you find a company that you trust, you need to stay involved in your rental business. Make sure you visit your units regularly, stay in touch with the property manager, and review all invoices and financial statements from the company.

How to Pick A Property Management Company

If you’re not sure how to choose a property management firm locally, picking a national provider may be your best bet. A company like Roofstock, for example, has been vetted and won the loyalty of thousands of clients.

Although Roofstock does much more than connect you to top property management companies. It caters to buyers who don’t want to haggle over pricing when purchasing real estate, and want a white-glove experience when it comes to rental property management.

Unlike the traditional pounding the pavement method of finding good properties, Roofstock makes it easy to buy property online in just a few clicks if you wish.

While that might have seemed an outlandish idea just a decade or so ago, it’s now made possible because all the key factors you need to make smart property investing decisions is taken care of for you.

For example, Roofstock builds the cash flow analysis for you. The company rates neighborhoods based on key criteria like school district and economic vibrancy. Plus, you get connected to local property managers who are vetted by Roofstock.

The bottom line is you get a full soup to nuts service from buying your property to full management post-purchase. And in between you get to see all the data you want to make an informed decision, including rental yield and forecasted growth in property value.

For investors who want instant cash flow on day one, you can even select properties that already rented out producing a yield, so there are no delays to earning passive income.

ROOFSTOCK SPOTLIGHT

roofstock logo

InvestorMint Rating

5 out of 5 stars

  • Buyer Fees: 0.50%
  • 30-Day Money Back Guarantee
  • 100% Online Purchase

via Roofstock secure site

>> How Many REITs Are There In North America?

>> Invest In Real Estate With Just $500

>> Roofstock Vs Fundrise Comparison

The article How to Choose a Property Management Company was originally posted on Investormint

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How Many REITs Are There In North America? https://investormint.com/real-estate/how-many-reits-are-there-in-north-america https://investormint.com/real-estate/how-many-reits-are-there-in-north-america#disqus_thread Thu, 25 Jul 2019 13:37:25 +0000 https://investormint.com/?p=12128 According to IRS records, approximately 1,100 REITs have filed tax returns. Of these, more than 225 US REITs are registered with the SEC to trade on major stock exchanges.

The article How Many REITs Are There In North America? was originally posted on Investormint

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how many reits in north america

Real estate investment is a popular method of building wealth, but most average investors aren’t financially able to bankroll large developments alone.

Fortunately, there is an alternative. Real Estate Investment Trusts (REITs) offer an opportunity to pool your money with other investors to purchase and/or manage income-producing properties.

What is a REIT?

The concept of an REIT is similar to that of a mutual fund. The REIT manager handles the logistics of buying, managing, and selling real estate. Investors buy shares of the REIT, and income generated from the real estate holdings is returned to shareholders.

Because REITs are eligible for special tax treatment, they must meet certain IRS requirements to qualify in this category.

  • The REIT must be organized as a corporation
  • It must have a managing board of directors
  • There must be a minimum of 100 shareholders
  • No more than 50% of an REIT’s shares can be held by five or fewer individual shareholders
  • A minimum of 75% of the REIT’s assets must be in real estate, cash, or US Treasuries
  • At least 75% of an REIT’s net income must come from real estate
  • At least 95% of an REIT’s income must be passive – for example, rental payments
  • At minimum, 90% of taxable income must be paid to shareholders as dividends

Of course, the biggest question for investors is which REIT is most likely to generate the highest dividends?

How Many REITs Exist In North America?

Choosing the best REIT can be overwhelming. According to IRS records, approximately 1,100 REITs have filed tax returns. Of these, more than 225 US REITs are registered with the SEC to trade on major stock exchanges.

Most can be bought and sold on the NYSE. As a group, these REITs have more than $1 trillion in market capitalization.

With numbers like that, it simply isn’t practical to conduct research on all of them before making an investment decision.

Though bigger isn’t always better, understanding which REITs are largest can make it easier to select your investment. After all, size can be an indication of success in some cases. In others, it can be an indication of investors’ faith in the REIT.

These are five of the largest REITs in the United States today:

  • American TowerAmerican Tower is the biggest REIT in the world when measured by market cap. Currently, this figure comes in at $74.0 billion. American Tower dates back to 1995, though it didn’t become an official REIT until 2012. It is headquartered in Massachusetts, and it owns and/or manages more than 170,000 global communications sites.
  • Simon Property Group – Founded in 1993, Simon Property Group now has a market cap of $55.2 billion. This REIT is headquartered in Indiana, and it is primarily focused on retail properties. Simon Property Group is the largest US REIT by revenue, and it is the largest US operator of shopping malls.
  • Crown Castle International Corporation – With a market cap of $42.5 billion, this Texas REIT is a leader in communications infrastructure. Crown Castle owns and/or operates more than 40,000 cell towers, as well as approximately 60,000 miles of fiber. It was founded in 1994, at the very start of the digital revolution, and there is room for growth as more smart devices come to market.
  • Public Storage – You don’t have to be a Storage Wars fan to know that finding space to house unneeded items is a challenge. Public Storage stepped up with a solution. Since it was founded in 1977, this company has become the largest self-storage brand in the country with a market cap of $38 billion. It owns more storage facilities than any of its competitors, and in 2017, Public Storage earned double the amount brought in by its next-closest rival. This REIT is headquartered in California.
  • ProLogis – This REIT targets industrial real estate, and it currently has a market cap of $34.1 billion. ProLogis was founded in 1983, and its headquarters are located in California. Today, ProLogis is considered the largest owner of warehouses and distribution centers in the world. Globally, it owns and/or operates around 3,300 facilities.

Though these five are currently the largest, they don’t represent the diversity available in REIT investing.

You can choose to focus your real estate investment dollars on health care facilities, office space, senior living centers, timberlands, and so forth.

Some REITs don’t specialize in a specific type of real estate. Instead, they own and/or operate properties used for a variety of purposes in an effort to mitigate the risk of losses if one industry experiences economic challenges.

How To Invest in REITs

Much like investing in mutual funds or trading individual stocks, the first step in buying REIT shares is opening a brokerage account.

Once your account is established and funded, you can trade shares as you would any other publicly traded investment.

The beauty of REIT investing is that you can build a passive income stream. Profits are paid out in dividends on a regular basis, so you can grow your wealth with additional investments.

If you’re not sure where to begin, pick a broker that gets an all-round top rating like TD Ameritrade, whose thinkorswim platform ranks among the very best.

THINKORSWIM® SPOTLIGHT

thinkorswim®

InvestorMint Rating

5 out of 5 stars

  • Commissions: $0 per trade
  • Account Minimum: $0
  • Promotion: Trade free for 60 days, based on $3,000 deposit

via thinkorswim secure site

REIT Alternatives

You don’t have to invest in a REIT to get exposure to real estate as an asset class. Other alternatives to REIT investing are available these days through real estate crowdfunding platforms.

Crowdstreet, Rich Uncles, and Fundrise, are just a handful of the many property marketplaces that allow individuals, both accredited and unaccredited, to get on the property ladder without the upfront cost.

CROWDSTREET SPOTLIGHT

crowdstreet logo

Investormint Rating

4.5 out of 5 stars

    • Targeted Cash Yield: 9.9%
    • Targeted IRR: 14.4%
    • Minimum: $25,000

 

via Crowdstreet secure site

Similar to REITs, you don’t actually need to get your hands dirty and manage tenants when you invest in any of the deals on these sites.

However, some investors like the idea of owning property outright and if you fall into that category but want to outsource the management of the property you own, Roofstock is the best place to begin.

Roofstock includes some perks, such as:

Every House Is Certified

A national inspection firm conducts a multi-point property inspection to assess habitability, risk, and safety.

Properties are examined both internally and externally.

roofstock advisor picks properties

Roofstock Negotiates List Prices For You

If you hate the idea of haggling over prices when you buy an investment property, Roofstock will be the answer to your prayers because it conducts the list price negotiation after performing a property evaluation and rental market analysis.

Certified Property Managers

Roofstock further simplifies the process of buying investment property by finding and certifying local property managers.

Roofstock Features

Property Purchases Made Easy 100% Online
Minimum Downpayment 20%
Geographic Diversification Nationwide
Property Type Residential
Buyer Fees 0.50%
Non-accredited Investors
Passive Income
Pre-Screened Property Managers
30-Day Guarantee

The article How Many REITs Are There In North America? was originally posted on Investormint

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How To Avoid Rental Scams [Shocking Airbnb Scam!] https://investormint.com/real-estate/rental-scams https://investormint.com/real-estate/rental-scams#disqus_thread Sat, 18 May 2019 00:48:51 +0000 https://investormint.com/?p=6051 Rental scams can be avoided by verifying the identity of the property owner, selecting a licensed real estate agent, knowing market rates, and conducting due diligence ahead of time.

The article How To Avoid Rental Scams [Shocking Airbnb Scam!] was originally posted on Investormint

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In big cities, rental costs are so high that they dwarf monthly mortgage costs in other parts of the country. And as rents have increased, rental scams have become ever more sophisticated.

Among the most common home rental scams is when a fraudster attempts to lease a property to you despite having no legal right to do so. The scammer will frequently demand a security deposit and the first month’s payment. After you fork over your hard-earning savings, they abscond with your money never to be seen again.

Another brazen tactic is to meet with prospective tenants at the home location and then claim to have forgotten the keys but demand payment without giving you the chance to view the property.

Many other apartment rental scams exist so the question is how do you avoid them before your pockets are picked for thousands of dollars?

How To Avoid Rental Scams:
Know Market Rates

In cities like New York and San Francisco, rental rates are famously high. A common way to deceive the public is to list a property just below the market rate in order to attract a lot of viewers. For the fraudster who plays a numbers game, the goal is to cast a wide net and hope to catch a victim among the many interested parties.

san francisco skyline

If the average rental cost for a 1-bedroom apartment is $3,500 in a high-priced city and the renter spots a 1-bed listing with all the amenities desired for $700, the renter will probably be suspicious that the price is too low and conclude something is not right.

But if the listing is priced just below the market price, at say $2,800, they might be more inclined to believe that they found a deal. Sophisticated scam artists know that pricing rental homes below the market price but not too low attracts a lot of interest, and then they pounce on unsuspecting victims.

To avoid becoming the victim of one of the craigslist rental scams, Zillow rental scams, or Trulia rental scams, check out local market rates so you can more easily spot when prices seem to good to be true.

Avoiding Common Rental Scams:
Pay By Check

Cash is a criminal’s best friend. It is easy to hand over and cannot be tracked. Unlike regular checks or even wires that require personally identifying information, which could allow police to quickly locate a criminal, cash is virtually untraceable.

In the old days, cash was the most common and prefered payment method demanded by tricksters but these days cryptocurrencies may be requested, whether bitcoin, litecoin or ethereum.

If your landlord demands cash or cryptocurrencies as payment for a security deposit or first month’s rent, red flags should immediately pop up in your mind, warning that the supposed “landlord” could in fact be a cheater.

It is much better to pay by cash, cashier’s check, or even consider ACH or wire transfers that can be more easily traced.

Even payment methods like Western Union are usually best to avoid because it can be difficult to track down the recipient of your money once it has been sent.

Housing Rental Scams:
Get Your Lease In Writing

In the good old days, a handshake was sufficient to consummate a deal. Warren Buffett famously agreed to buy ‘Mrs. B.’ Rose Blumkin’s Nebraska Furniture Mart with a shake of the hands. But these days, while you can still trust the person purporting to be your new landlord, you should still verify they are who they claim to be.

Not only should you demand a written lease but you should also request an executed lease document, meaning the contract is signed by your landlord. A common tactic among imposters is to attempt to make an oral agreement over the phone and quickly demand payment.

Even if the person you are speaking with is a legitimate landlord, you should still request an executed copy of the lease agreement so that you don’t run the risk of the landlord making you sign but refusing to do so themselves.

A landlord who fails to sign may subsequently deny responsibility for claims that arise. For example, if you were to discover carcinogenic materials on site that should have been removed or leaks that are the responsibility of the landlord to repair, you may end up footing the bill yourself if the landlord claims to never have signed the original lease.

Ideally, visit with the landlord in their office premises and, at the time of signing, make sure you both put pen to paper during the meeting so you can both walk away with a copy of the signed lease agreement.

House Rental Scams:
Hire A Licensed Agent

Scammers may be daring enough to post a fraudulent listing on a free site, such as Craigslist, but few have the gall to list a property with a licensed real estate agent.

It requires much more effort and increases the risk of being caught to reveal personally identifying information to a professional agent, so your chances of being duped diminish significantly when you rent from a licensed agent.

But before you get too gung-ho on renting from a licensed real estate agent, factor the costs of paying an intermediary into your budget. Go ahead and run the estimates through a personal finance budget tool like Personal CapitalMint or YNAB before hiring an agent. If the numbers check out and you know you will have greater peace of mind, you are almost set to go.

PERSONAL CAPITAL SPOTLIGHT

personal capital logo InvestorMint Rating

4.5 out of 5 stars

  • Management Fee: 0.49% - 0.89%
  • Account Minimum: $100,000
  • Brownie Points: Free tools to track spending; human advisors paired with clients

via Personal Capital secure site

The last step is to verify the credentials of the real estate agent. Scammers know that risk-averse renters will look to hire professionals to lower the chances of being duped and often pose as licensed agents to establish trust with their unsuspecting victims.

Regardless of which state you live in, your real estate agent will be registered with the state so you can quickly double check that they are who they claim to be.

How To Avoid
Craigslist Rental Scams

Craigslist rental scams are among the most common because the site is popular, free, and makes it easy to post listings.

Perhaps the biggest scam perpetrated on free sites like Craigslist is to demand payment sight-unseen.

The listing you view online may feature photos of a legitimate listing from another location. Often, the same scammer will post multiple listings featuring different addresses using identical photos. And in each case, they will demand immediate payment to secure your place.

To avoid Craigslist house rental scams like this one, inspect the unit you plan to rent and never send personally identifying information or payment upfront until you have confirmed the landlord is legitimate.

Rental scams on Craigslist often involve high-pressure sales tactics too. While competition for housing is intense in high-priced cities, be wary of a landlord who puts excessive pressure on you to commit to an agreement and make a payment sight-unseen.

How to Avoid Airbnb Rental Scams

Most people know Airbnb as a vacation rental site, not a site where they’d find long-term rentals. But Airbnb rental scams occur through listings on rental sites like Apartments.com and Facebook Marketplace.

You’ll see a listing that is about 10% below the market rate of other listings you’ve looked at, including extras like utilities and parking. It may also allow pets.

How The Scam Works

  1. When you contact the owner, they will tell you that they live in another country, and originally bought the apartment or home for their child who was studying at university there. Now, however, that child has moved back home, so they’re looking to rent the unit. Furthermore, they’ve listed it below the market price because they care less about making money and more about making sure the unit is being lived in and cared for.
  2. The scammer usually only asks for basic information such as your name, contact information, number of people who will be staying in the rental, and your desired length of stay.
  3. After you reply, they will remind you that they live out of the country, so they will arrange the rental through Airbnb. However, remember that you didn’t find their listing on Airbnb, which is the typical way that Airbnb operates. Instead, the scammer says that they will arrange everything through Airbnb:
  4. They will start the process through Airbnb, giving your information, and then Airbnb agents will show you the rental. Before they do that, though, they claims those Airbnb agents will need the security fee (typically a deposit of one-month’s rent) from you.

Once you pay that fee, you won’t hear back from the scammer or that “Airbnb agent,” and you won’t have a rental.

To avoid this Airbnb rental scam (and others like it), be wary of renters who direct you to Airbnb as a rental platform, especially if that rental is not listed on Airbnb.

If you plan to rent a vacation home from a landlord on Airbnb, conduct the entire transaction, from start to finish, through Airbnb.

As a security measure, if you do get contacted in this way, you can contact Airbnb directly. You can also google the name of the person who contacts you, along with the word “scam,” to check their authenticity.

>> Is Airbnb Worth It?

Avoid Room Rental Scams:
Meet Current Tenants

While posting fake listings is common among cheats, you can lower your chances of being duped by meeting with current tenants.

Ask them how long they have lived in the property and how fairly they have been treated by the landlord.

Beyond verifying the integrity of the listing, you can also use this opportunity to enquire about any issues with the property, such as damp or mold, leaky faucets, infestations, unreliable electricity, cable or WiFi.

If the current tenants are moving out because of property issues, the chances of getting a solo meeting without the landlord present is low, but you could ask the tenants for their numbers before leaving to ensure a private conversation is possible at a later stage.

How To Spot Rental Scams

Legitimate landlords generally conduct extensive research on prospective tenants. An undesirable tenant can become a pain not only to the landlord but also to neighbors, so it is in the landlord’s interests to screen tenants carefully.

Usually this means conducting a background check to see what prior rental record and even criminal record exists. Your landlord may even charge a fee to conduct due diligence on you before issuing you a lease.

When a landlord is overly eager to get you to sign a lease without conducting any due diligence on your background, watch out!

It is not necessarily evidence that you are being scammed but it should cause you to question whether the person claiming to be the landlord is the real owner or a licensed agent.

Signs Of Rental Scams

A telltale sign that you may be the mark for a rental scam is when the person pretending to be the landlord signs the lease agreement with a name that doesn’t match official records.

In general, either the property owner or authorized agent needs to be listed on the lease agreement so if you have done your homework beforehand and find neither name on the document presented to you, it is best not to sign.

If you don’t see the owner’s name featured, the agreement may be perfectly legitimate. In certain states, the owner does not always need to be listed on the agreement but their representative, who is a management agent should generally be named then.

Foreclosure Rental Scams

Another less common but equally dangerous trap scammers lay for prospective renters is the foreclosure rental scam.

foreclosure signThe way it works is that an imposter claiming to be a landlord invites renters to a property that had previously been foreclosed upon.

Sometimes the criminal will go so far as to change the locks on the vacant building. The victim is shown the property and has no reason to believe anything other than that the criminal is the official landlord – after all, they have the keys to the building!

After sending payment for a security deposit and first month’s rent, the criminal disappears into the night leaving the renter thousands of dollars short and egg on their face for having fallen for one of the most sophisticated scams.

Rental Scams Summary

Rental scams commonly begin when a criminal impersonates a landlord with a view to asking prospective renters to pay money upfront for a property they have no authority to lease.

To lower the risk of falling victim to a home rental scam, conduct as much due diligence on the person purporting to be the landlord, who may be listed officially as the property owner or a licensed agent on official websites.

Where possible, connect with current tenants and avoid signing any documentation until your landlord also executes the lease agreement.

If you do feel like you have been the victim of a rental scam, contact your local police department and report the incident. You will be required to fill out a report so make sure to record as much information as possible.

>> Build Your Credit Paying Rent with RentTrack

>> Get Your FICO® Score

>> Why Was My Credit Card Declined?

The article How To Avoid Rental Scams [Shocking Airbnb Scam!] was originally posted on Investormint

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Realty Mogul Review 2020 – Invest In Real Estate, Online! https://investormint.com/investing/realty-mogul-review https://investormint.com/investing/realty-mogul-review#disqus_thread Tue, 19 Mar 2019 00:16:26 +0000 https://investormint.com/?p=3974 Realty Mogul is a crowdfunding real estate platform that allows investors to pool money to finance real estate purchases. As an online real estate investing marketplace, Realty Mogul connects individuals to real estate investments across the U.S.

The article Realty Mogul Review 2020 – Invest In Real Estate, Online! was originally posted on Investormint

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realty mogul review

Realty Mogul is a crowdfunding real estate platform that allows investors to pool money to finance real estate purchases.

realty mogul logo darkAs an online marketplace for real estate investing, Realty Mogul connects individuals and institutions to residential and commercial property investments across the United States.

By pooling assets, investors can collectively buy real estate that may otherwise be out of reach, such as a multi-million dollar office building.

Investors can make money either from appreciation in the underlying real estate or from cash flows.

Another way to earn passive income is from MogulREIT I, an online Real Estate Investment Trust, which invests in a broad selection of properties nationwide, and is designed to pay investors an attractive and consistent yield while offering real estate companies an alternative and faster source of financing than big banks.

With as little as $1,000, you can get started investing in residential and commercial real estate opportunities that have been vetted by experts.

Realty Mogul Spotlight

REALTY MOGUL SPOTLIGHT

realty mogul logo

InvestorMint Rating

4.5 out of 5 stars

  • Minimum Investment: $1,000
  • Passive Income Opportunity: Monthly or Quarterly
  • Access To Commercial Real Estate: YES
  • Access To Non-Accredited Investors: YES

via Realty Mogul secure site

Why Choose Realty Mogul?

Realty Mogul investors get access at lower cost and can diversify property risk better than would be possible by investing solo.

If passive income is important to you yet the ups and downs of the stock market make you nervous, Realty Mogul is worth checking out.

Real estate got a bad name during the 2007-2009 period, but over a 15 year duration either side of the economic downturn, the asset class still produced a higher return than the S&P 500.

realty mogul real estate growth chart

Where Realty Mogul shines is by making real estate accessible to individuals who would otherwise have to roll up their sleeves, perform due diligence on individual properties, jump through legal hoops, and tie up a hefty chunk of net worth in single real estate investments.

By pooling the assets of many individuals and pre-vetting real estate opportunities, Realty Mogul shoulders the burden of due diligence and provides investors exposure to a broader range of real estate investments that diversify financial and geographical risk.

And by investing as a group instead of individually, investors can get started with as little as $1,000.

As an online peer-to-peer lending marketplace, Realty Mogul connects investors to real estate companies who want access to capital faster than they might otherwise be able to source it through big banks, so both investors and real estate companies win.

Realty Mogul Highlights

  • Invest in loans and equity investments
  • Non-accredited investors can invest in private MogulREIT I
  • Alternative passive income source to stock market

How Realty Mogul Works

Non-accredited, accredited and institutional investors can invest via the Realty Mogul online marketplace.

Realty Mogul can be described as a marketplace lender, peer-to-peer lender, and crowdfunding platform, but they all essentially mean the same thing. Realty Mogul connects investors who want real estate exposure with real estate companies that need capital, either equity or debt.

Whether you are accredited, non-accredited or an institutional investor, Realty Mogul provides opportunities to invest in real estate.

Once you open your account, you can browse investment opportunities, check out due diligence materials, and sign legal documents online.

And once invested, you can view your investor dashboard 24/7 to see how your investments are performing.

What Is Your Money Invested In?

Non-accredited investors are restricted to the MogulREIT while accredited investors and institutional investors can choose among a wider variety of private real estate investments.

Depending on whether you are an accredited, non-accredited or an institutional investor, you will have different investment options available to you.

NON-ACCREDITED INVESTORS

The definition of an accredited investor is someone who has an income of $200,000 annually for each of the last two years or $300,000 combined if married – or a net worth of $1,000,000+ excluding a primary residence.

If you are a non-accredited investor, you will be restricted to invest only in the MogulREIT I, which invests in and manages a diversified portfolio of commercial real estate investments.

The investments can be in the form buying loans or equity in commercial real estate ventures.

The MogulREIT I will typically invest in a variety of property types, including:

  • Multifamily
  • Office
  • Storage
  • Industrial
  • Retail

To get started investing in the MogulREIT I product, you need just $1,000 and can invest in increments of $1,000 thereafter.

If you want to invest as part of a self-directed IRA, the minimum investment is $10,000.

Registered Investment Advisors are required to invest a minimum of $25,000.

Usually, you can take your money out each quarter when redemption windows open up.

realty mogul office property and multifamily home

ACCREDITED INVESTORS

If you meet the net worth or income requirements to be an accredited investor, Realty Mogul makes a wider variety of investment choices available to you.

realty mogul multi-family home propertyLike non-accredited investors, you can invest in the MogulREIT, but you can also invest in equity and debt.

Equity investments can take the form of multi-family, office, industrial, self-storage, retail, medical, office, and hospitality.

The way it works is that you purchase shares in Realty Mogul Limited Liability Company, an “LLC” that in turn invests in an LLC or Limited Partnership (“LP”) that owns the property.

Generally, you can expect to receive distributions each quarter, though you should make sure to read the small print for any investment you choose.

If for some reason a project requires more money than has been contributed, you are not subject to capital call risk. Instead, investors will be diluted if more money needs to be raised.

For tax purposes, the LLC will be treated as a partnership, and you can expect to receive a K-1 tax form that you can file with the IRS alongside your regular tax forms.

How Does Debt Investing Work?

Institutional investors can purchase Platform Notes or whole loans, which are secured. Accredited investors are permitted to purchase Platform Notes only, which are unsecured.

Beyond the MogulREIT I and equity investing opportunities, accredited investors and institutional investors can also invest in debt.

When you invest in loans, you either purchase a whole loan or acquire a borrower payment dependent promissory note, called a “Platform Note” from Realty Mogul, Co.

Note that only institutional investors are eligible to purchase whole loans and typically a $25 million minimum is set for institutions; these whole loans are secured by real estate.

The Platform Note is unsecured and the performance is tied to the underlying real estate loan.

By purchasing the Platform Note, you can receive periodic payments if and when the borrower makes interest payments.

If for any reason a loan defaults, you are not liable to fund further amounts beyond the initial investment.

However, if you purchase a whole loan as an institutional investor, you are on the hook to commit more money to pay for foreclosure costs in the event of a loan default.

Generally, debt investors can expect to get paid monthly.

And when it comes to tax reporting, you should expect to receive a Form 1099 annually.

Invest In A 1031 Exchange

On the Realty Mogul online platform, you can invest in a 1031 exchange, which is a way defer capital gains taxes.

A 1031 exchange is a way to defer capital gains tax when real estate is sold. When you exchange property for like-kind real estate, you can defer Federal taxes and use proceeds to purchase replacement property.

For the most part, when you own business or investment property, it qualifies for a 1031 exchange.

Any of the following would qualify for a 1031 exchange:

Property Type Qualifies for 1031 Exchange?
Apartment buildings YES
Single-family Rentals YES
Vacant Land YES
Office Buildings YES
Self-storage Facilities YES
Shopping Centers YES
Hotels YES

You must actually own the asset to qualify for a 1031 exchange, so a debt investment doesn’t count.

Even a direct investment doesn’t qualify for a 1031 exchange because they are interests in a promissory note.

So to qualify for a 1031 exchange, the following criteria must be met:

  • A qualified intermediary known as a 1031 Accommodator is used to exchange funds from the sold property to the bought property.
  • Within 45 days of selling the initial property, investors must identify replacement properties with their 1031 Accommodator.
  • 100% of net sales proceeds are invested in the replacement properties.
  • An equal or greater amount of debt is assumed on the new property compared to the original one.
  • Within 180 days, the replacement property must be closed on.

Where Realty Mogul shines is that you don’t have to already own a 1031 eligible property to be able to invest.

Cash investors who use non-1031 money are still eligible to participate in 1031 exchanges.

And once the investment has been made, the investment funds become 1031 eligible for future 1031 exchanges.

Realty Mogul Pros and Cons

All property investments are pre-vetted by a highly experienced investment committee which has resulted in over 140,000 investors joining the platform, $300 million invested and $65 million+ paid out to investors.

Realty Mogul Pros Realty Mogul Cons
Low Minimum: For just $1,000 you can get started investing in private equity real estate while diversifying risk and eliminating the traditional hassles associated with buying a property outright. Restricted Debt Investments: To purchase loans outright, you must be an institutional investor, however non-accredited and accredited investors can invest in equity opportunities.
Pre-Vetted Investments: The investment team has transacted over $5 billion in real estate during their careers, and never offer highly risk investments, such as construction or raw land. Access To Cash: Once you commit your money, you are locked into deals for the duration of the investment terms.
Access to Commercial Real Estate: Before crowdfunding, commercial real estate was accessible mostly only to accredited investors and institutional investors, but Realty Mogul opens the doors to this asset class to non-accredited investors. Fees: Realty Mogul fees are variable depending on what real estate investment you choose. Fees cover legal and administrative expenses, as well as ongoing reporting. The fees are transparent for each deal.
1031 Exchange Investments: You don’t need to own an existing property to qualify to invest in a 1031 exchange that has federal tax deferral benefits.
Diversified Real Estate Investments: By investing in property via Realty Mogul, you can spread risk across multiple geographies and properties while risking a lot less than if you had to do so by yourself because of the economies of scale benefits from pooling investor funds.
Taxable & Retirement Accounts: Both taxable and retirement accounts are eligible vehicles for real estate investments.
Licensed Investment Specialists: If you have any questions, you can speak on the phone with licensed investment specialists and even visit investment properties upon request.
Passive Income: Debt instruments pay as often as monthly while equity investments and MogulREIT I investments typically pay quarterly, so passive income investors can look forward to regular payouts.

Realty Mogul Account Types

Type Capability
Taxable YES
IRA YES

Realty Mogul Review Summary

Realty Mogul is a real estate crowdfunding platform. If you have at least $1,000 to invest in real estate, this platform may help connect you with a wide variety of real estate investors, sponsors, and investment vehicles so that you can diversify your real estate portfolio and invest more quickly than you would if you used a traditional real estate broker.

Realty Mogul Simplifies the Real Estate Investment Process

One of the biggest advantages of investing via this platform is that it simplifies what is often a complicated process.

Purchasing real estate is generally not easy — there are a ton of legal and tax requirements and it’s hard to predict how much maintenance will cost on a given property.

However, Realty Mogul makes it easier by pre-vetting all properties and then allowing you to purchase the ones you are interested in with just a few clicks of your mouse.

No Capital Calls

There are often unexpected expenses when purchasing property, but with Realty Mogul you won’t find yourself in a position where you have to come up with additional capital beyond your initial investment in order to finalize the deal.

Instead, your investment is diluted if more money is needed to cover closing costs or if closing requires a member loan with greater than 10% interest.

Ability to Invest in Individual Properties

Unlike when you invest in a REIT, you aren’t investing in a group of properties.

With Realty Mogul, you pick the properties that interest you and invest in them directly. This gives you greater control over your investment than you would find if you invested in a REIT.

Pre-Vetted Investments

Realty Mogul does the hard work of vetting investment properties for you before they offer them on the platform. This means you never have to worry about purchasing a property that later turns out to need a lot more repairs than you realized or otherwise not be as good an investment as advertised.

Realty Mogul also does background checks on principals, so you will never get scammed by a criminal posing as a property owner.

Best For Accredited Investors

While Realty Mogul does offer two private REITs that non-accredited investors can put money into, the rest of the platform is closed to those who make less than $200,000 a year or have a net worth of less than $1 million. In addition, you need a minimum investment of $1,000 to begin investing using Realty Mogul.

The article Realty Mogul Review 2020 – Invest In Real Estate, Online! was originally posted on Investormint

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Roofstock Review – Buy Property 100% Online https://investormint.com/real-estate/roofstock-review https://investormint.com/real-estate/roofstock-review#disqus_thread Sun, 10 Mar 2019 00:20:26 +0000 https://investormint.com/?p=4246 Roofstock is a marketplace connecting investment property buyers to single-family home sellers, who can transact 100% online.

The article Roofstock Review – Buy Property 100% Online was originally posted on Investormint

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roofstock review

InvestorMint provides personal finance tools and insights to better inform your financial decisions. Our research is comprehensive, independent and well researched so you can have greater confidence in your financial choices.

Roofstock Review: This innovative property company matches real estate investors with single family homes through its online marketplace. The Roofstock platform cuts out the hassle of buying rental properties by featuring primarily pre-vetted rental homes with existing tenants.

Investors who wish to purchase investment properties close to home or 1,000 miles away can do so with a few mouse clicks.

Management is made easy too because Roofstock connects investors to pre-screened property managers.

So, whether you are looking to buy, own, or sell, Roofstock simplifies the steps to finding cash flow positive properties across the United States.

But what else do you need to know? In this Roofstock review we compare fees, downpayments, property types, and much more to help you decide whether buying property online is right for you.

Roofstock Fees & Features

ROOFSTOCK SPOTLIGHT

roofstock logo

InvestorMint Rating

5 out of 5 stars

  • Buyer Fees: 0.50%
  • 30-Day Money Back Guarantee
  • 100% Online Purchase

via Roofstock secure site

Why Choose Roofstock?

Roofstock certifies and guarantees each purchase so you can get a full refund on your home purchase within 30 days if you are dissatisfied.

30 Day Money Back Guarantee

Roofstock simplifies the process of buying rental properties. Before a property is listed on its marketplace for you to consider, experienced professional conduct due diligence.

For new buyers, the risk of missing something along the purchasing journey can be high enough to want to walk away from what might otherwise be an attractive passive income investment opportunity.

To ease any concerns you may have as a buyer, Roofstock certifies and guarantees each house featured in its marketplace.

When you purchase a property listed on Roofstock you receive a 30-day money back guarantee, meaning that you can hand back your property to Roofstock after providing written notice of your dissatisfaction.

The likelihood of coming across any major issue is lowered by the rigorous certification process that each property undergoes before featuring in the Roofstock marketplace.

Cash Flow Positive Properties From Day 1

The curated list of homes available for sale are frequently occupied by existing tenants so you can be earning passive income immediately.

And it saves you the hassle of finding tenants or having a property manager vet tenants on your behalf.

High Potential Markets

Roofstock evaluates markets with good potential for investment by evaluating rental rates, growth yields, population growth, job growth, and House Price Appreciation (HPA).

The supply and demand of single-family homes is factored into calculations to determine levels of projected growth too.

And Roofstock will evaluate neighborhood criteria, such as crime rates, amenities, and school districts as part of its research to gauge total returns.

Every House Is Certified

A national inspection firm conducts a multi-point property inspection to assess habitability, risk, and safety.

Properties are examined both internally and externally.

roofstock advisor picks properties

You will also receive a preliminary title report to make sure no uninsurable encumbrances, liens, or title commitments exist.

HOA fees that may be applicable are evaluated and disclosed so you won’t be surprised post-purchase.

For transparency, Roofstock makes sure that you see lease terms, such as monthly rent, lease-end date, utility responsibility, and security deposit. Plus, you will have access to the tenant’s rent payment history to make sure payments are timely.

Roofstock Pre-Negotiates List Prices

To save you the back-and-forth hassle of negotiating a price, potentially losing out on an investment property based on price alone, and to ensure you get a fair price, Roofstock conducts the list price negotiation after performing a property evaluation and rental market analysis.

In case repairs are needed, you will also receive an estimate cost for repairs.

Certified Property Managers

Roofstock further simplifies the process of buying investment property by finding and certifying local property managers.

The Roofstock team reviews the property management process and personally interview top managers to source the best one.

Roofstock Features

Property Purchases Made Easy 100% Online
Minimum Downpayment 20%
Geographic Diversification Nationwide
Property Type Residential
Buyer Fees 0.50%
Non-accredited Investors
Passive Income
Pre-Screened Property Managers
30-Day Guarantee

What Due Diligence Does Roofstock Conduct?

Roofstock screens locations, estimates growth potential, and conducts title and inspection due diligence on each property featured.

Where Roofstock shines is in vastly simplifying the process of buying a residential rental property for passive income.

Due diligence conducted by Roofstock on your behalf includes:

Research Performed By Roofstock
Preliminary title report
Interior & exterior inspection reports
Tenant payment history & lease details
Detailed financial pro forma & return estimates
Visualizations of income, appreciation, and total returns
Property valuation & comparables
Market, neighborhood & local school insights
Major repair cost estimates, if applicable

Roofstock Real Estate Locations

Roofstock serves markets it believes will perform well over the long-term.

High-potential regions are targeted by Roofstock based on a wide variety of economic criteria.

roofstock property map

The criteria used to determine the potential for growth include:

  • Housing supply trends
  • Economic data
  • Demand drivers, such as rental growth forecasts

The markets currently served include:

  • Atlanta
  • Dallas
  • Greater Tampa
  • Houston
  • Indianapolis
  • Jacksonville
  • Las Vegas
  • Los Angeles
  • Memphis
  • Miami
  • North Carolina
  • Orlando
  • San Bernardino
  • San Francisco – Easy Bay
  • Southwest Florida

Roofstock Neighborhood Ratings

A proprietary neighborhood rating formula is used to gauge key factors, including school district, income levels, and employment rates.

Roofstock Neighborhood Rating is a proprietary scores range from 1 to 5 stars based on data that is normalized across markets.

Approximately one dozen key attributes are measured using a proprietary algorithm, including employment rates, home values, school district quality, and income levels.

roofstock neighborhood 5 star-rating

A 5-star neighborhood rating may be an affluent neighborhood with higher-income residents and a top-rated school district.

These neighborhoods generally are higher cost and lower yield opportunities.

Employment levels in the surrounding area will generally be higher, and a higher percentage of homes will be owner occupied.

In contrast, a 3-star neighborhood may have a blend of older and newer homes in a decent school district.

The yields tend to be higher to reflect the higher risk associated with lower income tenants.

Roofstock Properties

Roofstock properties are exclusively single-family homes. If you are looking for commercial real estate opportunities, Rich Uncles may be a better fit.

Single-family home rental investments are a way to diversify an investment portfolio using an alternative vehicle than the stock market and to earn passive income from a tangible asset that can hedge inflation.

Single-Family Home Features YES/NO
Tax benefits
Tangible asset
Inflation hedge
Cash flow from day one
Uncorrelated to stock market
Investment portfolio diversification
Passive income
Buy with leverage

Roofstock Seller Fees & 1031

Roofstock charges buyers 0.50% to purchase homes and sellers 2.50%. Buyers can purchase homes via a self-directed IRA.

Buyer Fees 0.50%
Seller Fees 2.50%
Property Type Residential Single-Family
Pre-Vetted YES
IRA YES
1031 Exchange YES
Do You Own Property? YES
List Price Pre-Negotiated YES

Roofstock Review Pros and Cons

Roofstock makes it easier and cheaper to purchase leased single-family rental properties. Buyers will need to pay at least 20% for a downpayment and get pre-approved financing to make a purchase.

Roofstock Pros Roofstock Cons
Uninterrupted Tenant Occupancy: You can buy a leased single-family home with uninterrupted tenant occupancy so you can earn cash flow on day one. High Investment Minimum: You will need to deposit at least 20% of the purchase price to get started.
Low Cost: Compared to the traditional 6% transaction costs, Roofstock charges just 0.50% to buyers while sellers pay 2.5%. Time & Capital Commitment: Unlike a REIT, which you can buy and sell easily, a single-family home requires a longer term commitment, higher upfront costs, and higher transaction costs, as well as more research, so you should think carefully before making what is a sizeable commitment of capital and time.
Proprietary Neighborhood Rating: Normally, you would need to research a locality, including school district, crime rates, income and employment levels but Roofstock does all that for you using a proprietary algorithm. Illiquid Investments: Transaction costs to buy and sell property are high, so your money will generally be tied up for a long time period and inaccessible, so it is best not to use any capital you may need over the short-term.
Preliminary Title Research: To avoid last minute surprises, Roofstock conducts preliminary title research.
Curated List Of Homes For Sale: Roofstock screens each home and conducts extensive due diligence, so sellers cannot simply post their homes for sale which is designed to increase the quality of homes available.
Passive Income: You can earn passive monthly income on homes you buy and are not limited to the number of homes you purchase on the platform.
Screened Property Managers: Roofstock interviews and screens property managers, so you can have more confidence that you are partnering with a top rated firm, but you also have the flexibility to choose another company or self-manage.
Alternative Investment: Buying single-family rental properties via Roofstock offers an alternative to stock market investing.
30-Day Guarantee: If you are not satisfied with your new home, simply notify Roofstock in writing within 30 days of your purchase.
Easy Connection To Lenders: Roofstock has partnered with lenders to make it easy to access mortgage loans directly through its platform.
Roofstock Portfolios: Buyers with deep pockets can purchase Roofstock portfolios, which are collections of single-family homes bundled into a single purchase opportunity.

You May Incur Repair Costs

Roofstock does not utilize triple-net leases, which means that as the property owner you are responsible for repair and maintenance costs.

It’s best to have money set aside for possible repairs before you invest in property with Roofstock so that you can cover these costs.

Long-Term Investment

You’ll have to invest both time and money in the property you purchase through Roofstock.

Prior to making a purchase, you may need to research property values in the area or best practices for landlords in addition to comparing different properties to one another and deciding which one is best.

You’ll need to put 20 to 30% down on the property before you can get a mortgage, and you’ll have to depend on tenants paying the rent to help cover the cost of that mortgage every month if you don’t have the cash to purchase the property outright.

Roofstock Account Types

Type Capability
Taxable YES
IRA YES

Roofstock Review Summary

Roofstock is an investment company that provides a path for investors to easily purchase real estate.

Certified Properties

Each property on Roofstock’s site is thoroughly vetted by the service prior to being listed.

Certification is a complex process that requires an in-person inspection and walkthrough of the property, estimates of any repairs needed, a review and summary of leases and tenant selection processes, and several visual items on the property’s website such as a 3D virtual tour and photos of the property.

These requirements make it easier for you to decide whether a given property is the right investment for you.

30-Day Satisfaction Guarantee

Roofstock wants to ensure that all investors are happy with the properties they purchase.

It offers a 30-day satisfaction guarantee on any property you buy through the platform.

If for any reason you change your mind about the investment during the first month of purchase, you just need to notify Roofstock in writing.

They will relist the property for free and buy it themselves if they can’t find a new buyer within 90 days of your written notice.

Potential for Positive Growth

Roofstock keeps commissions low, so you can purchase real estate more easily and cheaply than you would on your own.

Owning property allows you to build equity and helps strengthen your investment portfolio, and you’ll get money coming in every month when tenants pay the rent.

Buy Anywhere

Roofstock makes it possible for an investor on one side of the country to buy a property thousands of miles away with much less effort than had previously been possible.

Be Hands-Off

Buyers can be as hands-off as they wish. While Roofstock will assess neighborhood quality, tenant payment schedules, screen properties, and produce pro forma financial estimates, buyers can self-manage the property post-purchase or choose a property manager that is pre-screened by Roofstock.

1031 Exchanges Permitted

At Roofstock 1031 exchanges and self-directed IRA accounts as well as standard taxable accounts are all supported.

Keep in mind that any purchase you make will tie up capital so be sure any money used is not needed for short-term expenses or daily needs.

The article Roofstock Review – Buy Property 100% Online was originally posted on Investormint

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RealtyShares Review 2020 – Real Estate CrowdInvesting https://investormint.com/real-estate/realtyshares-review https://investormint.com/real-estate/realtyshares-review#disqus_thread Fri, 22 Feb 2019 00:56:50 +0000 https://investormint.com/?p=4050 RealtyShares is a peer-to-peer lending marketplace platform that connects real estate companies in need of financing with accredited investors who seek passive income.

The article RealtyShares Review 2020 – Real Estate CrowdInvesting was originally posted on Investormint

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realtyshares review

InvestorMint provides personal finance tools and insights to better inform your financial decisions. Our research is comprehensive, independent and well researched so you can have greater confidence in your financial choices.

If you want exposure to real estate but don’t want the hassle of managing property yourself, RealtyShares provides a diversified way to invest at low cost.

RealtyShares is an online marketplace that connects companies in need of real estate financing with investors, who can pool assets together and buy a portion of a real estate project.

realtyshares logo squareAlong with Fundrise and Realty Mogul, who are also online real estate crowdfunding marketplaces, RealtyShares is designed to make real estate investing more accessible, save investors more time and provide more control over investment choices.

And unlike a REIT, which selects investment properties without consideration to your preferences, RealtyShares gives you control over which investments you want to participate in so you can avoid certain geographies if you wish or certain types of investment, for example residential or commercial.

Best of all, you can get started with as little as $5,000 so you can risk a lot less than a traditional real estate investment and diversify capital across multiple projects so your risk is not concentrated in a single property.

RealtyShares Spotlight

REALTYSHARES SPOTLIGHT

realtyshares logo

InvestorMint Rating

4 out of 5 stars

  • Minimum Investment: $5,000
  • Investment Length: 6 months to 10 years
  • Fees: 1-2%

via RealtyShares secure site

RealtyShares Features

Minimum Investment $5,000
Investment Length 6 months – 10 years
Investment Types Debt, Equity, Preferred Equity
Equity Fee 1%
Debt Fee Up to 2%
Property Investments Residential, Commercial, Industrial
Total Investments $870 million
Projects 1,160+

Why Choose RealtyShares?

RealtyShares investors can diversify risk across multiple properties in multiple states.

If you are an accredited investor on the hunt for passive income investing opportunities, RealtyShares is a powerful peer-to-peer platform that simplifies the process.

Compared to stock market investing which has its ups and down, real estate investing offers an opportunity for potentially more reliable cash flow.

As an asset class, real estate has outperformed the stock market by 2:1 since 2000.

realtyshares market outperform

Where RealtyShares earns its stripes is by making real estate investing simple for accredited investors and institutions who would otherwise be forced to source residential and commercial property investments, conduct due diligence, manage legal contracts, and deploy a greater chunk of capital into few concentrated real estate plays.

By combining assets from many investors and screening real estate opportunities, RealtyShares does the heavy lifting of vetting property investments, shoulders the burden of research, and simplifies real estate investing to the click of a button online.

Investors can get started with as little as $5,000 while still enjoying diversified geographic opportunities and the luxury of picking investments that match their financial goals and risk profile.

In some cases, a $1,000 minimum investment is accepted.

By connecting investors with real estate companies in need of capital to finance projects, RealtyShares creates a win-win because companies can access capital faster and investors can diversify risk more.

RealtyShares Highlights

  • Invest in residential and commercial property
  • Each deal selected and underwritten by team of investment professionals
  • Invest in private deals across the country: multi-family, offices, fix & flips
  • Investor services team is available to guide investors through platform

How RealtyShares Works

Only accredited and institutional investors can invest on the RealtyShares online platform.

To invest with RealtyShares, you must be an accredited investor, meaning that your income must be at least $200,000 for the past two years or your net worth – excluding your primary residence – must be at least $1,000,000. If you have a spouse and earn a combined income of at least $300,000 annually for more than two years, you also qualify.

realtyshares multi family preferred equityWhen you sign up, you will have the opportunity to invest in a broad spectrum of real estate plays from residential to commercial and from multi-family to offices as part of equity or debt investments.

The due diligence on property investments is performed by the investment team at RealtyShares, who screen out the vast majority of companies seeking financing, so you can feel more confident that the choices made available to you are thoroughly vetted.

RealtyShares claims that of 2,700 applications received monthly, fewer than 5% succeed in making it past the 4 screening steps: application submission, prequalification, project due diligence, and project funding.

realtyshares application submission through project funding

Once you select a property, your capital commitment will count towards a funding goal. Each investment opportunity must meet its funding goal in order for the project to kick off.

If for some reason a project does not reach its funding goal, your entire capital will be returned to you from an escrow account.

When projects are approved and your money is allocated, you will have 24/7 online dashboard access to see how your investments are performing, access legal documents or tax filing documents, and track your payments.

What Is Your Money Invested In?

You can invest in residential or commercial property using equity or debt across 35 states and target return and hold times that best meet your financial goals.

When you invest with RealtyShares, you can seek to optimize your portfolio by choosing from among four categories:

Investment Preferences Description
Asset Types Single family homes, multifamily, retail, and office
Offering Types Equity, preferred equity, and senior debt
Geography 220 cities in 35 states
Targeted Returns Extensive range of target returns and hold periods

EQUITY INVESTMENTS

When you make an equity investment, you will own shares in a separate Limited Liability Company, or LLC.

For each investment opportunity, RealtyShares creates a new LLC which in turn owns the real estate.

As an LLC partner, you enjoy “pass through” tax benefits from cash flow distributions while limiting your legal liability.

Keep in mind that your upside and downside as an equity investor is likely greater than if you invest in debt.

As an equity investor, you can benefit from appreciation in the value of the real estate as well as regular cash flow distributions, typically quarterly.

realtyshares multi family equity senior debt

But if the project runs into difficulty because the real estate doesn’t appreciate in value sufficiently or doesn’t produce enough cashflow to cover debt obligations and distribute a surplus to investors, then you risk losing money.

Compared to debt investors, equity investors must usually commit to longer timeframes, often of 5 years or more.

DEBT INVESTMENTS

You can think of investing in debt as akin to lending money to a real estate company who needs capital to finance a project.

Generally, term lengths for debt investments are shorter compared to equity investments and are lower risk, but also have less upside opportunity.

The way it works for debt and some “preferred equity” investments is your money will be allocated to debt obligations of RealtyShares subsidiaries that are connected to the performance of real estate loans made by the subsidiary.

For the most part, RealtyShares screens debt investments to ensure they have:

  • Loan-to-cost (LTC) ratio less than 80%
  • Estimated loan to after repair value is less than 65%

Sometimes, for mezzanine loans, RealtyShares may lend up to 90% LTC.

Is RealtyShares A REIT?

RealtyShares is not a REIT, though you enjoy similar benefits to REITs, albeit with more control over how your money is allocated.

A real estate investment trust, or REIT, is required to distribute at least 90% of its cash flow to investors.

Like a REIT, RealtyShares also passes through cash flow to investors but unlike a REIT, you get much more control over how and where your money is allocated.

In a publicly traded REIT, your capital may be invested across a range of real estate investments that include exposure you wish to avoid.

For example, you may want to steer clear of the residential real estate sector. Or perhaps you want to avoid exposure to a specific state, such as Illinois. Or maybe you want to sidestep riskier opportunities, such as any construction and raw land deals.

On RealtyShares, you can customize your investments to your own preferences so you better align your dollars with your financial goals and risk profile.

RealtyShares Pros and Cons

RealtyShares was founded in 2013 but already has 92,000 registered investors, financed over 500 projects, and returned almost $60 million to investors.

RealtyShares Pros RealtyShares Cons
Low Minimum: The stated minimum to invest in private equity real estate deals at RealtyShares is $5,000 though in some cases as little as $1,000 is accepted for a project. Accredited Investors Only: To invest on the RealtyShares platform, you must be an accredited investor.
Pre-Screened Investments: An expert team of real estate professionals prequalifies financing applicants based on track record, financial strength and expertise, and reviews financials, legal standing, investment strategy and property condition/location. Illiquid Investments: No secondary market exists to sell your investment if you want access to your capital, so you will need to commit to an illiquid investment for a variable timeline – generally equity investments have longer timelines than debt investments.
Access to Commercial Real Estate: By pooling your assets with other investors, you gain access to commercial real estate opportunities that may otherwise have been out of reach and accessible primarily to institutions. Tax Considerations: You may received a K-1 or Form 10-99 tax document depending on what type of investment you select, which will likely add to your year-end tax filing costs.
Diversified Real Estate Investments: As an investor, you can diversify your risk geographically across 35 states and 220 cities, and diversify your capital risk across multiple projects.
Taxable & Retirement Accounts: IRA accounts and taxable accounts are supported on the RealtyShares platform.
Passive Income: If you are looking for regular passive income as frequently as each quarter, equity investments, preferred equity investments, and debt investments have the potential to create a predictable income stream.

RealtyShares Account Types

Type Capability
Taxable YES
IRA YES

RealtyShares Review: Real Estate CrowdInvesting

RealtyShares is an online real estate investment platform. It enables investors to both purchase equity in real estate projects and group with other investors to provide finance for property loans. Investors can either invest in specific properties or across entire groups of properties.

RealtyShares Handpicks Suitable Properties

RealtyShares identifies and analyzes the best investments before making them available to investors. They cover the legal, underwriting, and due diligence in advance of offering an investment.

In total, RealtyShares offers less than 10% of the investments they review to their clients.

Crowdfunding Reduces Risk of Investing in Property Market

Historically, real estate investing was only available to investors with a large amount of resources.

By enabling investors to purchase shares in a development, or group with others to provide a loan, RealtyShares reduces the cost of entry and allows investors to spread their risk across multiple properties.

RealtyShares Monitors and Manages Your Investments

Investing in real estate with RealtyShares is passive.

You choose the investments you want, and the real estate site takes care of the rest.

RealtyShares monitors and manages your investment, keeps you updated through your personal dashboard, and distributes funds when you exit the investment.

Investments in Almost Every State

RealtyShares has upwards of $870 million in a wide range of properties (commercial, industrial, and residential) across 41 states.

This wide range of investments makes it likely you can find something that meets your investment criteria.

Reduced Portfolio Volatility

Historically real estate has shown a low correlation (sometimes negative) with other asset classes, as well as having lower volatility.

It is likely that investing in real estate will reduce the overall volatility of your portfolio if you have historically only invested in stocks.

Unknown Exit Date

Exiting a property either requires it to be sold (if you hold equity) or for the real estate loan to be paid back.

Depending on the project, this might be just a few months or several years. For this reason, investors should only invest money they won’t need access to in the immediate future.

Is RealtyShares For You?

This is a great opportunity for investors who want to add real estate to their portfolio but without directly purchasing property themselves.

The article RealtyShares Review 2020 – Real Estate CrowdInvesting was originally posted on Investormint

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Rich Uncles Review 2020 – Invest In Commercial Real Estate For $500! https://investormint.com/real-estate/rich-uncles-review https://investormint.com/real-estate/rich-uncles-review#disqus_thread Tue, 19 Feb 2019 19:29:23 +0000 https://investormint.com/?p=4323 Rich Uncles gives non-accredited investors exposure to commercial real estate opportunities via Real Estate Investment Trusts that have diversified geographic exposure.

The article Rich Uncles Review 2020 – Invest In Commercial Real Estate For $500! was originally posted on Investormint

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InvestorMint provides personal finance tools and insights to better inform your financial decisions. Our research is comprehensive, independent and well researched so you can have greater confidence in your financial choices.

Investing in real estate used to be a pain. You’d have to scout for properties, find tenants, oversee remodels, and manage ongoing maintenance.

For most people who wanted to get a foot on the property ladder, the barrier was too high. Whatever about being able to afford residential property, commercial property was simply too expensive for all but the very wealthy.

Then along came regulatory changes a few years ago, and all of a sudden it became affordable and accessible to earn income from commercial real estate investments without needing to be an accredited investor.

In this Rich Uncles review, you will discover how it is possible to receive a steady monthly income by claiming your share of rental income paid by big name corporations, like Chevron and Chase Bank.

Why Choose The Rich Uncles REIT?

Rich Uncles offers investors the ability to invest in real estate investment trusts (REITs) for as little as $5 at a time. There are good reasons to invest in this company, whether you are investing $5 or $50,000. Here’s why we think Rich Uncles may be a good investment vehicle for you.

Rich Uncles is An Alternative to Stocks

Want to invest without dealing with the stock market? Then Rich Uncles may be for you. Instead of investing your cash into volatile stocks, Rich Uncles invests in REITs, which are more stable and yield more consistent returns.

Rich Uncles Invests in Triple Net Leases

One of the reasons the REITs Rich Uncles invests in are so stable is because the company invests conservatively, requiring tenants on its properties to sign triple net leases (NNNs).

Triple net leases require the tenant to pay property taxes and pay for repairs and maintenance as well as paying rent every month.

Because Rich Uncles doesn’t pay these expenses, the company have a larger profit margin, which may be a boon for your investment returns.

Stability of Cash Flows

Rich Uncles invests in student housing REITs.

The demand for student housing historically has been steady, and that in turn translates into a steady, stable cash flow in these properties as tenants pay rent every month in order to live there and new tenants move in as old ones move out.

Lets You Get Your Feet Wet

Real estate can be lucrative, but investing in properties yourself can be risky if you don’t know what you’re doing.

If you invest with Rich Uncles, the risks are significantly diminished because you can gain exposure to the real estate business without buying properties yourself.

Offers Stable Dividend Income

For all the reasons listed above, dividends from Rich Uncles are projected to be stable. While profits are never guaranteed, the odds are high that your investments will yield dividends month after month.

Rich Uncles Features

Property Type Commercial
Minimum Investment $500
Dividend Payments Monthly
Sign-up Process Online
Maximum Loan-To-Value Ratio 50%
Lease Types Triple-net
Geographic Diversity Nationwide
Minimum Net Worth (/ Salary) $250,000 (or $75k)
Holding Period 4-7 years
Tenant Quality Very high
Better Business Bureau Rating A+

Rich Uncles Spotlight

RICH UNCLES SPOTLIGHT

rich uncles logo approved

InvestorMint Rating

4.5 out of 5 stars

  • Minimum Investment: $500
  • Salary Minimum To Invest: $75,000
  • Commercial Real Estate Exposure: YES
  • Access To Non-Accredited Investors: YES

via Rich Uncles secure site

What Are Rich Uncles Returns?

Rich Uncles returns are intrinsically linked to real estate returns, and the property sector has generated market-beating returns during the first couple of decades of this century.

The attraction to the real estate sector is obvious. Rich Uncles cites this chart from NCREIF.org which demonstrates that between 2000-2016, real estate growth of 144% outshone the returns of the S&P 500 which were 55%.

rich uncles real estate outperforms stock market

Stock market investors may dispute the claim that real estate returns beat stock market returns. If you were to compare the asset classes over a longer time period, stock market total returns are higher.

But the claim doesn’t take away from the major aim of Rich Uncles and the best real estate crowdfunding sites, which is to make real estate accessible to almost anyone.

Get Paid Rich Uncles Dividends

When you invest in the Rich Uncles NNN Reit or Student Housing REIT, you receive income in the form of monthly dividend payments.

Rich Uncles dividend income is by no means a fast track to immediate riches. If you are a buyer of Bitcoin in the hopes of a moonshot, don’t expect similar rewards or risks here.

The use of debt is highly conservative, which means the business is inherently protected from risks of rising interest rates or other risk factors. In fact, Rich Uncles only uses 50% debt compared to 80% – 90% loan-to-values by some others.

As a result, you can be more confident that your Rich Uncles dividend payments will be stable over time.

The flipside of lower leverage is lower returns but that don’t equate safety with mediocre returns. In fact, over a 5 year period, Rich Uncles estimates that your money will grow by about 50% based on a 7% annual dividend reinvested and 2% appreciation in property values.

rich uncles calculate hypothetical earnings 10k

If you were to invest $10,000, Rich Uncles calculates that you could earn as much as $15,652 over a 5 year period based on a 7% annual dividend reinvested and 2% annual property price increases.

With an average investor committing approximately $30,000, the projected payoff is $46,955 over a 5 year period.

rich uncles calculate hypothetical earnings 30k

Rich Uncles FAQs At A Glance

  • Minimum Net Worth: $250,000 (or $75,000 salary)
  • Diversification: Nationwide (with few states as exceptions)
  • Term Length: 4-7 years (though technically indefinite)

How Does Rich Uncles Work?

Sign up, choose how you want to get paid, provide your social security number, and in the time it takes to boil a cup of tea, you could be invested in commercial real estate!

Getting started with Rich Uncles is lightning fast. Simply, sign up beside the Rich Uncles login with your email address and create a password.

Select the amount you wish to invest in an individual, joint, retirement or trust account.

rich uncles account types

Choose whether you wish to receive your dividends in cash deposited to your bank or reinvested monthly.

Provide your social security number or business EIN, review the legal terms, connect your bank account and sign documents online.

From start to finish, we found the process easy to follow, intuitive, and fast with no hiccups along the way, from connecting a bank account to providing authorization and executing documents.

Is Rich Uncles A Good Investment?

Although no investment is guaranteed, Rich Uncles performs extensive due diligence on each property. The step by step of precisely how Rich Uncles conducts its vetting process is not outlined, but the standard steps include:

Research Performed By Rich Uncles
Preliminary title report
Interior & exterior inspection reports
Tenant payment history & lease details
Detailed financial pro forma & return estimates
Visualizations of income, appreciation, and total returns
Property valuation & comparables
Major repair cost estimates, if applicable

What Are Rich Uncles Approved States?

Based on the Rich Uncles prospectus, a snapshot of the properties in the Rich Uncles I portfolio is featured below and shows heavy exposure geographically to California and to the retail sector.

Tenant Location Property Type
Chase Bank California Retail
Great Clips California Retail
Chevron Gas Station California Retail
Levins California Industrial
Chevron Gas Station California Retail
Island Pacific Supermarket California Retail
Dollar General California Retail
Rite Aid California Retail
PMI Preclinical California Retail
EcoThrift California Retail
GSA (MSHA) California Office
PreK Texas Retail
Dollar Tree California Retail
Dinan Cars California Retail
Amec Foster California Office
Solar Turbines California Office
ITW Ripley California Industrial
Dollar General Texas Retail
Gap Rocklin California Office

According to its prospectus, Rich Uncles had spent approximately $181,000,000 acquiring properties as of March 31, 2018.

Other properties owned by Rich Uncles have broader nationwide coverage with states featured including:

  • CA, CO, CT, GA, HI, ID, IL, IN, KY, LA, MT, NH, NV, NY, SD, TX, UT, VT, WI, WY

Why Commercial Property?

Commercial property tenants are subject to triple-net lease terms that transfers the obligation of taxes, maintenance, and insurance to the tenants.

The advantage of commercial properties is that brand name tenants, such as Chase Bank, FujiFilm, Wyndham, Harley Davidson and Williams Sonoma, are clients and they are less likely to default on rental payments than would be the case for a residential tenant.

Rich Uncles focuses on a wide range of commercial properties, including retail, office, and even gas stations.

rich uncles commercial properties

Another attractive feature of Rich Uncles REITs is nationwide locations that provide geographic diversification.

Plus, they act as an inflation hedge and offer an investment opportunity that is uncorrelated with the stock market.

Commercial Property Features YES/NO
Tax benefits
Tangible asset
Inflation hedge
Cash flow from day one
Uncorrelated to stock market
Investment portfolio diversification
Passive income
Buy with leverage

Rich Uncles At A Glance

Rich Uncles is a REIT so you don’t own property per se but rather shares in an entity that owns the property. No 1031 exchanges are permitted.

Minimum Investment $500
Secondary Market Limited
Property Type Commercial Property
Pre-Vetted YES
1031 Exchange NO
Do You Own Property? NO
Offering (Preferred) Equity
Term Length 4-7 years
(average, not guaranteed)

Rich Uncles Pros and Cons

Rich Uncles has a low minimum to get started and pays monthly dividends which is attractive for investors seeking regular cash flow but fee transparency could be improved.

Rich Uncles Pros Rich Uncles Cons
Low Investment Minimum: You can get started for just $500. Illiquid Investments: Rich Uncles will repurchase shares monthly but also states that “you must be prepared to hold your shares for an indefinite length of time” which suggests liquidity is limited.
Monthly Dividends: Dividends are paid each month from rental income and may be received in the form of cash deposits or reinvested. Geographic Exposure: While Rich Uncles has broad (though not full) nationwide coverage, heavy exposure to the retail sector is noteworthy in some investment offerings, such as Rich Uncles I.
Non-Accredited Investors Permitted: You don’t need to have the income and net worth requirements of an accredited investor to gain exposure to commercial real estate. Rich Uncles SEC Investigation: From our research the company was scrutinized for its radio ads. If so, it’s not much cause for concern because the company suspended them.
Comparatively Low Debt Exposure: Rich Uncles limits LTVs to 50% in order to lower the leverage associated with any purchase.
Nationwide Coverage: To maximize portfolio diversification, Rich Uncles features properties mostly nationwide.
Non-U.S. Residents: U.S. residents as well as foreign investors are eligible to invest with Rich Uncles.
Hands-off Investing: Unlike some online real estate portals, such as Roofstock, which requires you to buy a property and has associated responsibilities, Rich Uncles will source, own, manage, and operate properties.
Triple-Net Lease Terms: Rich Uncles operates triple-net lease terms with tenants so they are responsible for tax payments, insurance, and maintenance.
Highly Rated Tenants: Rich Uncles leases to well-respected tenants, including major corporations and respected brand name firms.
Zero Standard REIT Fees: Typical REIT fees are eliminated with Rich Uncles for lower overall expense ratios because Rich Uncles relies on technology and online marketing to lower traditional capital acquisition costs.
A+ Rating: Better Business Bureau awards Rich Uncles an A+ rating.

 

Rich Uncles Account Types

Type Capability
Individual YES
Retirement YES
Joint YES
Trust YES
Entity YES

Rich Uncles Fees

Only two types of fees generally affect investors, Share Repurchase Fees and Organization & Operational Expenses. If an investment goes really bad, a liquidation fee may apply.

Share Repurchase Fees 

The longer you hold your shares the better off you will be. If you buy shares of a Rich Uncles REIT and sell those shares back within three years of initial purchase, you will be subject to a 1-3% fee depending on the duration of your holding.

If you hold your shares for less than a year, you will incur the maximum repurchase fee of 3%. Holding shares for more than one year but less than two will result in a repurchase fee equal to 2%. And holding for more than two years but less than three years will result in a 1% repurchase fee.

Operational Expenses

When you buy shares, 97% of your money is used to buy real estate while the remaining 3% is used to pay Rich Uncles, LLC for managing the REITs.

Although 3% is taken out immediately, you still receive dividends on 100% of your invested amount.

Liquidation Fee

Given that the most recent Rich Uncles launch has been a $1 billion offering, the likelihood of a liquidation fee being applied is low.

Nevertheless, it is technically possible that a liquidation event could occur from the sale of properties, a public listing, or a merger with another company.

In such a scenario, investors may be subject to a 30% fee on the increase in share value at that time.

Some other fees are charged by the advisor, Rich Uncles LLC, to the REITs (e.g. Rich Uncles NNN REIT) but none are passed on to investors, and Rich Uncles LLC has waived them since inception.

Rich Uncles Reviews Summary

Rich Uncles earns high marks for making it easy for any investor worth $250,000+ or earning at least $75,000 a year to gain exposure to a geographically diversified portfolio of commercial real estate.

For just $500, you can get started and earn passive income monthly with the added attraction that Rich Uncles commits to delivering 7% in annual dividends to investors.

Whether an individual, married, or looking to invest as part of an entity or trust, Rich Uncles caters to all and promises to save you 10% by cutting out middlemen, such as broker dealers who would otherwise earn commissions that hurt your returns.

However, Rich Uncles loses a few points when it comes to transparency, both with respect to fees and vetting of properties. Although the company is SEC registered, no third party oversight is in place that we could determine to spotlight total fees because it is not a publicly traded REIT, so it is best to consult a financial advisor to ascertain the suitability for your own circumstances.

Bonus Section: How Leverage Works

Imagine a property costs $1,000,000 and you used $100,000 of your own cash to buy it and borrowed $900,000 from the bank.

If the property value declined by just 10% from $1,000,000 to $900,000, your entire cash investment, the equity, would be wiped out.

In essence, you would have lost 100% of the money you invested.

On the flipside, if the property value rose just 10%, you would end up almost doubling your money after factoring in interest costs because the property would appreciate to $1,100,000 and you could pay back the bank $900,000 plus interest and keep the rest – almost $200,000 – for yourself.

Bonus 2: How Do REITs Work?

REITs are investment vehicles that pool investors’ capital with a view to gaining exposure to a broader real estate basket than would be possible if investors purchased separately.

REITs are commonly used to purchase commercial and large residential properties, including office, industrial, and retail spaces.

REITs generally fall into three categories:

REIT Type Description
Equity
  • Hold equity stakes in properties
  • Leases space to tenants
  • Buys property at discounted prices if possible
Mortgage
  • Invests in mortgages (not properties directly)
  • Earns interest on loans
Hybrid
  • Combines features of equity and mortgage REITs

When you invest with Rich Uncles, you are buying shares in a private equity REIT (as opposed to a publicly traded REIT).

The article Rich Uncles Review 2020 – Invest In Commercial Real Estate For $500! was originally posted on Investormint

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LendingHome Review 2020 – High Yield Real Estate Investing https://investormint.com/real-estate/lendinghome-review https://investormint.com/real-estate/lendinghome-review#disqus_thread Fri, 18 Jan 2019 15:23:37 +0000 https://investormint.com/?p=4984 LendingHome is an online marketplace connecting real estate borrowers and accredited investors.

The article LendingHome Review 2020 – High Yield Real Estate Investing was originally posted on Investormint

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lendinghome review

InvestorMint provides personal finance tools and insights to better inform your financial decisions. Our research is comprehensive, independent and well researched so you can have greater confidence in your financial choices.

LendingHome began with a lofty ambition to offer borrowers the best way to apply for a mortgage and to provide the best way for investors to get exposure to real estate.

To realize its vision, LendingHome built a technology-enabled marketplace that connects borrowers and investors. For borrowers, the platform makes it easier and faster to get access to financing by going beyond traditional credit and valuation analysis. And investors enjoy a hands-off experience while accessing high quality mortgage products.

When borrowers need bridge loan for a short time period for a fixer-upper or to flip a home, investors can earn yields from 6% to 12% annually. And investors can take some comfort knowing that LendingHome uses its own capital to fund loans which it then re-sells to institutions and individual investors in the form of “platform notes.”

How successful has LendingHome been so far? The company has funded approximately $2 billion in loans and returned about $1 billion to investors in interest and repaid principal.

But before taking the plunge to invest with LendingHome, what else do you need to know?

LendingHome Spotlight

LENDINGHOME SPOTLIGHT

lendinghome logo

InvestorMint Rating

4.5 out of 5 stars

  • Annual Returns: 6% → 12%
  • Minimum Investment: $50,000
  • Passive Income Opportunity: YES
  • Accredited Investors Only: YES

via LendingHome secure site

Why Choose LendingHome?

LendingHome provides investors with access to real estate opportunities that have short durations of 12 months, high yields, and earn interest on day one.

If you are an accredited investor looking for exposure to the real estate sector yet want to avoid the nitty gritty details ordinarily associated with investing in property, then LendingHome provides a way to benefit without having to roll up your sleeves and do the hard work.

Accredited investors who purchase “platform notes” are entitled to the cash flows from a specific mortgage. If you want to make a one-time investment manually, the minimum investment per loan you select is $5,000 but that threshold is reduced to $2,500 if you choose to put your investing on auto-pilot using the Auto-Invest feature.

These platform notes give investors an attractive mix of high yields, high liquidity, diverse geographic and deal exposure, and high security.

Platform Notes Features Description
High Yield
  • Net of servicing fees, the historical weighted average rate is 8.75%.
Liquidity
  • The average maturity is 7 months while loan terms are for a 12 month duration.
Diversity
  • Loans are available in 25 states
  • If you invest manually, the minimum is $5k per note.
  • If you choose to auto-invest, the minimum is $2,500.
Security
  • Out of 7,300+ loans issued, 8% were delinquent by 60 or more days while historical losses were under 0.01%.
Risk
  • LendingHome is prepared to own a portion of any loan or all of it in the event that accredited investors don’t fully fund it.

A standout feature of investing with LendingHome is that you earn interest from the very start.

Unlike some other online real estate platforms that require an investment opportunity to become fully funded first, LendingHome funds each loan with its own capital before offering it to investors – so you start earning interest from the first day you invest.

And as an investor you can take some comfort knowing that borrowers stand to lose a significant amount of equity before the loan is negatively impacted because the weighted average loan-to-value is 72%.

Keep in mind however that while LendingHome’s underwriting is secured by the underlying residential property, platform notes are not secured

lendinghome home value

LendingHome Highlights

  • Interest Earned: From Day 1
  • Weighted Average Loan-to-value: 72%
  • Geographic Diversification: Over half of all U.S states
  • Property Type: Residential

How Does LendingHome
Screen Borrowers?

LendingHome makes it easy for borrowers to apply for financing 100% online yet conducts thorough screening to ensure they can cover down-payment costs, upfront fees and meet required credit standards.

Following the fallout of the housing crash in 2008-9, lenders who screen borrowers more thoroughly do both themselves and their customers a favor by preventing excess leverage.

But historically one of the problems borrowers have had to face is a mountain of paperwork and bank bureaucracy, resulting in higher fees.

LendingHome looks to do away with offline hassles and transfer the process fully online. That means all documents are uploaded to an online dashboard and LendingHome integrates directly with your financial accounts to pull documents for you.

Unlike the phone tag games borrowers typically play with bank personnel, you don’t have to speak to anyone if you don’t want to at LendingHome because all communication is done via email or chat.

You also don’t have to pursue a bank employee to give you a status update of where you sit in the process of securing financing because a customized online dashboard lets you know.

The due diligence LendingHome conducts on borrowers includes:

Borrower Research Checked By LendingHome
  • Bank statements for past few months to show you can cover closing costs and down payment.
  • Documentation of your assets, such as retirement accounts and investment statements.
  • Income documentation such as W-2 or K-1 forms.
  • Purchase contract with sales price and terms.
  • Borrower specific documentation such as homeowners insurance.
  • Evidence that you can cover the cost of a home appraisal.
  • Evidence to show you can cover upfront costs like title, insurance, and inspection fees.

LendingHome Review:
How Much Can I Earn?

Investors can earn annual yields between 6% and 12% approximately, with higher yields paid on loans issued to higher risk borrowers.

LendingHome provides short-term financing to borrowers who need a bridge loan to finance a property rehab or flip.

These are some actual refurbishments completed by LendingHome borrowers.

lendinghome refurb before and after

By examining how much transactional experience a borrower has and the loan-to-value ratio, as well as other factors such as local market conditions, property types, foreclosure laws, and personal guarantees, LendingHome assigns borrowers to a risk category.

Each loan originated is assigned a risk grade which influences how much a borrower pays, and in turn correlates with how much an investor earns.

The net rates of return investors can expect to earn based on risk grades are listed below:

lendinghome return on investmentSource: LendingHome

With such attractive investor yields, you might be wondering how LendingHome makes its money?

The company takes a servicing fee which amounts to 10% of the coupon the borrower pays. For example, if a borrower pays 9% then LendingHome will keep a servicing fee of 0.90%.

How Does The
AutoInvest Program Work?

To invest automatically in real estate, a minimum $2,500 commitment is required by LendingHome, which will take on the responsibility to generate income for you as frequently as possible.

If you want to put your investing on auto-pilot, you can do so easily by choosing the LendingHome AutoInvest program.

The minimum amount required to invest in the program is $2,500 and it provides the same diverse exposure and liquidity as investing manually – where the minimum threshold is $5,000.

You have three choices when you choose to auto-invest but regardless of which you select, LendingHome takes on the responsibility of keeping your money invested and generating income for you as often as possible.

lendinghome autoinvest programs

What Are The Benefits of
Real Estate Investing?

When you invest with LendingHome, your risk is more diversified compared to investing by yourself, and your investment is uncorrelated with the stock market.

If you were to invest in property by yourself, you would need a lot more capital than the $50,000 minimum needed to get started with LendingHome.

But worse still, your entire investment would be locked into a single real estate deal whereas you can spread your money across lots of deals when you invest via the LendingHome platform.

By going solo, you also need to roll up your sleeves so to speak and source investment opportunities, trudge through legal paperwork, verify title deeds are in order, and so on. All of those hassles are avoided and you get the added benefit of instant interest earnings with LendingHome.

Single-Family Home Features YES/NO
Inflation hedge
Cash flow from day one
Uncorrelated to stock market
Investment portfolio diversification
Passive income
Buy with leverage

LendingHome Snapshot

Investments are pre-vetted and pre-funded because LendingHome acts as a direct investor in loans, and then re-sells loans to institutions and accredited investors.

Account Fees 1.00% → 2.50%
Property Type Residential
Pre-Vetted YES
Pre-Funded YES
Term Length Up to 1 Year
1031 Exchange NO
Do You Own Property? NO
(you own platform notes)

LendingHome Pros and Cons

LendingHome deals are pre-vetted and pre-funded, offer high yield potential and high liquidity, and earn interest from day one, but the minimums are high and deals are only available to institutions and accredited investors.

LendingHome Pros LendingHome Cons
Earn Interest Day One: When you invest with LendingHome, you start earning interest from the very first day. High Investment Minimum: A $50,000 minimum is required to invest on the platform though you can spread your money across many deals.
Spread Your Risk: You can diversify your money across a lot of investment opportunities in dozens of states to avoid concentrated risk when investing solo. Accredited Investors Only: If you don’t meet the income or net worth requirements associated with being an accredited investor, you will be restricted from investing.
High Liquidity: Real estate investments are notoriously illiquid but LendingHome limits terms to no more than 1 year so investments are more liquid than if they were tied up in a solo project. Unsecured Notes: As an investor, you will purchase platform notes which are not secured but loss rates below 0.01% should bring some comfort that LendingHome has a solid process to originate high quality loans.
Pre-Vetted & Pre-Funded: LendingHome conducts all due diligence and directly funds and originates all loans. Tax Rates: Interest income is generally taxed at ordinary income tax rates so you won’t benefit from lower tax rates as you would from long-term stock market investment gains.
Invest On Auto-Pilot: If you want to be 100% hands-off you can select the Auto-Invest program which has a minimum threshold of $2,500 to get started.
High Yields: Investors can earn high yields between 6% → 12% because loans issued are for shorter durations.
Risk Customized Investments: If you are a conservative investor, you can select lower yielding investments that are more aligned with your risk tolerance.
Almost $2 billion in loans funded: LendingHome has issued almost $2 billion in loans and returned approximately $1 billion in interest and repaid principal to investors so you can be confident it has a proven business model.

Related: RealtyShares Vs Fundrise Review

LendingHome Account Types

Type Capability
Taxable YES
IRA YES

LendingHome Review Summary

If you are an accredited investor seeking exposure to the real estate sector but don’t want to roll up your sleeves to find a deal, source tenants, and go through the legal and financing hassles then LendingHome has much to offer.

By re-imagining the borrowing process from the ground up, LendingHome has created a 100% online process that sidesteps the delays and headaches usually experienced by borrowers.

For property buyers looking to fix or flip real estate, LendingHome provides short-term financing more simply than traditional funding sources, and this translates to attractive yields for investors over a period of one year or less.

Once investors meet the minimum $50,000 required to invest, they can access a diversified range of properties across the U.S. and invest via taxable or self-directed IRA accounts.

Keep in mind that tax treatment of gains is unlikely to be as favorable as those enjoyed in the stock market from long-term buy-and-hold positions but, on the flipside, real estate investments are not correlated with the stock market.

The bottom line is if you want a passive income stream from the real estate asset class with attractive returns earning interest from day one and no-hassle, LendingHome is hard to beat.

The article LendingHome Review 2020 – High Yield Real Estate Investing was originally posted on Investormint

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RealCrowd Review 2020 – Invest In Commercial Real Estate https://investormint.com/real-estate/realcrowd-review https://investormint.com/real-estate/realcrowd-review#disqus_thread Thu, 17 Jan 2019 13:21:21 +0000 https://investormint.com/?p=4199 RealCrowd is an online real estate crowdfunding platform that connects accredited investors with qualified real estate sponsors.

The article RealCrowd Review 2020 – Invest In Commercial Real Estate was originally posted on Investormint

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realcrowd review

InvestorMint provides personal finance tools and insights to better inform your financial decisions. Our research is comprehensive, independent and well researched so you can have greater confidence in your financial choices.

If you want to invest in commercial real estate but don’t have the capital to buy a commercial investment property, sufficient credit to take out a large loan, or the inclination to operate a property, this RealCrowd review might be exactly what you have been looking for to get started.

RealCrowd is an online marketplace platform connecting accredited investors with qualified real estate sponsors. It is free to investors and provides a new pool of capital to real estate companies.

Unlike other real estate crowdfunding platforms, RealCrowd doesn’t actually own or operate properties, so you won’t be charged an ongoing management fee by the platform.

Think of RealCrowd simply as a way for accredited investors to spot commercial real estate investment opportunities at no cost and for real estate companies to access capital through another channel other than a bank or a private personal network.

With over 20,000 investors served, over $2.2 billion transactions, and 55 validated sponsors, RealCrowd has earned its position as a leading crowdfunding platform that can provide an attractive alternative to stock market investing.

RealCrowd Spotlight

REALCROWD SPOTLIGHT

realcrowd logo

InvestorMint Rating

4 out of 5 stars

  • Cost To Investors: None
  • Passive Income Opportunity: YES
  • Access To Commercial Real Estate: YES
  • Access To Non-Accredited Investors: NO

via RealCrowd secure site

Why Choose RealCrowd?

RealCrowd is free to investors and provides sponsors an alternative funding source beyond traditional banks and their own networks.

RealCrowd provides significant value to both accredited investors and qualified real estate sponsors.

INVESTORS

The most obvious benefit to investors is RealCrowd is free. If you want to browse commercial real estate opportunities, you can do so at no cost whatsoever.

Beyond attractive pricing, RealCrowd does the hard work of vetting sponsors. To be accepted by RealCrowd, a sponsor must have sufficient transactional history and experience to pitch a deal.

Sponsors fall into one of three tiers:

Sponsor Type Transactional History Principal Experience
Rising Sponsor $25,000,000+ 5 years
Established Sponsor $50,000,000+ 10 years
Elite Sponsor $1,000,000,000+ 25 years

As you can see, the hurdle is high to qualify as a sponsor. By establishing such high thresholds, investors can have more confidence that sponsors have a track record of success and the experience needed to navigate commercial real estate deals successfully from start to finish.

Another attractive feature of the marketplace platform is that the deals on offer are exclusive, so if you want in on an investment opportunity, you can only access it via RealCrowd.

A further benefit is that real estate investing offers some significant advantages when compared to alternative investment opportunities, such as stocks, bonds, and cash or savings.

realcrowd investment comparison

SPONSORS

Approximately 55 sponsors have been approved by RealCrowd, so it is an exclusive group and a significant badge of honor to be accepted and approved to pitch deals.

Once you’re in, it’s not all smooth sailing because the only way to kick off with an investment is if the property deal you pitch gets fully funded.

Similar to Kickstarter, or other crowdfunding platforms, partial funding is not sufficient to earn the green light to move forward with a project.

You won’t receive any capital unless the entire funding requirement is met.

However, when you compare to the old school method of raising capital by tapping into your personal network or getting a loan from a bank, the opportunity to raise money is significantly less cumbersome.

RealCrowd makes it clear to sponsors that you should not view the platform as a lender of last resort. The idea is to prevent real estate sponsors from approaching RealCrowd investors for funding only after a traditional funding source, such as a bank, has been unsuccessful.

On the plus side as a sponsor, you get to do more deals, build your brand, and access more capital using RealCrowd.

RealCrowd Highlights

  • Low-cost Access To Commercial Property Investments
  • Direct Access To Sponsors: Connect directly with deal sponsors
  • Geographic Diversification: Nationwide
  • Property Diversification: multifamily, retail, office, industrial, development & fund

How RealCrowd Works

After you sign up, your accredited investor status will be verified and thereafter you can review real estate investment opportunities, review and execute documents online, and connect directly with sponsors to transfer funds.

Historically, only pension funds and institutions had free access to commercial real estate deals, but RealCrowd has a mission to transform the real estate industry by making it equally easy for accredited investors.

The way it works is simple.

Step one, you create an investor profile. Your accredited investor status is verified after this step, and it is used to fill the real estate company’s subscription documents.

To securely automated certification at no cost to you, RealCrowd partners with VerifyInvestor.com.

When your investor profile is selected, you will be directed through the VerifyInvestor.com process.

In the penultimate step when your certification is approved, you will receive subscription documents to your inbox for review and signature online.

Once you are on the website, you can browse through listings and find commercial real estate opportunities that appeal to you.

realcrowd properties

Finally, when the documents have been executed, you will receive funding instructions from the real estate company so you can send capital directly to their account.

>> Compare RealCrowd Vs Fundrise

What Is Your Money Invested In?

Investment opportunities are in the form of office, retail, multi-family, industrial or fund.

RealCrowd deals in commercial real estate opportunities that average just under $30,000,000 with a range from $15,000,000 to $150,000,000.

Your money is never invested in single-family home or house flipping investments.

Generally, the highest-income producing assets are targeted, including:

  • Office
  • Retail
  • Multi-family
  • Industrial

Some real estate companies offer funds that package investments to make it easier to diversify.

When you compare the earning potential from real estate opportunities versus stocks and bonds, you can see the annual income produced on a $1,000,000 investment is comparatively attractive:

realcrowd income comparison

RealCrowd Snapshot

RealCrowd is free to investors who want access to commercial and residential real estate investment opportunities and supports self-directed IRA property investments that last anywhere from 1 to 10 years with nationwide coverage.

Investor Fees $0
Investment Categories Commercial, Residential
Locations Nationwide
Pre-vetted YES
Accredited Investors Only YES
Term Length 1 → 10 years
Open To Non-US Residents Depends on Sponsor
Tax Information View RealCrowd Dashboard
1031 Exchange YES

RealCrowd Pros and Cons

RealCrowd investors enjoy geographic diversification and the potential for passive income but money is tied up for long periods.

RealCrowd Pros RealCrowd Cons
Low Cost: RealCrowd is 100% free for investors to browse and invest in commercial and residential investment opportunities. The process to certify that you are an accredited investor is also free. High Investment Minimum: A minimum investment of $25,000 to $50,000 is generally required.
Pre-Vetted Sponsors: RealCrowd demands sponsors have significant experience both in the volume of transactions completed and years of experience. Accredited Investors Only: If you don’t meet the minimum salary or net worth hurdles of $200,000 in annual income or $1,000,000 in net worth exclusive of a primary residence then other private equity real estate investment platforms, such as Realty Mogul, may be a better fit.
Access to Commercial Real Estate: For comparatively low cost, investors have access to commercial real estate investment opportunities that were previously the domain almost exclusively of pension funds and institutions. Illiquid Investments: Your money will generally be tied up for anywhere from one to ten years because no secondary market exists to cash in on your investment, so make sure only cash you do not need for a long period is invested.
Diversified Real Estate Investments: Investment opportunities span the entire nation, and some sponsors package real estate investments into funds for broader diversification. Tax Considerations: Your tax documents will be posted online and you may need to file additional forms during your annual tax filing when you invest in a RealCrowd property offering.
Taxable & Retirement Accounts: Whether investing with post-tax dollars in a taxable account or pre-tax dollars via a self-directed IRA, RealCrowd caters to your account type preference.
Passive Income: If you are looking for passive income away from more traditional stock and bond investing, RealCrowd investment opportunities provide the potential for cash flow via exclusive deals.

RealCrowd Account Types

Type Capability
Taxable YES
IRA YES

RealCrowd Summary

RealCrowd is an online real estate crowdfunding marketplace that connects accredited investors with real estate companies who need capital for investment opportunities.

Unlike some other real estate crowdfunding platforms, RealCrowd is free to investors, who can browse pre-vetted investment opportunities that span anywhere from one to ten years in duration, and cover all U.S. regions.

It is possible to invest both via traditional taxable accounts as well as through self-directed IRAs for maximum tax benefit.

Generally, investment opportunities are available only to U.S. investors, though it is up to the discretion of real estate sponsors if non-U.S. investors are permitted, and you can connect directly with sponsors to enquire about this or any other concern you may have.

For non-accredited investors, Realty Mogul may be a better bet if you wish to gain exposure to real estate opportunities at lower cost than would be otherwise possible.

Keep in mind too that your money will be tied up for quite some time in an illiquid investment that cannot be encashed, so use only money that you will not need to dip into to pay imminent bills or expenses.

The article RealCrowd Review 2020 – Invest In Commercial Real Estate was originally posted on Investormint

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Accredited Investors > Earn Monthly Income with EquityMultiple (Review) https://investormint.com/real-estate/equitymultiple-review https://investormint.com/real-estate/equitymultiple-review#disqus_thread Wed, 07 Nov 2018 18:41:18 +0000 https://investormint.com/?p=6897 EquityMultiple is an online real estate investment platform aimed at accredited investors who want access to commercial real estate opportunities. The investment minimum is higher than charged by some rivals. Both debt and equity investments are offered.

The article Accredited Investors > Earn Monthly Income with EquityMultiple (Review) was originally posted on Investormint

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equitymultiple review

InvestorMint provides personal finance tools and insights to better inform your financial decisions. Our research is comprehensive, independent and well researched so you can have greater confidence in your financial choices.

In this EquityMultiple review, we check out the pros and cons of one of the leading online real estate crowdfunding platforms.

The first thing to note is EquityMultiple is only available to accredited investors who meet the benchmark eligibility levels: $200,000 of income over two prior consecutive years or $1,000,000+ in net worth excluding a primary residence.

If you are one of the lucky few who falls into the accredited investor category, you may be tempted to purchase commercial property outright. But then you would have to deal with the hassles of managing and maintaining it.

Another option is to choose a passive income investment that could possibly put money in your pocket monthly or quarterly. And that’s where EquityMultiple can offer significant value.

But before investing, what else do you need to know?

EquityMultiple Spotlight

EQUITYMULTIPLE SPOTLIGHT
equitymultiple logo

InvestorMint Rating

4 out of 5 stars

  • Passive Income Opportunity: YES
  • Access To Commercial Real Estate: YES
  • Accredited Investors Only: YES
  • Minimum Investment: $5,000

via EquityMultiple secure site

What Is EquityMultiple?

EquityMultiple is an online real estate crowdfunding platform that connects investors in search of income-generating opportunities in the property sector with pre-vetted investments from experienced sponsors looking to raise capital for deals, and experienced private lenders looking to syndicate existing commercial real estate loans.

As an investor, you can allocate your money to both equity, preferred equity, and senior debt investments.

equitymultiple higher upsideGenerally, EquityMultiple targets commercial real estate opportunities but you can still get started for as little as $5,000.

Sponsors who are looking to raise capital for deals are screened by EquityMultiple to ensure they come to the table with a history of transactional experience.

The EquityMultiple team reviews Sponsor proposals and has extensive experience in vetting deals – combined, the EquityMultiple team and its partners have closed over $70 billion in real estate transactions and completed $300+ million in deal value.

Why Choose EquityMultiple?

For both investors looking to earn returns on savings and Sponsors looking to raise money for deals, EquityMultiple has much to offer.

Predictable Income

You have no shortage of online real estate platforms to choose from these days so, as an investor, why choose EquityMultiple?

Almost exclusively, EquityMultiple focuses on commercial properties, such as office, retail with corporate tenants, and multifamily.

For conservative investors who like to be hands-off, the idea of earning income from corporate tenants can be very appealing.

It beats sourcing deals, working with banks, and managing and operating opportunities by investing solo.

Plus, the predictability of a regular income stream is hard to resist.

The targeted returns:

Type of Investment Targeted APR To Investors Typical LTV Typical Term
Syndicated Debt 7 → 12% 50 → 75% 6 → 24 months

Syndicated debt deals create significant downside protection for investors because they are backed by a secured interest in properties, but upside is limited.

Type of Investment Targeted Current Preferred Return Targeted Total Preferred Return Typical Term
Preferred Equity 6 → 12% 10 → 14% 1 → 3 years

Preferred equity holders are senior to equity holders, meaning that if a project goes belly up, they will get paid before equity investors.

As a result, risk is mitigated somewhat while some upside is enjoyed too.

Type of Investment Targeted Annual Cash Return Targeted IRR Typical Term
Equity 6 → 12% 14%+ 3 → 7 years

Equity investors take on the biggest risk but, when things go well, they enjoy the greatest upside too.

What Are The Targeted Risk-Adjusted Returns?

EquityMultiple focuses on primary and secondary markets characterized by strong demand in underlying fundamentals.

Usually, EquityMultiple concentrates on stabilized projects as opposed to ground up entitlement plays.

All prospective deals are subjected to a comprehensive underwriting process before being presented to investors.

The targeted risk-adjusted returns for investors are:

Type of Deal Targeted Returns
Debt Deal 7 → 12% Net APR
Preferred Equity
  • 6 → 12% Net Current Preferred Return
  • 10 → 14% Net Total Preferred Return
  • 14%+ Net IRR

EquityMultiple Highlights

  • Low-cost Access To Commercial Property Investments.
  • Geographic Targets: Primary & Secondary Markets Primarily
  • Targeted IRR Returns: Double-digit Percentage Returns

How EquityMultiple Works

equitymultiple harvard heights multifamilyAfter registering on the platform, you can view live offerings and review investment details that match your financial goals.

Once you’ve found an investment, you can link your bank account to fund and receive distributions.

You will be invited to e-sign investment documents, verify your accreditation status, and fund your investments.

Subsequent to closing, you can track your investment’s progress on the portal at any time.

What Is Your Money Invested In?

Most deals available through EquityMultiple come from its network of Sponsors and Lenders.

The extensive network of contacts and some of the deal flow EquityMultiple enjoys is driven in part by its partnership with Mission Capital, which has extensive real estate transactional experience that stretches into the tens of billions of dollars.

All the deals presented to investors are pre-vetted from experienced Sponsors and Lenders.

The focus is on commercial real estate, including:

  • Multifamily
  • Office
  • Retail
  • Industrial
  • Alternative & emerging asset class (e.g. student housing, manufactured home communities, and co-living spaces)
  • Mixed-Use

Professional real estate companies manage investments, including all aspects of the properties and business plans.

And unlike traditional, commercial real estate investments with high investment minimums that were mostly accessible in the past only to institutions, the minimum to get started is just $5,000 on the EquityMultiple platform.

EquityMultiple Snapshot

Fees (Equity) 0.5%-1.5% annual management fee plus 10% of profits after exit (after all investor principal has been returned)
Fees (Preferred Equity & Debt) 1%
Investment Categories Residential
Locations Primary & Secondary markets primarily
Pre-vetted YES
Accredited Investors Only YES
Investment Liquidity LOW
Term Length 6 → 84 months
Open To Non-US Residents NO
Tax Information K-1 tax forms issued
Invest Via IRA YES

All return projections presented on the platform are net of all fees.

What Fees Does
EquityMultiple Charge?

EquityMultiple charges an annual management fee to equity investors of 0.50%-1.50% plus 10% of investor profits after exit (after all investor principal has been returned)

EquityMultiple
Pros and Cons

EquityMultiple Pros EquityMultiple Cons
Experienced Team: Together with Mission Capital, transactional experience stretches into the tens of billions of dollars. High Investment Minimum: A minimum of $5,000 is required to invest – which is a lot lower than investing in commercial real estate solo but higher than some competitors like Rich Uncles.
Pre-Vetted Sponsors: All the deals presented to investors are pre-vetted and originate from experienced sponsors and lenders. Accredited Investors Only: You must be an accredited investor to be eligible to invest.
Access to Commercial Real Estate: Compared to investing solo, EquityMultiple simplifies the process of accessing commercial real estate. Illiquid Investments: Your capital will be tied up for anywhere from 6 months → 7 years typically and will be illiquid and inaccessible.
Diversified Real Estate Investments: Primary and secondary markets are targeted usually. From time to time, tertiary markets may be featured if they are backed by stabilized demand and strong demographic trends. Tax Considerations: Annual K-1 tax forms may increase your filing costs each year with Uncle Sam.
Passive Income: Income opportunities are available on a monthly and quarterly basis depending on the type of investment selected.
Multiple Investment Types: Equity, preferred equity, and debt investments are available to investors.

EquityMultiple Account Types

Type Capability
Taxable YES
IRA YES

EquityMultiple Summary

EquityMultiple is an online real estate crowdfunding platform that connects investors looking for commercial real estate opportunities with sponsors in need of capital.

Its partnership with Mission Capital means EquityMultiple can tap into a vast network of lenders and sponsors to source deal flow.

Generally, the deals target high rates of return and can be in the form of equity, preferred equity, or debt investments.

For hands-off investors looking for passive income, it’s definitely worth exploring further.

Conservative investors who are attracted more towards commercial real estate than residential real estate investments will also find EquityMultiple to be a better fit than some other online platforms.

Keep in mind that when you invest in any real estate platform, you will generally be classified as a partner and receive a flow-through of gains or losses, so the extra tax forms may increase your annual filing costs.

For retirement-oriented investors, EquityMultiple earns points for catering to self-directed IRAs.

If you browse the offerings and don’t find what you are looking for in terms of location, returns, or a match to your financial goals, other platforms worth checking out include Rich Uncles, Patch of Land, Fundrise, and RealtyMogul.

EquityMultiple FAQ

Who is Mission Capital and how do they relate to EquityMultiple?

EquityMultiple and Mission Capital are closely aligned. Some of Mission Capital’s management team funded EquityMultiple in the early stages.

Plus, principals at Mission sit on EquityMultiple’s board.

Can I invest through my self-directed IRA?

Yes. EquityMultiple partners with Millennium Trust to provide investments via self-directed IRAs.

If I am a non-US resident, can I invest?

No, you are not eligible to participate in offerings on EquityMultiple as a non-US resident.

What happens to my investment if a deal isn’t fully funded?

Every deal has minimum and maximum funding thresholds so when a deal falls short of the minimum level, your capital commitment is refunded.

The article Accredited Investors > Earn Monthly Income with EquityMultiple (Review) was originally posted on Investormint

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Airbnb Host Checklist: Essentials Template https://investormint.com/real-estate/airbnb-host-checklist-essentials-template https://investormint.com/real-estate/airbnb-host-checklist-essentials-template#disqus_thread Tue, 30 Oct 2018 09:21:10 +0000 https://investormint.com/?p=9293 A good Airbnb host checklist includes confirming guest bookings, professional cleaning, stocking supplies, verifying fire alarms and extinguishers, leaving guest notes, organizing keys, and following up with guest reviews.

The article Airbnb Host Checklist: Essentials Template was originally posted on Investormint

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airbnb host checklist

Investormint provides personal finance tools and insights to better inform your financial decisions. Our research is comprehensive, independent and well researched so you can have greater confidence in your financial choices.

Much like Uber, Airbnb offers an excellent way to make extra money to supplement your income.

By renting out your entire home, a room in your home, or an investment property, the opportunity to bring in supplemental cash is significant. This is especially true if you live in a desirable area, a popular tourist location, or a spot frequented by business travelers.

When setting up your Airbnb listing, you can set your nightly rates and show off the benefits of your property with flattering photos. Good descriptions that highlight access to transit and other amenities can also help to bring in satisfied customers.

After your guests leave, they will be invited to review your location and you, the host (you’ll also have the opportunity to review your guests). These reviews can help to drive attention and visits to your property, so maximizing your positive reviews is important for your hosting business.

You can get better reviews and make more money over the long term by following an Airbnb host checklist. The checklist below aims to help you to keep key points in mind as you put your best foot forward and build a profitable side business through Airbnb.

Airbnb Host Checklist:
Before Guests Arrive

Your Airbnb hosting experience will begin before your guests set foot in your property.

By taking the following steps before your guests’ arrival, you can make a great impression while being prepared for any unexpected events.

Airbnb Host Checklist: Confirm Booking

You’ll confirm the booking after a guest request comes in through the site. If you set up Instant Book, guests can book your property without your approval.

It’s important to note that you can set criteria to limit the guests who can use Instant Book for your property to those who have previous positive reviews from other Airbnb hosts.

If you’re more comfortable with reviewing each potential guest yourself, you can turn off Instant Book and receive rental requests directly.

Several days before your guests’ stay begins, reach out to provide them with information on how to get to the property and how keys will be exchanged.

You can also arrange to meet your guests when they arrive so that you can exchange keys and introduce them to your property in person.

Providing clear, responsive communication can play a big part in ensuring excellent guest reviews.

>> Related: How To Make Money Renting Your Home

Get Rooms Professionally Cleaned

If you’re hosting on Airbnb for the first time, you may want to bring in a professional cleaner to set the standard for your home.

Even if you clean yourself, however, you’ll want to achieve a professional level of quality.

A clean, inviting home can elicit positive guest reviews and inspire more bookings.

Airbnb allows you to include a cleaning fee as part of your rate, and it’s good to browse other local properties to see what they are charging for a cleaning fee.

airbnb bookable passions los angeles hardy

Airbnb Host Checklist: Store Valuables

As an Airbnb host, it’s also important to protect yourself.

Of course, trust is a big part of a successful Airbnb location. The vast majority of people renting an Airbnb want to save money on travel or enjoy the personal conveniences of a home rather than a hotel.

At the same time, you should make sure that any personal possessions are protected by keeping them in a locked room or safe. These items include electronics like laptops, identification items like passports or ID cards, any cash or credit cards, valuable jewelry, and prescription medication.

>> Related: Protect Yourself with Lemonade Insurance

Airbnb Host Checklist: Stock the Fridge

Despite the “bed and breakfast” aspect of the Airbnb name, hosts aren’t under any obligation to provide food to guests.

If your Airbnb includes a kitchen, however, keeping staple items like salt, pepper, ketchup, mustard, oil, and butter on hand.

Offering coffee and tea options is often highly appreciated and helps guests to feel comfortable and at home.

Providing dishwasher detergent is also a good idea because doing so can help cut down on your cleaning burden later on.

Place Fresh Towels in Bathrooms

Fresh hand and bath towels can make a big difference to your guests. Make sure you have enough for all of your guests as well as extras available.

Stocking up on well-made but inexpensive towels can help to add a feeling of abundance to your Airbnb.

By providing matching sets or stocking up on towels of the same color, you’ll give your property a professional look.

airbnb welcome

Check That Soaps and Shampoos Are Stocked

Many Airbnbs provide guests with what the site calls “Essentials,” which include items like soap and shampoo.

There are a few ways that you can handle personal care products for your Airbnb.

Some hosts collect small personal items from hotels when they travel and leave them out for guest use.

Others simply leave out regular retail-sized bottles of shampoo, conditioner, and body wash without changing them between guests. If you go with this route, be sure to wash the bottles and make sure that they are sufficiently full before your next guest arrives.

Verify That Fire Extinguishers and Alarms Are Working

Safety first!

If you’re hosting guests, it’s important to make sure they will be safe.

Test your fire alarms and extinguishers to be prepared in case of an emergency.

Leave reminder notes for guests to turn off gas stoves used for cooking.

Write an Introductory Note for Guests

This is an optional step, but many hosts strive to provide a personal touch.

Your introductory note can simply be a handwritten note card or a printed document with important information about the location.

It can also advise guests about how to discard trash or handle other tasks that might be important for your property.

>> How To Make Money Renting Your Home

Airbnb Host Checklist: Leave a Key for Guests

You’ll want to make sure that you have an extra key for your guests.

Even if you’re sharing a private room in your main residence, it’s important for guests to have the freedom to come and go.

This is one reason why many Airbnb hosts use electronic keypad locks, especially once they’ve been in business for a while.

With these types of locks, each guest can receive a code that is immediately deactivated after his or her stay.

If you don’t have an electronic lock, simply provide a physical key for guests to use.

It’s important to make sure that you keep keys of your own so that you can get into the property if a guest accidentally loses a key or locks themselves out.

airbnb give a key

Welcome Guests When They Arrive

One of the benefits of Airbnb is the personal touch.

By personally meeting and welcoming your guests, you can help to boost your reviews.

People will associate your home with a friendly face and potentially feel a greater responsibility toward your home than they would with a colder, more impersonal interaction.

Airbnb Host Checklist: When Guests Leave

The Airbnb host’s work isn’t done when guests leave!

In fact, it is the ideal time to prepare for the next guests to come.

By keeping your Airbnb property in guest-ready mode, you’ll be primed to accept bookings at any time.

Send a Message to Guests Confirming Checkout Time

On the day of your guests’ departure, send them a message before it’s time to check out in order to go over any information they need to know.

If they need to put keys in a particular location, instruct them where it is.

If you’re planning to meet them to pick up the keys, let them know the specific time they should be ready to go.

Airbnb Host Checklist: Collect Keys

Whether it’s from the guest directly or through a lockbox, mailbox, or deposit box, make sure to get your keys back.

Of course, you’ll have your own keys, but you want to ensure that your home is secure by having all guest keys in hand as well.

Inspect the Property to Be Sure There’s No Damage

After your guests leave, check your items and property for any signs of damage.

You can inspect linens for stains and spills, but also check to make sure that your electronics and appliances are functioning properly.

You’ll want to ensure that all of your valuable items are still present and in the proper place as well.

If you do find damage, you can follow up with Airbnb’s claims process to seek reimbursement. It’s important to have “pre-stay” photos available to illustrate the extent of the damage.

airbnb living room

You Might Like >> Real Estate Investing For Dummies

Thank Guests and Request a Review

Assuming all went well, as it does in the vast majority of stays, you can send your guests a message thanking them for the stay and reminding them that they can leave a review at the Airbnb site.

Leave a Guest Rating

You can also leave an honest review of your guests for future hosts to see.

The guest will not be able to see your rating for 14 days or until they leave a review for you, whichever comes first.

After two weeks, Airbnb’s review period closes.

Clean Towels and Linens

After your guests leave, it’s time to get back in shape for your next Airbnb booking.

Thoroughly wash and dry your towels and linens and get them back in place for the next potential guest.

By sticking with matching sets and coordinated colors, you’ll never have an unprofessional or amateurish look.

Clean Tables and the Fridge

After your guests leave, make sure to clean out the fridge and wipe down tables.

In the fridge, don’t forget to check for and remove any open or perishable items. You may find takeout boxes and other food remnants left behind.

Make sure to wipe down the sides of items as well as the surfaces for an extra-clean appearance for future guests.

Airbnb Host Checklist: Take Out the Trash

In addition to cleaning your tables and fridge, check all of the trash cans, including the main trash can as well as small bedroom and bathroom trash receptacles.

After clearing out the trash, put in fresh trash bags for the next guests’ — or your own — use.

Hire Professional Cleaners if Necessary

Some Airbnb hosts take care of all of the cleaning themselves. Others find it more prudent to establish a relationship with a professional cleaner.

If you use a professional, you can incorporate their cost into the nightly rate or cleaning fee.

You can save money by cleaning yourself, but a professional service can save you time.

Each Airbnb host can weigh their options to decide what is best for his or her own business.

By following these guidelines and keeping an eye on this checklist, you can help to ensure that you have a prosperous future as an Airbnb host.

Airbnb hosting takes real work. With the right property, however, hosting can help you to achieve your own financial goals by providing a substantial side income.

Airbnb Host FAQ

>> Can You Buy A House With A Credit Card?

The article Airbnb Host Checklist: Essentials Template was originally posted on Investormint

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What Are The Best Real Estate Investing Websites? https://investormint.com/real-estate/best-real-estate-investing-websites https://investormint.com/real-estate/best-real-estate-investing-websites#disqus_thread Fri, 26 Oct 2018 09:05:16 +0000 https://investormint.com/?p=9275 The best real estate investing websites offer investors the potential to earn passive income, keep pace with inflation, own pre-vetted single family rentals, purchase multifamily units in bulk, and even purchase ownership shares of commercial properties.

The article What Are The Best Real Estate Investing Websites? was originally posted on Investormint

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best real estate investing websites

Investormint provides personal finance tools and insights to better inform your financial decisions. Our research is comprehensive, independent and well researched so you can have greater confidence in your financial choices.

The real estate market has the potential to pay investors a passive income, keep pace with inflation, and earn high yields from single family rentals, multifamily units, and commercial properties. But coming up with a big chunk of change for a downpayment is no mean feat. With crowdfunding, the industry is changing.

Crowdfunding allows investors to pool their money together to collectively make larger purchases than any single person could afford to do as a solo investor.

Below we examine the best real estate investing websites from owning single family rentals outright to claiming your share of commercial property without paying a fortune.

Best Residential Crowdfunding Site: Roofstock

Roofstock specializes in connecting investors to single-family properties across the United States.

Homes available through Roofstock are located in high-potential markets according to rental growth yields, trends in the local economy, and House Price Appreciation indexes.

Many single family rentals on offer already have existing tenants, and they’ve all been checked out in terms of potential returns on investment. In other words, not just any property is offered through Roofstock.

ROOFSTOCK SPOTLIGHT

roofstock logo

InvestorMint Rating

5 out of 5 stars

  • Buyer Fees: 0.50%
  • 30-Day Money Back Guarantee
  • 100% Online Purchase

via Roofstock secure site

Roofstock Guarantee

To inspire confidence among buyers, Roofstock offers a 30-day money-back guarantee.

If you’re dissatisfied with your purchase, you can hand the property back over to Roofstock and walk away from the deal.

One of the best parts of going this route versus the solo path is that you don’t have to make the day-to-day decisions that you would otherwise have to be responsible for as a landlord.

You can work with property managers who have already been screened and lined up. So, you don’t have to be bothered with hiring plumbers to fix leaky faucets or finding someone to mow the lawn.

Roofstock Fees

When you make a purchase, you’ll only be charged 0.5% in transaction fees.

Sellers are charged 2.5%.

These lower costs offer significant savings compared to the 6% commission that’s fairly standard across the industry.

Is Roofstock Worth It?

It’s important to remember that with Roofstock, you’ll be financially responsible for a single-family rental home.

You’ll have to be prepared to fork over at least 20% of the price for your down payment, and while you can expect to earn passive income each month from the rent, you’ll probably want to stick with this investment for a medium- to long-term period.

>> Related: Compare Roofstock Vs Fundrise

Best Commercial Real Estate Site: Rich Uncles

Rich Uncles solely offers investments in commercial properties.

As one of the best real estate investing websites, it has helped to open up the commercial real estate industry to everyday investors.

While you may have once been required to deposit a large chunk of change to buy commercial real estate, the barrier to entry is much lower these days.

With Rich Uncles, the minimum amount needed to claim your portion of a private real estate investment trust (REIT) is only $500.

You’ll be able to combine your money with the funds of other investors, and that pool will go toward investing in commercial rental properties.

RICH UNCLES SPOTLIGHT

rich uncles logo approved

InvestorMint Rating

4.5 out of 5 stars

  • Minimum Investment: $500
  • Salary Minimum To Invest: $75,000
  • Commercial Real Estate Exposure: YES
  • Access To Non-Accredited Investors: YES

via Rich Uncles secure site

Rich Uncles Tenants

According to Rich Uncles, tenants have all been highly vetted, and they include retail giants that are in virtually every suburb across the country — think restaurants, banks, drug stores, gas stations, etc.

This means that you can have higher confidence in the property tenants. It’s unlikely that a CVS, for example, is going to be unable to pay its rent.

Is Rich Uncles Right For You?

As an investor, you might not see high returns immediately because Rich Uncles aims for steady, long-term growth.

If you expect you will need cash near-term, Rich Uncles may not be the right choice for you because higher fees are charged to exit quickly.

The longer you hold the investment, the lower the fees usually.

>> Compare Rich Uncles Vs Fundrise

Best Online Real Estate Site: Fundrise

Fundrise lets you invest in properties even with limited funds.

With just $500, you can play a small part in the overall investment of a particular property.

Still, you get a seat at the table and could reap your fair share of rewards.

Of course much larger amounts can be invested too if you want a greater share of the “pie”.

How To Invest In Fundrise?

With Fundrise, you can invest in the market either through an eREIT or an eFund.

A Fundrise eREIT gives you direct access to professional commercial real estate investors who handle private deals.

These deals would be otherwise inaccessible to most people.

Administrative fees are also reduced because Fundrise eliminates the “middleman”.

FUNDRISE SPOTLIGHT

fundrise logo

InvestorMint Rating

4.5 out of 5 stars

  • Minimum Investment: $500
  • Returns: 11.44% (net of fees)

via Fundrise secure site

Putting your money into an eFund means that you are part of a group that buys property in high-potential markets.

You have the potential to diversify your portfolio while earning passive income.

Is Fundrise Worth It?

Fundrise eREITs and eFunds are both long-term options, so either one of them would make sense if you have some time on your hands.

According to the terms of your contract, you won’t be able to access your invested cash for a fixed period, and you’ll be taxed on your dividends at your income rate.

You could use an IRA account, however, so that your dividends can be exempt from taxes.

>> Related: Compare Fundrise Vs Realty Mogul

Best Real Estate Site for
Accredited Investors:
Origin Investments

If you’re an accredited investor, you probably already have a foot in the door, but you might still be able to do even more with your resources if you join Origin Investments.

This company has been around for a while, and they mean business. You need to come to them with at least $100,000 ready to go.

The principals at the company have also put a significant amount of cash down, so they’re fully invested just like any other partner investor. This means that they want to keep fees down and returns up just like you would.

ORIGIN INVESTMENTS SPOTLIGHT
origin investments logo dark

InvestorMint Rating

5 out of 5 stars

  • Minimum Investment: $100,000
  • Access To Multi-Family Units & Office Space: YES
  • Accredited Investors Only: YES

via Origin Investments secure site

How Does Origin Investments Invest?

Origin invests in multifamily residential properties and office spaces. The management team tries to evenly split the focus between these two categories.

They’ve traditionally done well in their eight geographic regions, resulting in a historical average net annualized returns of 24%.

Over time, your returns may also be impressive but as with almost all real estate investments, leverage plays a role, so economic downturns can hurt returns.

Keep in mind also that this approach will affect your taxes and could make that yearly tax return a lot more complicated.

Best High-Yield Real Estate Site: LendingHome

Unlike some of the other real estate sites, LendingHome focuses on giving investors more immediate returns. Investors could see money coming back as soon as the day they invest, and there’s a potential for high yields.

LendingHome Investment Minimum

However, not just anybody can join in on the fun. LendingHome requires a minimum of $50,000 to start, and it only allows accredited investors to participate.

Also, the interest you earn is taxed as income, so those looking to lower their rates may want to think carefully about this.

LENDINGHOME SPOTLIGHT

lendinghome logo

InvestorMint Rating

4.5 out of 5 stars

  • Annual Returns: 6% → 12%
  • Minimum Investment: $50,000
  • Passive Income Opportunity: YES
  • Accredited Investors Only: YES

via LendingHome secure site

How are the high yields produced? LendingHome is in the lending business, hence the name.

It offers borrowers a straightforward online lending process. Borrowers need to have all kinds of financial documentation and paperwork regarding the home they want to purchase so that LendingHome can be confident that they’ll be able to pay off their loans.

LendingHome does a lot of the legwork for borrowers, making the whole process simple.

As an investor in this process, you’ll be buying what they call platform notes, which are eventually pooled together and used to fund loans.

LendingHome is a big player in the industry, and you can select which types of investments according to risk level.

Best Crowdfunding Real Estate Site: RealCrowd

RealCrowd connects two major parties together: accredited investors and real estate sponsors.

By taking the money offered up by those investors, the company can give real estate sponsors a significant amount of capital. That capital can then be turned into financial gains, which may be cashed out in anywhere from 1 → 10 years.

REALCROWD SPOTLIGHT

realcrowd logo

InvestorMint Rating

4 out of 5 stars

  • Cost To Investors: None
  • Passive Income Opportunity: YES
  • Access To Commercial Real Estate: YES
  • Access To Non-Accredited Investors: NO

via RealCrowd secure site

Why place your trust in these sponsors? Because they’ve been thoroughly vetted.

Rising sponsors have transactional histories of at least $25 million, established sponsors have transactional histories of at least $50 million, and elite sponsors have transactional histories of at least $1 billion.

All sponsors invest in commercial properties.

RealCrowd Investment Minimum

If you want to take part in this process, you will need a minimum starting investment of between $25,000 and $50,000. In return, you’ll earn passive income and have the opportunity to diversify your portfolio.

It enables smaller investors to be a part of opportunities that may otherwise be financially out of reach.

Best Passive Income
Real Estate Site: EquityMultiple

EquityMultiple is another site that’s only open to accredited investors.

The benchmark necessary to join is having earned at least $200,000 in annual income for the past two years.

You could also be a part of EquityMultiple if you have at least $1 million in net worth, excluding your primary residence.

EQUITYMULTIPLE SPOTLIGHT
equitymultiple logo

InvestorMint Rating

4 out of 5 stars

  • Passive Income Opportunity: YES
  • Access To Commercial Real Estate: YES
  • Accredited Investors Only: YES
  • Minimum Investment: $5,000

via EquityMultiple secure site

Once you’ve passed this first test, things are pretty straightforward. You can get started with just $5,000, and you can choose whether to put your money in equity, preferred equity, or senior debt investments.

The people handling your cash on the other end are experienced sponsors who are continually researching opportunities in the commercial real estate field.

Properties could include:

  • Offices
  • Retail spaces
  • Multifamily buildings

You have the potential to earn a regular amount of monthly income with EquityMultiple.

Syndicated debt offers the most protection and has a typical term between six months and two years.

Preferred equity is next with a typical term of one to three years.

With a targeted internal rate of return (IRR) of 14%, equity investors have the most risk and reward. That term is usually three to seven years.

You can log on to the site at any time to review investment opportunities and manage your account.

Best Real Estate Investing
Websites Wrap-up

When it comes to choosing how to approach these types of crowdfunding investments, be sure to carefully consider your overall portfolio, your investment goals and timeframe, and the resources that you feel comfortable investing.

Real Estate Site Investment Type Minimum
roofstock logo Single-family Rentals 20% of purchase price

rich uncles logo Commercial $500

fundrise logo eREIT / eFund $500

origin investments logo dark Multifamily & Office Space $100,000

lendinghome logo Commercial $50,000

realcrowd logo Commercial $25,000

equitymultiple logo Multifamily, Retail & Office Space $5,000

The article What Are The Best Real Estate Investing Websites? was originally posted on Investormint

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Is Airbnb Worth It For Hosts? https://investormint.com/real-estate/is-airbnb-worth-it-for-hosts https://investormint.com/real-estate/is-airbnb-worth-it-for-hosts#disqus_thread Wed, 24 Oct 2018 09:20:19 +0000 https://investormint.com/?p=9217 Airbnb is worth it for hosts who set fair pricing and provide top notch customer experiences which lead to high guest review ratings and higher occupancy rates. Provided insurance, maintenance, and hidden costs are covered, Airbnb can be very lucrative for hosts.

The article Is Airbnb Worth It For Hosts? was originally posted on Investormint

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is airbnb worth it for hosts

Investormint provides personal finance tools and insights to better inform your financial decisions. Our research is comprehensive, independent and well researched so you can have greater confidence in your financial choices.

If you’ve been on the fence thinking about becoming an Airbnb host, you’ll need to know the pros and cons before opening your doors to new guests.

The possibility of extra income is alluring but at what cost? Allowing a stranger to stay in your home comes with risks, so it’s important to become familiar with them in order to answer the question: Is Airbnb worth it?

How Much Can I
Airbnb My House For?

Picking a price point for your Airbnb will depend on where your home is located, how large it is, and what amenities or points of interest are close by.

Airbnb has an estimator to help you set a price. To use the estimator, just enter in your location and what you want to rent out.

It’s also a good idea to check other rental properties in your area to make sure that you’re asking a fair price for those who are traveling to your city.

You can rent out:

  • a shared room
  • a private room
  • an entire residence

airbnb give a key

Include the number of guests you can host and Airbnb will give you a weekly average estimate. For instance, a two-bedroom apartment located in Brooklyn goes for around $1,120 a week while in Houston, a traveler can rent a home for anywhere from $1,100 to $2,000 a month depending on the time of the year.

Before signing up with Airbnb, check local laws to make sure that you can legally rent your property.

Is Airbnb Worth It For Hosts?

The payoff of signing up to Airbnb as a host can be lucrative but you should go in with your eyes open so you know both the pros and the cons.

Airbnb Pros

As a host, you get to set your own price so that you can make sure you’re earning enough.

You also have the flexibility to rent out your home on your terms. When you plan to be away over the summer months, you can open your home up to guests.

Or if you have a rental property, you could choose short term Airbnb rentals that may generate more income when compared to the alternative of a long-term tenant.

It could also be a good option for homeowners who are traveling and would prefer to have someone occupying their home while they’re gone versus leaving it vacant and exposed to the prying eyes of opportunist burglars.

Along with making a little extra cash, hosts have the opportunity to make new friends and form connections with people from around the world.

One of the main reasons that travelers like to use Airbnb is because it gives them the opportunity to have more authentic travel experiences because they stay alongside residents instead of other travelers.

Airbnb Cons

While there are many benefits to earning money by renting out your space, be sure to consider the cons.

For instance, you will be renting your place to people you don’t know. Airbnb has a few ways to vet guests, but guests are strangers nonetheless.

Once you agree to be an Airbnb host, you can review a traveler’s ratings and reviews before agreeing to let them stay.

You’ll also have access to a private, secure messaging system that allows you to ask travelers questions. This will give you a better sense of who they are. Likewise, they can ask you questions.

It’s a good idea to ask a prospective guest for scanned government-issued identification to confirm their identity.

No matter how trustworthy a guest is, it’s best not to leave temptation in their way. Store the diamond jewelry and gold rings ahead of time.

If a valuable does go missing, Airbnb Host Protection insurance may come to your rescue but it’s not an all-inclusive policy. For example, it doesn’t cover things like cash and jewelry.

Pro Airbnb Host Tip: When you’re listing the details of your property, confirm that the list is accurate. If it isn’t, then your guests can request a refund.

Airbnb Host Requirements

When you decide to become an Airbnb host, you are entering the hospitality business.  You’re not merely sharing your home.

The 5 Basic Requirements For Hosts

Essential Amenities: As a host, it’s up to you to make your guests comfortable. Plan to provide clean linens, towels, cleaning supplies, and soap. Also, make sure that your guests have coffee, tea, and kitchen utensils.

Be Responsive: When guests inquire about your home or make reservation requests, hosts are expected to respond within 24 hours.

Accept Reservation Requests: Whenever you are available, you are expected to accept guests and make them feel welcome.

Avoid Cancellations: Guests take travel plans seriously. If they’ve already booked flights and a place to stay in your home, it could be very disruptive and costly for them if you cancel.

Maintain High Rating Overall: When guests book on Airbnb, they expect the quality of homes to be consistent and high, so it’s up to you to keep high standards of cleanliness.

airbnb living roomOnce you’ve signed up with Airbnb, the company will send you a checklist so that you can be ready for guests.

To make them feel welcome, create a guest greeting. The greeting should include instructions for how everything works in your residence as well as home amenities.

Give your guests the internet password, directions to the nearest coffee shops, transportation hubs, and a list of restaurants.

The little things that take a bit of time can pay off big when your guests rate you as a host.

Airbnb Host Fees & Taxes

Airbnb Host Fees

Airbnb charges its hosts a 3% fee to process payments.

Pro Tip: If you are planning to rent out your home regularly, you can pay an annual fee to advertise, which is cheaper than paying a commission for every booking.

With preparation, you can avoid the complications and unnecessary costs that might come with being an Airbnb host. For instance, you may wind up owing an unexpected tax bill. Here are a few tax guidelines to keep in mind.

14 Day Rule

If you rent out a residence that you own for 14 days or fewer a year, then you don’t have to report it as income.

If you do rent out your personal residence for more than two weeks within a year, you will need to report the money you collected as income.

Rental Property vs Full-Time Home

If you purchase a property that you don’t intend to live in full time, such as a vacation home, and rent it, then you’ll need to report the money paid to you as rental income.

You can deduct rental costs, but be sure to separate them from any expenses that you incurred when you were using the property.

Airbnb Host Costs

Along with the cost of buying and laundering things like towels and linens, cleaning is another expense that you should budget into your Airbnb costs even if you’re doing the work.

Professional Cleaning Vs Self-Cleaning

Depending on how much time you have, it may be worthwhile to hire a cleaning company. Otherwise, you will have to pay for cleaning products.

Self-cleaning means that you’ll pocket a lot more of what you’re making from hosting through Airbnb.

You can require guests to pay the maximum amount allowed for cleaning and do the work yourself, increasing your profits.

Along with the financial benefit, this option gives you complete control over where everything is placed after your guests leave. That way, you will know where everything is when you’re using the property.

The downside to cleaning the home yourself after your guests leave is the time that it will take. Depending on the size of your rental and the cleanliness of your guests, cleaning up could be a time sink.

If cleaning were to take up to a full day, your occupancy rates may decline.

airbnb welcome

Hiring someone to do the cleaning for you comes with its own set of pros and cons.

You could hire a company to get the job done fast, or you might hire an individual cleaner who you can train to clean the way that you prefer.

Professional cleaning companies know how to clean a home to make it ready for hosting.

They also have experience in cleaning up after guests who are messier than the norm.

Before hiring anyone to clean your Airbnb, be sure to read company reviews or ask for recommendations.

Insurance Costs

Insurance costs are necessary but companies like Lemonade and Allstate could save you money.

Some home insurance policies include coverage for short-term rentals, but for multiple short-term visits, your rental company may insist that you purchase a business policy, one that protects bed and breakfast or hotel owners.

If you’ll be renting your home to one person or a family for a longer stretch, then your insurance company may need you to shift into a rental dwelling policy.

According to estimates, this type of policy can run you about 25% more, so set your rental costs high enough to ensure that you’re not losing money.

Hidden Costs

Other hidden costs that aren’t immediately obvious day one include consumables, like coffee, paper towels, and toiletries.

You may also have the cost of some food if you’re kicking your hosting responsibilities up a few notches by supplying breakfast items or snacks.

Plan on utility expenses increasing too. They may run higher than before when guests leave the lights on or use more water than normal.

Be sure to purchase a fire extinguisher and change the batteries in the home’s fire alarms regularly.

Wear and tear on furniture, dishes, and flooring are other hidden costs of an Airbnb.

Is Airbnb Worth It for Hosts?

As a host, you should be able to make money as long as you keep your prices reasonable for:

  • Your area of residence
  • The length of stay
  • The space you have available

Maximize your Airbnb income by being flexible about your pricing. For instance, if you live in an area that brings travelers because there is skiing, then charge more in the winter and less during the summer months.

The nice aspect of hosting on Airbnb is it’s always up to you whether you decide to host someone.

Hosting an Airbnb requires some research and up-front costs, but deciding to take this step also has benefits like making new friends and added income. It really is something that is a win-win most of the time for everyone involved.

The article Is Airbnb Worth It For Hosts? was originally posted on Investormint

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