It has become fairly obvious to me that there are a lot more people that would like to be able to participate in real estate crowdfunding if they could. The #1 inquiry I received on the heels of my episode of the bigger pockets podcast has been– What are the options available for non-accredited investors to participate in this asset class?
As previously mentioned, Groundfloor.com represented the only site that I know of and have used that from its inception has been dedicated to non-accredited investors. Because of regulatory hurdles they have to go through a time consuming state by state approval process to allow new investors to participate. At the time of this writing they only operate in 10 states despite being around since 2013.
After some more research, there are some additional options although the overall landscape remains limited. I ran across a very informative blog posts on this topic over at Lendacademy.com. This has been one of my primary learning resources as they cover the full spectrum of online lending from consumer to business to real estate. The founder, Peter Renton, has an excellent podcast where he routinely interviews thought leaders and CEOs of many of the platforms I have invested on.
The blog posts was called Peer-to-peer and Marketplace lending opportunities for nonaccredited Investors. In it he spotlights the platforms Fundrise.com and Realtymogul.com who now offer nonpublicly treated REITS for non accredited investors.. REITS or real estate investment trusts are funds you can invest in that go out and buy a portfolio of properties. If this sounds familiar that is because there are several publicly treated REITS listed on the major stockings changes. Fundamentally, the crowdfunding sites are offering the same thing with the notable exceptions that the overall size of the funds will be much smaller and not subject to the potentially large price swings that can occur with the stock market.
In reviewing one of Realtymogul’s funds, the investment minimum is $1000 and to this point they have distributed returns to shareholders averaging 8% annually. Thus far it is acquired 5 different properties.
So while these do represent alternative options, if you one a more traditional crowdfunding experience where you are choosing the specific property, developer, and geography; it looks like groundfloor.com remains you’re only option – its significant geographic restrictions notwithstanding.
I would encourage any fellow potential investors to constantly checked back as new platforms are being added to the landscape every month and seems. I predict that eventually there will be ample opportunities for the non accredited investor as the profile of real estate crowdfunding continues to grow.
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Podcasts have been an absolute godsend in my investing journey turning an otherwise nonproductive commute into prime learning time. In the arena of real estate, BiggerPockets.com has been the most useful as I have gleaned plenty of actionable advice and inspiration from the talented roster of guests that owners Brandon Turner and Josh Dorkin bring on. I had the honor to be a guest myself on episode 219 and gave my insights on some of the more passive investing strategies suitable for time constrained busy professionals. We focused specifically on 3 arenas including turnkey rental property, private mortgage lending, and real estate crowdfunding. The latter seemed to strike a particular cord with the audience as I received a plethora of email inquiries wanting to know more details about my experiences. They all basically boiled down to two questions:
- What platforms do you use?
- What have your results been?
There are a plethora of crowdfunding sites out there and the proliferation continues as both investors get more comfortable with the concept and the real estate entrepreneurs get past the negative stigma of raising capital online. In total I am on nine different sites but in the accompanying video, I am going to highlight just three of them that I feel have distinct profiles in terms of the types of deals they offer, and meet the following criteria:
- The platform has been in existence for a minimum of 3 years
- I have been investing on it for at least 2 years
- I have had at least 1 successful exit on a deal
I hope after viewing it, your interest will be piqued sufficiently to seriously explore this emerging asset class and start participating. Be sure to check out our interviews with the CEOs of 2 of the 3 platforms mentioned in the video here.
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There are many ways to make money in real estate, but perhaps one of the less well known ways is investing in distressed mortgages, also known as real estate “notes”. These are delinquent loans where the borrower has stopped making payments and the property is in some stage of the foreclosure process. In some states this can take years owing to the backlog caused by the foreclosure crisis which began in 2008. Working with the individual borrowers to modify their loans is time consuming process that banks aren’t set up to do. Instead the banks are willing to sell large portfolios of these mortgages at deep discounts to specialty companies who raise money from investors to buy the notes, and attempt to get them reperforming. When done properly, it’s a rare win-win-win situation where a homeowner gets a new affordable payment, the note company gets a profitable asset, and investors can get a high return on their money.
Dave Van Horn is president of PPR Note Company which stands for partners for payment relief. He is going to give us an inside view of the distressed mortgage note business, and how you can invest in one of his funds to get that high yield we all want. Enjoy!
My provider has just freshly renovated the home after acquiring it at a significant discount in an off market transaction. The property was distressed and got a complete makeover as detailed in Hassle Free Rentals with a new roof, HVAC, plumbing, etc. This is all designed to minimize the likelihood of any major repairs for the first few years of ownership. Once a well screened tenant is placed, our group will have the option to purchase the home at a price where the turnkey provider makes a profit, but still provides good cashflow for us. That’s why it is so key to get the property at a deep discount.
So did we pick it up? Watch and see.