Real Estate Crowd Funding

I am curious to hear if anyone here has invested with any of the crowd funding sites. And if so, what’s your experiences? If not, why not?

Also this is new to me that FundRise actually put some of their investment as eREIT:

Personally, I am interested in some of the larger multi-family projects since this is truly passive, and I don’t have to build a team and do research on acquisition (with assumption that sponsor has good track record in the geo & type of assets). If they pay you 12%-14%, I find that it is almost similar to my Austin investment in terms of Cash-on-Cash return (without appreciation).

  1. The risk of default is the issue. 2) Liquidity is the issue. 3) You are evaluating investment based on third party data. I was lending club + Prosper investor, but such crowd funding is not attractive.

IMO, best is direct rental, SFH,Duplex or multiplex, are better. If money is constraint, easier options are to go for REIT (for cash flow) or stocks (cash flow and growth).

If you prefer dividend cash flow, just invest in good REITs or JNJ or AAPL kind of stocks or even ETFs or Mutual Funds or Berkshire stock BRKB.

Personally, I like Stocks/ETFs next to real estate investments.

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I joined a bunch of crowd funding sites but so far haven’t pull triggers on any of them. When I was on Bigger Pocket more regularly a year or so ago, debates on turnkey investment would flare up once in a while. One guy who used to live in California but now in Oregon cautioned people not to invest in turnkeys. Returns are always lower than promised.

Fundrise seems to be pretty desperate for investment. I get their emails almost everyday…

A few reasons why not,

a. Conservative, prefer to be in the early majority phase of anything.
b. Sound like CDO, we really don’t know what is going on. Compare to S&P Index fund, we know that we’re investing in the best 500 US businesses selected by a group of professionals.
c. I share JIL’s sentiments.

Of all the crowdfunding sites, I like HomeUnion’s model the best. It’s not really crowdfunding. You own 100%. But they make it easy to buy out of state.

Actually you guys can join forces to buy if you trust one another. Do a syndication deal right here on forum. :smile: That’s fine. I won’t ask for a cut.

Trust is hard to earn. Most businesses failed in the early stage, the biggest reason is TRUST. IMHO, the only reason for syndication is to invest in commercial property and condos… no point for SFHs.

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Thanks all for the replies. It is interesting that one of the reason @Jil said is liquidity. Maybe it is less liquidity than REIT or stock, but more liquid than owning your own property? I agree that Trust is the issue to the strangers on the platform. But other than doing your own direct investment, it is hard to find investment that can consistently return 10%-15% on your investment? I don’t think REIT or any dividend stock, that comes close to it.

What I am considering is starting to build up income stream(s), as I have been focusing on the growth so far. Here are some choices I am thinking: 1. joining syndication deals with operator I know or can trust to certain extent, 2. ETF/REIT for dividend 3. own cashflow property in flyover state.

Not necessarily in fly over states. Central Valley from Sacramento down to inland empire have cash flowing deals.

I am thinking along similar lines as yours. Maybe I will do alternating Bay Area deals and then cash flow deals in Central Valley. A tick tick if you will.

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Another cons of crowdfunding and even anything less than 100% ownership is that you have limited re-leveraging opportunities. You can’t do cash out refi for example. Or you can’t install coin-op washing machines to increase cash flow.

I think I’d rather start small like buying a 4-plex or 8-plex in a Central Valley town like Stockton and grow the base organically. Crowd funding or syndication takes away the simplicity and tangibleness of real estate for me.

Wonder why you are interested in RE only? Your family in Burma is into RE? Or has bad experience in stock investment?

  1. No
  2. Prefer healthcare ones. Bought some OHI. Currently REITs are too expensive.
  3. Invested in Austin but Texas is not a flyover state. Reason for choice is it is a suitable retirement place for me. The choice of neighborhood are those that I might go there for retirement.

Real estate has the beauty of debt leveraging. We will all look like geniuses holding 4% fixed mortgages in a 15% rate environment 10 years from now. So the key for me at least is to have as much mortgage debt as possible.

I prefer RE over Stock since with RE I feel I have more control over it like influencing how to add value or not. I can have multiple exit strategy and debt leverage. As well as tax strategy. With Stock, I can do research on what to buy, but other than that little I have control. First generation RE Investor.

Why do you think so?

Just look at what many people did. Buy the well known stocks when the market dips very low and hold on to it. You will have good return. I have already stated when AMZN was well within $725-750 range. Same way, I bought NFLX when it went down $86. Similarly, choose the well know stocks, you will get nice return.

Now is the best time to buy some of the US oil companies. In fact, the best time was Feb 2016. Now, it is better late than never. There are well know dividend payers in oil industries.

I am not favorable with REITs, even though good dividend payers, until FED finishes its rate hike. Still some of the REITs, not related to MBS or mortgage REIT, are really good such as NRZ or STWD or Hotel or Data center REITs.

Any way, you need to do some research on it, but can not depend on my statements.

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Only if RE doesn’t behave like bonds. Rate up, bond price down.

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It should not. Rates up means inflation up. Inflation up means salary up. If housing supply doesn’t suddenly go up like crazy rent should go up as well.

I don’t know if rates will be 15% in 2027. That’s just hyperbole on my part. But I do think the low rates we are seeing today won’t last forever.

We had two historic events that pushed rates down. One is China exporting its savings. The other is central banks all over the world pumping in record amount of liquidity. Both are ending. China is rebalancing its growth towards internal consumption and less exports, and central banks are tightening.

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[quote=“manch, post:17, topic:1526”]
Rates up means inflation up. Inflation up means salary up. If housing supply doesn’t suddenly go up like crazy rent should go up as well.
[/quote]So the converse should be true right?

Rates down means inflation down. Inflation down means salary down. If housing supply doesn’t suddenly go down like crazy rent should go down as well. Is that we’re seeing?

Always find it interesting that you think when rates go down, house price would go up; and when rates go up, house price would go up. I guess the only time that house price would go down is when rate stays the same :joy:

Or maybe housing price will almost always go up. Because we almost always have positive inflation.