I’ve mentioned in a few posts the I’ve recently sold my home and moved across the country. This freed up lots of money that needed a job. I’ve spent hours crunching numbers, poring over spreadsheets, scouring Google, and exploring my options. Crowdfunded real estate (CFRE) kept coming up and I joined a Facebook group geared towards these types of investments. After reading through some of the past discussions and posing some questions, I finally decided to jump in.
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Which Platforms and Why?
I decided to go with three different platforms in order to diversify to some degree.
Let me start by saying that I’m not an accredited investor. Many crowdfunded real estate platforms are specifically geared towards the people who are. It is a self certified thing too, and no one is going to check on you. That is fine and I know there are people who are not accredited that join these platforms. I didn’t feel comfortable with this though.
AHP vs StREITwise
Similarities:
- Expected return of 10% APY.
- Option to reinvest your dividends to compound yield.
- Support for monthly transfers to add to the account consistently.
Differences:
- AHP pays out monthly; stREITwise pays quarterly.
- AHP minimum has a lower minimum investment at $100 vs $1000 with stREITwise.
- Asset class: stREITwise invests in Class A midsize commercial projects in secondary markets usually in the Midwest of the US. This is a higher quality asset, but diversity has been limited. They only had one project in their portfolio until recently. Expect more acquisitions to come, and further improve diversity.
- American Homeowner Preservation buys defaulted mortgages in bulk at a discount. This is not a particularly strong asset but it gives them a lot of diversity and a strong margin if they can redeem a majority of the loans. They have done well with their program and have been at it for several years.
One interesting thing to note is that when you sign up for stREITwise, you send them funds but it can take several weeks to even get an account and a login set up. I sent them money about 3 weeks ago but still haven’t been able to log into my account. I’m not really worried about it, I have actually talked with the owner of stREITwise in the FB group mentioned at the top of the article. AHP and Fundrise are more normal in their account set up.
Fundrise
I haven’t really looked into Fundrise very much, and I put the least amount into this platform. I have been on their email list for months and they send out really interesting blog posts explaining their business model in depth, talking about projects, and other interesting topics. They let you try them out with a Start portfolio, which is available for three months. After that you can upgrade to one of their three plans with different “asset allocations” of sorts:
- Dividend: This will pay you monthly about 4-6% a month with a little bit of growth
- Growth: It will reinvest dividends to compound your return
- Blend: It will pay a smaller dividend to you monthly and reinvest the majority of the earnings for some compounding
Fundrise seems to be the most recognizable brand and is generally highly ranked and has the most widespread range of assets available. It can return anywhere from 6 to over 10%.
Worth the Risk?
CFRE is a relatively new way to invest and has only come about in a bull market. I have spread my money across these three platforms as I think it mitigates the risk of losing my money, should the real estate market have a pullback. My thinking is none of these companies have weathered a recession, so I want to spread my money across a few different companies, in hopes some will make it, if others fail. Additionally, I’m spread across residential and commercial real estate. Some platforms have access to several types, while others limit to just one asset class. Personally, I’m really excited to have given myself a raise this year, and will provide updates as the money rolls in.
Have you tried crowdfunded real estate? If so, which platforms have you tried? What would prevent you from trying it out?
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