My friend was telling us the other day how they were extremely fortunate to have bought their million dollar home a few decades ago, because they scraped together a $3,000 down payment to buy a $15,000 home they now live in. They will never tell you they are investing geniuses, but multiplying their initial investment by at least 300 times since the home is worth north of $1 million bucks today qualifies as a legendary return in my book.
Hearing these stories always gets my juices flowing. Just like that, my off and on desire to start investing in real estate is turned on and revved up to the max.
I’ve toyed with the idea of investing in rental properties in the past few years. What makes me hesitant every time I think about the topic is the amount of work involved in managing multiple rental properties. I already have full time work here at 1078fm.ru, and I really don’t need more stress. If anything, the potential income from investments should give me more freedom and time, not less.
Plus, I live in Southern California and prices of properties in my neck of the woods are very high. I once saw a small shopping plaza for sale and the rent you could get was 1.5% of the listing price. Woah? Who would buy anything risky that pays just 1.5% a year?
You’ve probably seen the rise of real estate crowdfunding platforms, where companies curate different property investments and allow multiple investors to invest in a slice of each investment deal. One company, RealtyShares, caught my attention because they allow direct investments into each property.
Here’s what I found out about the platform.
What Does RealtyShares Offer?
Think of them as the middlemen, where developers go to get funding for their real estate projects and where investors like us provide the funds. As an investor, you get to see a summary of the specific property you’ll be investing in, whether it’s an equity or a debt deal, the plan to generate returns and a bit about the company that is operating and managing the asset. You also get a summary of the market and more specifics on how the returns are calculated, important when you are evaluating each potential investment.
Side Note: With an equity deal, you are going to be participating in the potential appreciation of the property like an owner would as well as get potential periodic payments (historically quarterly or monthly depending on the specific deal). In a debt deal, you are basically loaning money to the developer for this project and acting as a lender to receive interests for putting your money at risk.
The company actually made an easy to understand video about how the platform works. Check it out here:
Get started here.
What I Like About RealtyShares
One of the reasons to use a platform for real estate investments is that RealtyShares vets every opportunity that is presented to them and rejects roughly 97% of what they see. This is pretty valuable for most of us who don’t have the time to sift through all the potential opportunities that are out there.
The other positive is that I can invest with just a few thousand dollars. Aside from being able to use a small amount of capital to get my feet wet, investing in small chunks also means that I can invest in many different properties, spreading out my risk not just with the type of properties but also geographically throughout the country.
Many novice real estate investors can’t appreciate this enough, but unlike investing in a rental property, the sponsor will collect the rents and potential coupon payments for you. That means not having to contact the renter if they are late on payments, or needing to always drive around collecting checks and wasting time and gas.
Another positive is that you have access to deals nationwide. I can find out investment opportunities in the local area using traditional methods, but deals outside of my immediate area would be hard to spot when they become available.
Finally, the platform is free to join and for those who want to browse potential investments. I think this is a good model. I mean, who would want to pay a fee just to take a look at what the potential is anyway? RealtyShares will take its cut from the deals you invest in, but it’s a fee you’ll pay for any broker anyway.
Signing Up for RealtyShares and the Cooling Off Period
The process was pretty simple since it literally took about a minute. Fill out some basic information, choose a username and password and off you go. You can’t invest right away though, as regulations require a 30-day cooling off period. Those who want to invest before the 30 days is up can complete the full investor profile and schedule a call with their investor team though.
What Would You Do?
I’m a bit late to the real estate party already, but there are still plenty of profitable deals out there. Just as everyone was filled with envy of my friend’s $15,000 home purchase a few decades ago, even those who bought before the financial crisis made out okay as long as the numbers made sense before they wrote the check. They key is the entry price, and companies like RealtyShares are making it easier than ever to evaluate and be notified of each deal.
It could take quite a while before enough interesting deals pop up in the system for me to be fully invested and be properly diversified across different deals, but that’s not a bad thing since I want to learn the platform a bit more too.
What do you think? Would you get your feet wet if you were me? How would you approach this?
I just found out that until the end of August, RealtyShares will give you $100 after you make your first investment. With the minimum investment amount at $2,000, that’s a 5% return within 30 days of making your first investment. Plus, you get the returns of whichever investment you choose. This is a great deal so don’t miss out on this if you have any plans to invest with any real estate crowdfunding sites.
Use promo code: Partner100 – Expires 10/30/2017
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