I continue to get great engagement from readers and listeners. Andy recently finished reading Alternative Financial Medicine: High Yield Investing in a Low Yield World and had a few follow up questions in this thoughtful and appreciated email he left on the site. The reason I share it is because there may be some of you with the same concerns and hopefully you can benefit from my insights to help you be a better investor.
Message: Hi Doctor Meadows,
I just finished your book and wanted to thank you for writing it! You give some great direction to those of us who have been floundering. It’s comforting to hear someone else’s views on some of the things that I’ve been considering and looking for feedback on. I invest in PPR and was glad to hear that there’s another option out there. Realtyshares has been another consideration, and I’m curious now, do you prefer it over Realty Mogul, or others? Also, I just saw a troubling article in Business Insider about Lending Club, do you still look favorably at them? Here is the link: http://www.businessinsider.com/lending-club-may-have-hit-a-dead-end-2017-5
On turn-key investing, wow, right here near me in Phoenix, there are a number of companies offering opportunities! So, now the daunting task of sorting them all out!
Are you familiar with The Note Factory? I just pulled the trigger with them and really like their business model a lot. You might want to take a look. They don’t advertise and are strictly word-of-mouth.
So, thanks again for the great book. It was very timely for me finding it when I did since the decision process was well underway.
Tons of points you bring up!
Realtyshares is my number one crowdfunding site in terms of money and number of projects. This is due to me getting to know the CEO to a degree through multiple conversations over the past few years including meeting him in person at an industry event. They seem to be very committed to maintaining strict underwriting standards which is the real key to long term success.
If you have not seen it, I would highly recommend you check out my video interview with the CEO HERE.
Full disclosure, I have a teensy position in the company having been invited to invest in one of their equity rounds of fundraising.
I have been on Lending Club for about 3 years now and have seen everything from extreme optimism to much more pessimistic articles like the one you pointed out. Around the time of their IPO in December 2014 there was talk they could emerge as a real rival to traditional banks and then they went through some turmoil and scandal with impropriety with their CEO.
It seems like things have been shaky both for the company and the industry overall since then. Personally, I have maintained my account, which is only a modest portion of my overall portfolio. From the beginning I have been a relatively conservative investor preferring “A” and “B” loans with a target return of about 7% which I have been able to achieve. I have not noticed a spike in defaults sticking to these types of notes despite the occasional bad news for the industry.
On the rental property front, I haven’t found any shortcuts to vetting a turnkey rental provider. The things I used included podcasts, reading forums, calling up current investors and some on the ground site visits. I would particularly focus on talking to the investors and finding out their experience in terms of actual rents/expenses vs the always rosy numbers on the proforma. Also ask how responsive the property management aspect of things has been. In the end, it took several weeks for me to get comfortable with a provider but it has paid off significantly as I have experienced great customer service and expected financial performance on my now multiple purchases.
Can’t say that I have heard of the Note Factory. I have been pretty pleased with PPR as my exposure to the world of distressed real estate notes but I will check out Note Factory as well. I like PPR’s fund structure as it greatly diminishes the default risk associated with holding individual mortgages.
Thanks for picking up the book and if you haven’t, please leave a review on Amazon and tell your friends!
To your Wealth,